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ER - Signify reports first quarter sales of EUR 1.7 billion, operational profitability of 8.9% and a free cash flow of EUR 51 million

Company: Signify N.V. Date: 2023-05-03 Language: English Register to download
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# Press Release

May 3, 2023

# **Signify reports first quarter sales of EUR 1.7 billion, operational profitability of 8.9% and a free cash flow of EUR 51 million**

### **First quarter 2023<sup>1</sup>**

- Signify's installed base of connected light points increased from 114 million in Q4 22 to 117 million in Q1 23
- On track to double the pace of the Paris Agreement
- Sales of EUR 1,678 million; nominal sales decline of -6.1% and CSG of -9.1%
- LED-based sales represented 82% of total sales (Q1 22: 84%)
- Adj. EBITA margin of 8.9% (Q1 22: 10.5%)
- Net income of EUR 28 million (Q1 22: EUR 87 million)
- Free cash flow of EUR 51 million (Q1 22: EUR -189 million)

**Eindhoven, the Netherlands** – Signify (Euronext: LIGHT), the world leader in lighting, today announced the company's first quarter 2023 results.

"Largely in line with expectations, Q1 2023 saw persistent weakness in the consumer segment and in the indoor professional business, as well as a slowdown in OEM sales. At the same time, we made progress with our 2023 priorities, such as continued price discipline and effective COGS management, which resulted in an improvement in our gross margin. The Adjusted EBITA margin performance of our Conventional Products division returned to historical levels. The company's free cash flow further recovered, driven by working capital improvements. While our adjusted EBITA margin was impacted by lower fixed cost absorption, we remain steadfastly focused on applying our customary cost discipline," said Eric Rondolat, CEO of Signify.

"While we expect the remainder of H1 2023 to remain challenging, we continue to see the potential for an improved second half. Given the structural improvements in our gross margin and free cash flow generation, as well as our intensified measures to reduce fixed costs, we confirm our guidance for the full year."

# Brighter Lives, Better World 2025

In the first quarter of the year, Signify was on track for all of its [Brighter Lives, Better World 2025 sustainability](https://www.signify.com/global/sustainability/brighter-lives-better-world-2025) [program](https://www.signify.com/global/sustainability/brighter-lives-better-world-2025) commitments that contribute to doubling its positive impact on the environment and society.

- **• Double the pace of the Paris Agreement:**  Cumulative carbon reduction over the value chain is on track. This is mainly driven by energy-efficient and connected LED lighting, which drive emission reductions in the use phase.
- **• Double our Circular revenues to 32%:**  Circular revenues were 29%, stable versus the previous quarter, yet on track to reach the 2025 target. Circular revenues continue to be driven by serviceable and circular luminaires.
- **• Double our Brighter lives revenues to 32%:**  Brighter lives revenues were 27%, on track to reach the 2025 target. The main contribution continues to be the consumer well-being and Safety & security portfolios.
- **• Double the percentage of women in leadership positions to 34%:** The percentage of women in leadership positions was 29%, an increase versus the previous quarter and on track to reach the 2025 target. The improvement was mainly driven by new external hires and the internal promotion of women.

# Outlook

Signify confirms its guidance for 2023. The company continues to focus its efforts on improving the Adjusted EBITA margin and free cash flow. Signify expects for 2023:

- An Adjusted EBITA margin in the range of 10.5-11.5%
- Free cash flow between 6-8% of sales

# Financial review

|                                        | First	quarter |        |         |
|----------------------------------------|---------------|--------|---------|
| in	millions	of	EUR,	except	percentages | 2022          | 2023   | change  |
| Comparable	sales	growth                |               |        | (9.1%)  |
| Effects	of	currency	movements          |               |        | 0.9%    |
| Consolidation	and	other	changes        |               |        | 2.1%    |
| Sales                                  | 1,788         | 1,678  | (6.1%)  |
| Adjusted	gross	margin                  | 684           | 659    | (3.6%)  |
| Adj.	gross	margin	(as	%	of	sales)      | 38.3	%        | 39.3	% |         |
| Adj.	SG&A	expenses                     | -456          | -461   |         |
| Adj.	R&D	expenses                      | -72           | -74    |         |
| Adj.	indirect	costs                    | -528          | -535   | -1.4	%  |
| Adj.	indirect	costs	(as	%	of	sales)    | 29.5	%        | 31.9	% |         |
| Adjusted	EBITA                         | 187           | 149    | (20.2%) |
| Adjusted	EBITA	margin                  | 10.5%         | 8.9%   |         |
| Adjusted	items                         | -41           | -67    |         |
| EBITA                                  | 146           | 83     | (43.4%) |
| Income	from	operations	(EBIT)          | 115           | 61     | (47.2%) |
| Net	financial	income/expense           | -6            | -30    |         |
| Income	tax	expense                     | -22           | -3     |         |
| Net	income                             | 87            | 28     | (67.9%) |
| Free	cash	flow                         | -189          | 51     |         |
| Basic	EPS	(€)                          | 0.69          | 0.20   |         |
| Employees	(FTE)                        | 36,884        | 34,408 |         |

### **First quarter**

Nominal sales decreased by 6.1% to EUR 1,678 million, including a positive currency effect of 0.9% and a positive effect of 2.1% from the consolidation of Fluence, Pierlite and Intelligent Lighting Controls. Comparable sales declined by 9.1%, driven by continued weakness in the indoor professional business, the consumer segment and the OEM channel. In China, the market was still impacted by COVID-related disruptions, but the company started to see increased economic activity following the reopening. 

The Adjusted gross margin increased by 100 bps to 39.3%, mainly driven by continued price discipline and effective COGS management. Adjusted indirect costs as a percentage of sales increased by 240 bps to 31.9%, as the reduction of indirect costs was not sufficient to compensate lower sales.

Adjusted EBITA decreased to EUR 149 million. The Adjusted EBITA margin decreased by 160 bps to 8.9%, mainly due to under-absorption of fixed costs and an adverse currency effect from the weakening of emerging market currencies, the strengthening of the US Dollar, and a one-off impact from the implementation of a new hedging policy.

Restructuring costs were EUR 47 million and were mainly related to Conventional Products. These restructuring costs were in line with the strategy to adjust Conventional Products' footprint to declining sales. Acquisitionrelated charges were EUR 3 million and incidental items were EUR 16 million, mainly related to additions to environmental provisions.

Net income decreased to EUR 28 million, mainly due to lower income from operations and higher financial expenses, partly offset by lower income tax expense due to lower taxable income and a release of tax liabilities. 

The higher financial expenses were mainly related to a non-cash fair value adjustment of the Virtual Power Purchase Agreements due to lower energy prices, and higher interest costs.

The number of employees (FTE) decreased from 36,884 at the end of Q1 22 to 34,408 at the end of Q1 23. The year-on-year decrease is mostly related to a reduction of factory personnel due to lower production volumes. In general, the number of FTEs is affected by fluctuations in volume and seasonality.

# Digital Solutions

| in	millions	of	EUR,	unless	otherwise	indicated | First	quarter |      |        |
|------------------------------------------------|---------------|------|--------|
|                                                | 2022          | 2023 | change |
| Comparable	sales	growth                        |               |      | -8.7%  |
| Sales                                          | 981           | 951  | -3.0%  |
| Adjusted	EBITA                                 | 95            | 82   | -13.1% |
| Adjusted	EBITA	margin                          | 9.7%          | 8.7% |        |
| EBITA                                          | 75            | 70   | -6.4%  |
| Income	from	operations	(EBIT)                  | 47            | 50   | 8.0%   |

*Includes Intelligent Lighting Controls since March 1, 2023, Fluence since May 2, 2022, and Pierlite since April 29, 2022.*

### **First quarter**

Nominal sales decreased by 3.0% to EUR 951 million, including a positive currency effect of 1.7% and a positive effect of 4.0% from the consolidation of Fluence, Pierlite and Intelligent Lighting Controls. Comparable sales declined by 8.7% on the back of a high base of comparison (Q1 22: +16.9%), and weaker indoor professional and horticulture sales. The Adjusted EBITA margin declined by 100 bps to 8.7%, as gross margin improvements were more than offset by under-absorption of fixed costs and an adverse currency effect.

# Digital Products

|                                                | First	quarter |       |         |
|------------------------------------------------|---------------|-------|---------|
| in	millions	of	EUR,	unless	otherwise	indicated | 2022          | 2023  | change  |
| Comparable	sales	growth                        |               |       | -10.1	% |
| Sales                                          | 601           | 537   | -10.6	% |
| Adjusted	EBITA                                 | 77            | 44    | -42.1	% |
| Adjusted	EBITA	margin                          | 12.8	%        | 8.3	% |         |
| EBITA                                          | 65            | 39    | -40.2	% |
| Income	from	operations	(EBIT)                  | 63            | 38    | -40.9	% |

### **First quarter**

Nominal sales decreased by 10.6% to EUR 537 million, including a negative currency effect of 0.4%. Comparable sales declined by 10.1%, due to continued weakness in the consumer connected and OEM businesses, which was partly compensated by higher sales of LED lamps and luminaires. The Adjusted EBITA margin declined by 450 bps to 8.3%, mainly reflecting under-absorption of fixed costs due to lower sales volumes, partly offset by a positive impact from price and sales mix.

# Conventional Products

| in	millions	of	EUR,	unless	otherwise	indicated | First	quarter |        |          |
|------------------------------------------------|---------------|--------|----------|
|                                                | 2022          | 2023   | change   |
| Comparable	sales	growth                        |               |        | -8.5	%   |
| Sales                                          | 201           | 186    | -7.6	%   |
| Adjusted	EBITA                                 | 32            | 42     | 30.1	%   |
| Adjusted	EBITA	margin                          | 16.0	%        | 22.5	% |          |
| EBITA                                          | 23            | -5     | -121.8	% |
| Income	from	operations	(EBIT)                  | 23            | -5     | -121.8	% |

### **First quarter**

Nominal sales decreased by 7.6% to EUR 186 million, including a positive currency effect of 0.9%. Comparable sales declined by 8.5%, as lower volumes were partially compensated by price increases. The Adjusted EBITA margin increased by 650 bps to 22.5%, mainly reflecting strong price discipline and a benefit from one offs. EBITA included EUR 47 million of adjusted items, mainly related to restructuring charges and additions to environmental provisions.

# Other

### **First quarter**

'Other' represents amounts not allocated to operating segments and includes costs related both to central R&D activities to drive innovation, and to Group enabling functions. Adjusted EBITA was EUR -19 million (Q1 22: EUR -17 million) and EBITA was EUR -22 million (Q1 22: EUR -18 million). Restructuring costs increased to EUR 3 million (Q1 22: EUR 1 million) and incidental items were a net benefit of EUR 1 million.

### **Update US legal case**

In reference to the legal case disclosed in its Q3 2022 press release, Signify received a decision from the trial judge on April 26th, reducing the jury's award from USD 100 million to approximately USD 46 million and Signify's allocated share to approximately USD 42 million. Both the legal provision and the insurance cover asset have been updated in the balance sheet of the company as per 31 March 2023 without any net P&L impact. 

Signify has a comprehensive global liability insurance and has confirmation that the case is fully covered without reservation of rights, including interest and other costs. Signify will continue to exercise all its rights to appeal this verdict.

# Sales by market

|                                        |       | First	quarter |        |        |
|----------------------------------------|-------|---------------|--------|--------|
| in	millions	of	EUR,	except	percentages | 2022  | 2023          | Change | CSG    |
| Europe                                 | 557   | 524           | -5.9%  | -6.2%  |
| Americas                               | 703   | 653           | -7.1%  | -10.9% |
| Rest	of	the	world                      | 394   | 369           | -6.2%  | -6.8%  |
| Global	businesses                      | 135   | 132           | -1.8%  | -16.4% |
| Total                                  | 1,788 | 1,678         | -6.1%  | -9.1%  |

*Americas includes Intelligent Lighting Controls since March 1, 2023. Global businesses include Fluence since May 2, 2022. Rest of the world includes Pierlite since April 29, 2022.* 

### **First quarter**

In the first quarter, most markets saw continued weakness in the consumer segment and softness in the indoor professional segment, in addition to a high base of comparison. In Europe, comparable sales declined by 6.2%, mainly due to Germany, the Benelux and the UK. In the Americas, comparable sales declined by 10.9%, mainly due to the US and Canada. In the Rest of the World, comparable sales declined by 6.8%, as most markets 

declined. China was still impacted by COVID-related disruptions. Global businesses' comparable sales declined by 16.4%, mainly due to Klite.

# Working capital

| in	millions	of	EUR,	unless	otherwise	indicated | Mar	31,	2022 | Dec	31,	2022 | Mar	31,	2023 |
|------------------------------------------------|--------------|--------------|--------------|
| Inventories                                    | 1,535        | 1,361        | 1,337        |
| Trade	and	other	receivables                    | 1,128        | 1,102        | 1,032        |
| Trade	and	other	payables                       | -2,073       | -1,859       | -1,710       |
| Other	working	capital	items                    | -30          | -41          | -42          |
| Working	capital                                | 559          | 564          | 617          |
| As	%	of	LTM*	sales                             | 7.9	%        | 7.5	%        | 8.3	%        |

\* LTM: Last Twelve Months

### **First quarter**

Working capital slightly increased from a recurring seasonal low of EUR 564 million at the end of December 2022 to EUR 617 million at the end of March 2023. The higher working capital is driven by a reduction in payables, only partly offset by lower receivables and lower inventories. As a percentage of last twelve-month sales, working capital increased by 80 bps to 8.3%. Including last twelve-month sales pro forma for Fluence and Pierlite, working capital increased by 90 bps to 8.3%.

Compared with March 2022, working capital increased by EUR 58 million. This increase is mainly related to lower payables and other working capital items, partly offset by lower inventories and receivables. As a percentage of last twelve-month sales, working capital increased by 40 bps to 8.3%. Including last twelve-month sales pro forma for Fluence and Pierlite, working capital also increased by 40 bps.

# Cash flow analysis

|                                                  | First	quarter |      |
|--------------------------------------------------|---------------|------|
| in	millions	of	EUR                               | 2022          | 2023 |
| Income	from	operations	(EBIT)                    | 115           | 61   |
| Depreciation	and	amortization                    | 76            | 71   |
| Additions	to	(releases	of)	provisions            | 19            | 77   |
| Utilizations	of	provisions                       | -43           | -52  |
| Changes	in	working	capital                       | -315          | -53  |
| Net	interest	and	financing	costs	received	(paid) | —             | -4   |
| Income	taxes	paid                                | -24           | -23  |
| Net	capex                                        | -27           | -30  |
| Other                                            | 9             | 4    |
| Free	cash	flow                                   | -189          | 51   |

### **First quarter**

Free cash flow was EUR 51 million, mainly due to a lower cash outflow from working capital, which benefited from improved demand planning reliability and stricter inventory discipline. The increase in additions to provisions was mostly related to restructuring provisions in Conventional Products. Free cash flow included a restructuring payout of EUR 21 million (Q1 22: EUR 14 million).

![](_page_6_Picture_0.jpeg)

# Net debt and total equity

| in	millions	of	EUR        | Mar	31,	2022 | Dec	31,	2022 | Mar	31,	2023 |
|---------------------------|--------------|--------------|--------------|
| Short-term	debt           | 72           | 83           | 83           |
| Long-term	debt            | 1,932        | 1,950        | 1,942        |
| Gross	debt                | 2,004        | 2,033        | 2,025        |
| Cash	and	cash	equivalents | 626          | 677          | 694          |
| Net	debt                  | 1,378        | 1,356        | 1,331        |
| Total	equity              | 2,716        | 3,065        | 3,053        |

### **First quarter**

Compared with the end of December 2022, both the cash and gross debt positions remained relatively stable. The cash position increased by EUR 17 million to EUR 694 million, while gross debt declined by EUR 8 million to EUR 2,025 million. As a result, net debt decreased by EUR 25 million to EUR 1,331 million. Total equity slightly reduced to EUR 3,053 million at the end of March 2023 (Q4 22: EUR 3,065 million), primarily due to currency translation results, partly offset by net income.

Compared with the end of March 2022, the cash position increased by EUR 68 million, while gross debt increased by EUR 21 million. As a result, the net debt decreased by EUR 47 million year on year. At the end of March 2023, the net debt/EBITDA ratio was 1.4x (Q1 22: 1.6x).

![](_page_7_Picture_0.jpeg)

# Other information

Appendix A – Selection of financial statements Appendix B – Reconciliation of non-IFRS financial measures Appendix C – Financial glossary

### **Conference call and audio webcast**

Eric Rondolat (CEO) and Javier van Engelen (CFO) will host a conference call for analysts and institutional investors at 9:00 a.m. CET to discuss the first quarter 2023 results. A live audio webcast of the conference call will be available via the [Investor Relations website](https://www.signify.com/global/our-company/investors).

### **Financial calendar**

| May	16,	2023     | Annual	General	Meeting                    |
|------------------|-------------------------------------------|
| May	18,	2023     | Ex-dividend	date                          |
| May	19,	2023     | Dividend	record	date                      |
| June	5,	2023     | Dividend	payment	date                     |
| July	28,	2023    | Second	quarter	and	half-year	results	2023 |
| October	27,	2023 | Third	quarter	results	2023                |

**For further information, please contact: Signify Investor Relations** Thelke Gerdes Tel: +31 6 1801 7131 E-mail: [thelke.gerdes@signify.com](mailto:thelke.gerdes@signify.com)

**Signify Corporate Communications** Leanne Carmody Tel: +31 6 3928 0201 E-mail: [leanne.carmody@signify.com](mailto:leanne.carmody@signify.com)

Abigail Levene Tel: +31 6 2939 3895 E-mail: [abigail.levene@signify.com](mailto:abigail.levene@signify.com)

### **About Signify**

[Signify](https://www.signify.com/)  (Euronext: LIGHT) is the world leader in lighting for professionals and consumers and lighting for the Internet of Things. Our [Philips](https://www.lighting.philips.com/) products, [Interact](https://www.interact-lighting.com/en) connected lighting systems and data-enabled services, deliver business value and transform life in homes, buildings and public spaces. In 2022, we had sales of EUR 7.5 billion, approximately 35,000 employees and a presence in over 70 countries. We unlock the extraordinary potential of light for brighter lives and a better world. We [achieved](https://www.signify.com/global/our-company/news/press-releases/2020/20200908-signify-achieves-carbon-neutrality-and-sets-course-to-double-its-positive-impact-on-the-environment-and-society) carbon neutrality in our operations in 2020, have [been](https://www.signify.com/global/sustainability) in the [Dow Jones Sustainability World Inde](https://www.spglobal.com/spdji/en/indices/esg/dow-jones-sustainability-world-index/#overview)x since our IPO for six consecutive years and were named [Industry](https://www.signify.com/global/our-company/news/press-releases/2019/20190916-signify-named-industry-leader-in-2019-dow-jones-sustainability-index)  [Leader](https://www.signify.com/global/our-company/news/press-releases/2019/20190916-signify-named-industry-leader-in-2019-dow-jones-sustainability-index) in [2017,](https://www.signify.com/global/our-company/news/press-release-archive/2017/20170907-philips-lighting-named-industry-leader-in-the-2017-dow-jones-sustainability-index) [2018](https://www.signify.com/global/our-company/news/press-releases/2018/20180913-signify-named-industry-leader-2018-dow-jones-sustainability-index) and [2019.](https://www.signify.com/global/our-company/news/press-releases/2019/20190916-signify-named-industry-leader-in-2019-dow-jones-sustainability-index) News from Signify is located at the [Newsroom,](https://www.signify.com/news) [Twitter](https://twitter.com/Signifycompany), [LinkedIn](https://www.linkedin.com/company/signifycompany/mycompany/) and [Instagram.](https://www.instagram.com/signifycompany/) Information for investors can be found on the [Investor Relations](https://www.signify.com/investors) page.

# Important information

### **Forward-Looking Statements and Risks & Uncertainties**

This document and the related oral presentation contain, and responses to questions following the presentation may contain, forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Signify N.V. (the "Company", and together with its subsidiaries, the "Group"), including statements regarding strategy, estimates of sales growth and future operational results.

By their nature, these statements involve risks and uncertainties facing the Company and its Group companies, 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 conflict, the energy crisis in Europe, the impacts of COVID-19, supply chain constraints, 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.

Additional risks currently not known to the Group or that the Group has not considered material as of the date of this document could also prove to be important and may have a material adverse effect on the business, results of operations, financial condition and prospects of the Group or could cause the forward-looking events discussed in this document not to occur. The Group 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 the Group'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, and free cash flow, and other related ratios, which 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 Group's business and operations and, accordingly, they have not been audited nor reviewed. Not all companies calculate non-IFRS financial measures in the same manner or on a consistent basis and these measures and ratios may 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 18 Reconciliation of non-IFRS measures" in the Annual Report 2022.

### **Presentation**

All amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up to totals provided. All reported data are unaudited. Unless otherwise indicated, financial information has been prepared in accordance with the accounting policies as stated in the Annual Report 2022.

### **Market Abuse Regulation**

This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

# Appendix A – Financial statement information

# A. Condensed consolidated statement of income

*In millions of EUR unless otherwise stated*

|                                                                | First	quarter |         |
|----------------------------------------------------------------|---------------|---------|
|                                                                | 2022          | 2023    |
| Sales                                                          | 1,788         | 1,678   |
| Cost	of	sales                                                  | (1,124)       | (1,073) |
| Gross	margin                                                   | 664           | 605     |
| Selling,	general	and	administrative	expenses                   | (477)         | (472)   |
| Research	and	development	expenses                              | (71)          | (76)    |
| Other	business	income                                          | 1             | 6       |
| Other	business	expenses                                        | (1)           | (3)     |
| Income	from	operations                                         | 115           | 61      |
| Financial	income                                               | 10            | 6       |
| Financial	expenses                                             | (15)          | (35)    |
| Results	relating	to	investments	in	associates                  | —             | —       |
| Income	before	taxes                                            | 109           | 31      |
| Income	tax	expense                                             | (22)          | (3)     |
| Net	income                                                     | 87            | 28      |
| Attribution	of	net	income	for	the	period:                      |               |         |
| Net	income	(loss)	attributable	to	shareholders	of	Signify	N.V. | 86            | 25      |
| Net	income	(loss)	attributable	to	non-controlling	interests    | 1             | 3       |

# B. Condensed consolidated statement of comprehensive income

| In	millions	of	EUR |
|--------------------|
|--------------------|

|                                                                  | First	quarter |      |
|------------------------------------------------------------------|---------------|------|
|                                                                  | 2022          | 2023 |
| Net	income	(loss)                                                | 87            | 28   |
| Pensions	and	other	post-employment	plans:                        |               |      |
| Remeasurements                                                   | (6)           | —    |
| Income	tax	effect	on	remeasurements                              | —             | —    |
| Total	of	items	that	will	not	be	reclassified	to	profit	or	loss   | (6)           | —    |
| Currency	translation	differences:                                |               |      |
| Net	current	period	change,	before	tax                            | 71            | (59) |
| Income	tax	effect                                                | —             | —    |
| Net	investment	hedge                                             |               |      |
| Net	current	period	change,	before	tax                            | (3)           | —    |
| Income	tax	effect                                                | —             | —    |
| Cash	flow	hedges:                                                |               |      |
| Net	current	period	change,	before	tax                            | (6)           | 18   |
| Income	tax	effect                                                | 1             | (4)  |
| Total	of	items	that	are	or	may	be	reclassified	to	profit	or	loss | 64            | (46) |
|                                                                  |               |      |
| Other	comprehensive	income	(loss)                                | 59            | (46) |
| Total	comprehensive	income	(loss)                                | 146           | (18) |
|                                                                  |               |      |
| Total	comprehensive	income	(loss)	attributable	to:               |               |      |
| Shareholders	of	Signify	N.V.                                     | 142           | (19) |
| Non-controlling	interests                                        | 3             | 1    |

# C. Condensed consolidated statement of financial position

*In millions of EUR*

|                                                     | December	31,	2022 | March	31,	2023 |
|-----------------------------------------------------|-------------------|----------------|
| Non-current	assets                                  |                   |                |
| Property,	plant	and	equipment                       | 699               | 687            |
| Goodwill                                            | 2,861             | 2,830          |
| Intangible	assets,	other	than	goodwill              | 700               | 677            |
| Investments	in	associates                           | 12                | 12             |
| Financial	assets                                    | 165               | 108            |
| Deferred	tax	assets                                 | 418               | 428            |
| Other	assets                                        | 40                | 34             |
| Total	non-current	assets                            | 4,895             | 4,775          |
|                                                     |                   |                |
| Current	assets                                      |                   |                |
| Inventories                                         | 1,361             | 1,337          |
| Financial	assets                                    | —                 | —              |
| Other	assets                                        | 161               | 168            |
| Derivative	financial	assets                         | 34                | 32             |
| Income	tax	receivable                               | 56                | 44             |
| Trade	and	other	receivables                         | 1,102             | 1,032          |
| Cash	and	cash	equivalents                           | 677               | 694            |
| Assets	classified	as	held	for	sale                  | 1                 | 1              |
| Total	current	assets                                | 3,391             | 3,308          |
| Total	assets                                        | 8,286             | 8,084          |
|                                                     |                   |                |
| Equity                                              |                   |                |
| Shareholders'	equity                                | 2,920             | 2,907          |
| Non-controlling	interests                           | 145               | 146            |
| Total	equity                                        | 3,065             | 3,053          |
| Non-current	liabilities                             |                   |                |
| Debt                                                | 1,950             | 1,942          |
| Post-employment	benefits                            | 327               | 321            |
| Provisions                                          | 283               | 247            |
| Deferred	tax	liabilities                            | 25                | 24             |
| Income	tax	payable                                  | 111               | 92             |
| Other	liabilities                                   | 160               | 171            |
| Total	non-current	liabilities                       | 2,855             | 2,798          |
|                                                     |                   |                |
| Current	liabilities                                 |                   |                |
| Debt,	including	bank	overdrafts                     | 83                | 83             |
| Derivative	financial	liabilities                    | 42                | 38             |
| Income	tax	payable                                  | 21                | 27             |
| Trade	and	other	payables                            | 1,859             | 1,710          |
| Provisions                                          | 168               | 171            |
| Other	liabilities                                   | 194               | 204            |
| Liabilities	from	assets	classified	as	held	for	sale | —                 | —              |
| Total	current	liabilities                           | 2,367             | 2,233          |
| Total	liabilities	and	total	equity                  | 8,286             | 8,084          |

# D. Condensed consolidated statement of cash flows

*In millions of EUR*

|                                                                                      | First	quarter |       |
|--------------------------------------------------------------------------------------|---------------|-------|
|                                                                                      | 2022          | 2023  |
| Cash	flows	from	operating	activities                                                 |               |       |
| Net	income	(loss)                                                                    | 87            | 28    |
| Adjustments	to	reconcile	net	income	(loss)	to	net	cash	provided	by	operating         |               |       |
| activities:                                                                          | 129           | 176   |
| •		Depreciation,	amortization	and	impairment	of	non-financial	assets                 | 76            | 71    |
| •		Impairment	(reversal)	of	goodwill,	other	non-current	financial	assets	and         |               |       |
| investments	in	associates                                                            | —             | —     |
| •		Net	gain	on	sale	of	assets                                                        | —             | (5)   |
| •		Net	interest	expense	on	debt,	borrowings	and	other	liabilities                    | 7             | 10    |
| •		Income	tax	expense                                                                | 22            | 3     |
| •		Additions	to	(releases	of)	provisions                                             | 15            | 72    |
| •		Additions	to	(releases	of)	post-employment	benefits                               | 4             | 5     |
| •		Other	items                                                                       | 5             | 19    |
| Changes	in	working	capital:                                                          | (315)         | (53)  |
| •		Changes	in	trade	and	other	receivables                                            | 65            | 55    |
| •		Changes	in	inventories                                                            | (107)         | 9     |
| •		Changes	in	trade	and	other	payables                                               | (284)         | (136) |
| •		Changes	in	other	current	assets	and	liabilities                                   | 10            | 19    |
| Changes	in	other	non-current	assets	and	liabilities                                  | 4             | 9     |
| Utilizations	of	provisions                                                           | (34)          | (42)  |
| Utilizations	of	post-employment	benefits                                             | (8)           | (9)   |
| Net	interest	and	financing	costs	received	(paid)                                     | —             | (4)   |
| Income	taxes	paid                                                                    | (24)          | (23)  |
| Net	cash	provided	by	(used	for)	operating	activities                                 | (162)         | 82    |
|                                                                                      |               |       |
| Cash	flows	from	investing	activities                                                 |               |       |
| Net	capital	expenditures:                                                            | (27)          | (30)  |
| •		Additions	of	intangible	assets                                                    | (14)          | (14)  |
| •		Capital	expenditures	on	property,	plant	and	equipment                             | (14)          | (16)  |
| •		Proceeds	from	disposal	of	property,	plant	and	equipment                           | 1             | —     |
| Net	proceeds	from	(cash	used	for)	derivatives	and	other	financial	assets             | 14            | 13    |
| Purchases	of	businesses,	net	of	cash	acquired                                        | —             | (14)  |
| Proceeds	from	sale	of	businesses,	net	of	cash	disposed	of                            | —             | —     |
| Net	cash	provided	by	(used	for)	investing	activities                                 | (12)          | (31)  |
| Cash	flows	from	financing	activities                                                 |               |       |
| Dividend	paid                                                                        | —             | —     |
| Proceeds	from	issuance	of	debt                                                       | 3             | 1     |
| Repayment	of	debt                                                                    | (23)          | (23)  |
| Purchase	of	treasury	shares                                                          | (36)          | —     |
| Net	cash	provided	by	(used	for)	financing	activities                                 | (55)          | (22)  |
| Net	cash	flows                                                                       | (230)         | 29    |
| Effect	of	changes	in	exchange	rates	on	cash	and	cash	equivalents	and	bank	overdrafts | 8             | (12)  |
| Cash	and	cash	equivalents	and	bank	overdrafts	at	the	beginning	of	the	period	1       | 847           | 676   |
| Cash	and	cash	equivalents	and	bank	overdrafts	at	the	end	of	the	period	2             | 625           | 693   |

*1 For Q1 2023 and Q1 2022, included bank overdrafts of EUR 1 million and EUR 4 million, respectively.*

*2 Included bank overdrafts of EUR 1 million and EUR 0 million as at March 31, 2023 and 2022, respectively.*

# Appendix B - Reconciliation of non-IFRS financial measures

### **Sales growth composition per business in %**

|                       | First	quarter        |                  |                                    |                |  |
|-----------------------|----------------------|------------------|------------------------------------|----------------|--|
|                       | Comparable<br>growth | Currency	effects | Consolidation	and<br>other	changes | Nominal	growth |  |
| 2023	vs	2022          |                      |                  |                                    |                |  |
| Digital	Solutions     | (8.7)                | 1.7              | 4.0                                | (3.0)          |  |
| Digital	Products      | (10.1)               | (0.4)            | —                                  | (10.6)         |  |
| Conventional	Products | (8.5)                | 0.9              | —                                  | (7.6)          |  |
| Total                 | (9.1)                | 0.9              | 2.1                                | (6.1)          |  |

### **Sales growth composition per market in %**

|                   | First	quarter        |                  |                                    |                |  |  |
|-------------------|----------------------|------------------|------------------------------------|----------------|--|--|
|                   | Comparable<br>growth | Currency	effects | Consolidation	and<br>other	changes | Nominal	growth |  |  |
| 2023	vs	2022      |                      |                  |                                    |                |  |  |
| Europe            | (6.2)                | 0.1              | 0.2                                | (5.9)          |  |  |
| Americas          | (10.9)               | 3.6              | 0.2                                | (7.1)          |  |  |
| Rest	of	the	world | (6.8)                | (3.6)            | 4.2                                | (6.2)          |  |  |
| Global	businesses | (16.4)               | 1.6              | 13.0                               | (1.8)          |  |  |
| Total             | (9.1)                | 0.9              | 2.1                                | (6.1)          |  |  |

### **Adjusted EBITA to Income from operations (or EBIT) in millions of EUR**

|                                  |         | Digital   | Digital  | Conventional |       |
|----------------------------------|---------|-----------|----------|--------------|-------|
|                                  | Signify | Solutions | Products | Products     | Other |
| First	quarter	2023               |         |           |          |              |       |
| Adjusted	EBITA                   | 149     | 82        | 44       | 42           | (19)  |
| Restructuring                    | (47)    | (6)       | (4)      | (34)         | (3)   |
| Acquisition-related	charges      | (3)     | (3)       | —        | —            | —     |
| Incidental	items                 | (16)    | (3)       | (1)      | (12)         | 1     |
| EBITA                            | 83      | 70        | 39       | (5)          | (22)  |
| Amortization1                    | (22)    | (20)      | (1)      | —            | —     |
| Income	from	operations	(or	EBIT) | 61      | 50        | 38       | (5)          | (22)  |
|                                  |         |           |          |              |       |
| First	quarter	2022               |         |           |          |              |       |
| Adjusted	EBITA                   | 187     | 95        | 77       | 32           | (17)  |
| Restructuring                    | (4)     | (1)       | —        | (2)          | (1)   |
| Acquisition-related	charges      | (7)     | (7)       | —        | —            | —     |
| Incidental	items                 | (29)    | (11)      | (11)     | (7)          | —     |
| EBITA                            | 146     | 75        | 65       | 23           | (18)  |
| Amortization1                    | (31)    | (29)      | (2)      | —            | —     |
| Income	from	operations	(or	EBIT) | 115     | 47        | 63       | 23           | (18)  |

*1 Amortization and impairments of acquisition related intangible assets and goodwill.* 

### **First quarter 2023 Income from operations to Adjusted EBITA in millions of EUR**

|                                              |          |               | Acquisition |                      |          |
|----------------------------------------------|----------|---------------|-------------|----------------------|----------|
|                                              |          |               | related     | Incidental<br>items1 |          |
| First	quarter	2023                           | Reported | Restructuring | charges     |                      | Adjusted |
| Sales                                        | 1,678    | —             | —           | —                    | 1,678    |
| Cost	of	sales                                | (1,073)  | 37            | 1           | 16                   | (1,019)  |
| Gross	margin                                 | 605      | 37            | 1           | 16                   | 659      |
|                                              |          |               |             |                      |          |
| Selling,	general	and	administrative	expenses | (472)    | 9             | 3           | (1)                  | (461)    |
| Research	and	development	expenses            | (76)     | 2             | —           | —                    | (74)     |
| Indirect	costs                               | (548)    | 11            | 3           | (1)                  | (535)    |
| Impairment	of	goodwill                       | —        | —             | —           | —                    | —        |
| Other	business	income                        | 6        | —             | (1)         |                      | 5        |
| Other	business	expenses                      | (3)      | —             | —           | —                    | (2)      |
| Income	from	operations                       | 61       | 47            | 3           | 16                   | 127      |
| Amortization                                 | (22)     | —             | —           | —                    | (22)     |
| Income	from	operations	excluding             |          |               |             |                      |          |
| amortization	(EBITA)                         | 83       | 47            | 3           | 16                   | 149      |
| First	quarter	2022                           |          |               |             |                      |          |
| Sales                                        | 1,788    | —             | —           | —                    | 1,788    |
| Cost	of	sales                                | (1,124)  | 2             | 3           | 15                   | (1,104)  |
| Gross	margin                                 | 664      | 2             | 3           | 15                   | 684      |
| Selling,	general	and	administrative	expenses | (477)    | 2             | 5           | 14                   | (456)    |
| Research	and	development	expenses            | (71)     | —             | —           | —                    | (72)     |
| Indirect	costs                               | (548)    | 2             | 5           | 14                   | (528)    |
| Impairment	of	goodwill                       | —        | —             | —           | —                    | —        |
| Other	business	income                        | 1        | —             | —           | —                    | 1        |
| Other	business	expenses                      | (1)      | —             | —           | —                    | (1)      |
| Income	from	operations                       | 115      | 4             | 7           | 29                   | 156      |
| Amortization                                 | (31)     | —             | —           | —                    | (31)     |
| Income	from	operations	excluding             |          |               |             |                      |          |
| amortization	(EBITA)                         | 146      | 4             | 7           | 29                   | 187      |

*1 Incidental items are non-recurring by nature and relate to impairment and other non-cash charges related to operations in Russia and Ukraine, separation, transformation, environmental provision for inactive sites and discounting effect of long-term provisions.*

# Appendix C – Financial glossary

### **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, acquisitionrelated charges, and other incidental charges.

### **Adjusted EBITA margin**

Adjusted EBITA divided by sales to third parties (excluding intersegment).

### **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 R&D expenses**

Research and development expenses, excluding restructuring costs, acquisition-related charges, and other incidental items attributable to research and development expenses.

### **Adjusted 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.

### **Brighter lives revenues**

Percentage of total revenues coming from all products, systems and services contributing to Food availability, Safety & security, or Health & well-being.

### **Changes in scope**

Consolidation effects related to acquisitions.

### **Circular revenues**

Percentage of total revenues coming from products, systems and services designed for a circular economy, categorized as serviceable luminaires (incl. 3D-printing), circular components, intelligent systems, or circular services. 

### **Comparable sales growth (CSG)**

The period-on-period growth in sales excluding the effects of currency movements and changes in consolidation and other changes.

### **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 deconsolidation) on the Group's figures is included (or excluded) in the calculation of the comparable sales growth 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.

### **Employees**

Employees of Signify at the end of the period, expressed on a full-time equivalent (FTE) basis.

### **Free cash flow**

Net cash provided by operating activities minus net capital expenditures. Free cash flow includes interest paid and income taxes paid.

### **Gross margin**

Sales minus cost of sales.

### **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 may extend over several quarters within the same financial year.

### **Indirect costs**

The sum of selling, general and administrative expenses and R&D expenses.

### **Net capital expenditures**

Additions of intangible assets, capital expenditures on property, plant and equipment and proceeds from disposal of property, plant and equipment.

### **Net debt**

Short-term debt, long-term debt minus cash and cash equivalents.

![](_page_17_Picture_0.jpeg)

### **Net leverage ratio**

The ratio of consolidated reported net debt to consolidated reported EBITDA for the purpose of calculating the financial covenant.

### **R&D expenses**

Research and development expenses.

### **Restructuring costs**

The estimated costs of initiated reorganizations which have been approved by the company, and 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.

### **SG&A expenses**

Selling, general and administrative expenses.

### **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).