Annual Report 2023

Signify Annual Report 2023

Our purpose
is to unlock
the extraordinary
potential of lightfor 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 collectto devices, places and people - redefining what light can doand 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 throughthe Signify Foundation – our purpose is to unlock the extraordinary
potential of light for brighter lives and a better world.

Our values
Our values provide our people with a common understanding ofwhat 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 doin the precious values of sport such as teamwork, loyalty, solidarity andmany 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 thecommunities and the youth we are working with. The installation ofproper lighting at the grassroots centers not only enhances safety andextends playing hours but also inspires young talent.”
Abhijit Bhattacharya, Brahmaputra Volleyball League“Thanks to the efficient LED installation, energy consumption forlighting 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

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Signify Annual Report 2023

Table of contents
We are Signify
1

Performance highlights

2

CEO message

5
7

3

Creating sustainable long-term value

10
26

4

Brighter Lives, Better World

5

Corporate performance

53

6

Three-year overview

60

Governance
7

Board of Management

62

8Supervisory Board

63

9Supervisory Board report65

10

Remuneration report74

11

Corporate governance95

12Investor relations

102

13

Risk factors and risk management

105

14

Statement of the Board of Management

114

Corporate statements

European single electronic reporting format (ESEF) and PDF version
This copy of the Annual Report is the PDF/printed version of the Annual Report 2023 of
Signify N.V. This version has been prepared for ease of use, and does not contain ESEF
information as specified in the Regulatory Technical Standards on ESEF (DelegatedRegulation (EU) 2019/815). The official ESEF reporting package is available on our
website at https://www.signify.com/static/2023/signify-annual-report-2023.zip.

15

Consolidated financial statements

117

16

Signify N.V. financial statements

161

17

CSRD disclosures

169
182

18

Combined independent auditor’s report

19

Reconciliation of non-IFRS financial measures

197

20

Definitions and abbreviations

202

21

Forward-looking statements and other information

206

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.

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We are Signify

Consolidated financial statements

Signify Annual Report 2023

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Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

1

Performance highlights

1.1

Financial performance•

Consolidated financial statements

LED-based sales

100

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

2021

2022 2023

25

Sales by geography

8%
30%

23%

•

83%

50

In EUR million

Divisions

85%

83%

75

2022

DigitalSolutions

Signify Annual Report 2023

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%

AmericasRest of the world

Digital Conventional
Products
Products

Sales *

EuropeGlobal businesses
39%

Sales by Division

9%

In EUR million

Digital Solutions
Digital ProductsThis 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.

32%
59%

Conventional Products

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We are Signify

1.2

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Sustainability 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

Employees (full-time equivalent)

36,8242021

Better World highlights

2022

2023

177

334

Circular revenues

29%

33%

Carbon neutral operations

100%

100%

Total waste to landfill

<1%

<1%

Cumulative carbon reduction overvalue chain, in million tonnes CO2e1

Signify Annual Report 2023

1

34,6192022

31,9202023

Employee Net Promotional Score

36
30
26

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

2021

2022

2023

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2 CEO message
2023 – Delivering our strategy in achallenging 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 andownership.” – Eric Rondolat, Signify CEO

As global conditions remained volatile andunpredictable throughout 2023, Signify's
financial profile was significantly
strengthened. We have successfully
expanded our gross margin by 180 bps to38.2% and delivered a healthy free cash flowof EUR 586 million, representing 8.7% ofsales. Despite adverse market conditions, ourteams have worked particularly hard toachieve 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 themstay in step with emissions reduction targets.
As a result, we are gaining ground inconnected professional systems andservices, 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 Decemberthat 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 verticallyintegrated businesses. Three of these will
focus on customers: Professional, OEM, andConsumer. The fourth will be dedicated toconventional lighting technologies. Aligned tothis new verticalized, customer-centric
structure, we will adjust the size of ourcentral organization and further reduce ourstructural costs. Already started in Q4 2023,
these changes will be implemented through2024, with the majority achieved in Q2, andare expected to generate annualized savingsin excess of EUR 200 million.

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Signify Annual Report 2023

"It is our ambition to build an inclusive culture andwork environment where people can express theirtalents and grow personally and professionally in anenvironment 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 tobuild on the strong foundation of our Brighter
Lives, Better World sustainability programthat addresses climate action, circularity, andour 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 acumulative 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 thisachievement which is an unprecedented
milestone for a multinational manufacturing
company like Signify with tens of thousands ofproducts in our portfolio. With accurate
emissions data at the product level, we are
driving transparency of the environmental
impact of our products, and enabling ourcustomers to make informed decisions onsustainable products.

Signify has powered its operations with 100%
renewable electricity since 2020. This year,
we secured our access to renewableelectricity in Europe for the next ten years
through a Virtual Power Purchase Agreementin partnership with Philips, HEINEKEN, andNobian. 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 inthis report.
The strength of our commitment tosustainability 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, andinclusion in the Dow Jones Sustainability
World Index for a seventh consecutive year.
Innovation beyond illumination
Innovation is in our DNA and is essential tokeep pace with the demands of this rapidlychanging 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 ofpatents.
In 2023, we invested 4.2% of our sales in
research and development, successfullytargeting key strategic technologies. We
further expanded our Ultra Efficient portfolio
which is 50-60% more energy efficient thanfirst-generation LED light sources. We
continued to develop our 3D printing businessunder the Philips MyCreation brand, opening a
fifth facility in Australia and delivering the firstbio-circular based 3D-printed housings. For
consumers, we extended our homeconnected 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 Phaseof the US Department of Energy's prestigious
L-Prize competition. This accolade joins eightRed Dot Design Awards and eight iF Awards in2023 for excellence in design.

Prioritizing customer satisfaction
The past three years have been marked bysupply chain disruptions that impacted ourdeliveries and our customers. Managing thisissue has been a top priority across ourbusiness, to the extent that in 2023, we madeorder and delivery customer satisfaction
scores part of annual incentive KPIs foreveryone in our organization. We
implemented a centrally driven program
including systemic running LEAN
improvements and Kaizens in cross-functional
teams, steadily improving our order anddelivery customer satisfaction over eight
consecutive quarters. In 2023, oursatisfaction score doubled versus 2022.
While there is more work to be done, I am
confident that we will maintain a fast rate ofprogress and bring customers' order anddelivery satisfaction fully in line with theexcellence we strive to achieve in every
aspect of the customer experience.
A digital future
Our digitalization roadmap charts ourprogress in creating future-ready processes,
customer interfaces, and products. Investingin core data science competencies has

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We are Signify

Creating value

Brighter Lives, Better Worldhelped us drive our Artificial Intelligence (AI)capabilities at scale. AI is now being deployed
to enhance our customer experience andoptimize our operations. All global customer
care centers are now powered by generativeAI, which has significantly improved customer
experience. AI has also been deployed in thedesign of our 3D-printed luminaires, where an
end-to-end fine-tuned text to image model
generates texture images.
On customer interfaces, we launched anenhanced digital platform for our professionalcustomers 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.

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Building an inclusive performance culture
It is our ambition to build an inclusive culture

As we move to a new operating model thatwill unleash talent across the company,

Toward a brighter future
Everything we achieved in 2023 was madeand work environment where people can
express their talents and grow personally andprofessionally in an environment that is
guided by our values. In 2023, our focus has
been on building a performance culture,strengthening our Diversity, Equity, andInclusion, and developing internal talent. Our
initiatives included enhanced leadershipprograms to benefit new and existing leaders,
now including focused training on inclusivity.
This focus on learning extends throughout
the organization, filling our internal talentpipeline and creating a workplace where
people can thrive and develop. Our Inclusivity
Index, measured as part of the team survey, isbringing us closer to our customers anddriving faster decision-making with greater
autonomy and ownership, we must also
undertake significant change. I would like totake this opportunity to thank all our
employees who have contributed to makeSignify what it is today. I am grateful for theirunwavering professionalism and commitment
to take us through this new phase of ourdevelopment.

possible by the talent, foresight, anddiligence of our Signify teams around theworld. For this, they have my sincere
admiration and gratitude. I would also like tothank our customers and shareholders,
whose trust in our company and brands
makes progress possible. Although we willundoubtedly 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 theorganization we are building is ready with thesmart lighting solutions the world needs for abrighter future.

84%, which is higher than the industry
benchmark.

company in the first half of 2024. As membersof our Board of Management, their guiding
influence has played an important role inensuring our strong operational position
today. I wish them every success for the
future.

I would like to extend my appreciation andgratitude to Maria Letizia Mariani, CCO andDivision Leader for Conventional Lighting, andto Javier van Engelen, CFO, who will leave theIn the coming months, the Supervisory Board
will be evaluating candidates for the role ofChief Financial Officer. As Signify moves tothe new operating model announced in
December, it has been agreed not to renew
the role of Chief Commercial Officer.

Eric Rondolat
CEO Signify

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Corporate performance

3 Creating
sustainable longterm value

Governance

3.1

Corporate statements

Consolidated financial statements

Our strategy

Signify Annual Report 2023

Strategic context

Signify, headquartered in Eindhoven, theNetherlands, is the world market leader withrecognized expertise in the development,
manufacture and sale of innovative, energyefficient lighting products, systems andservices. With more than 31,900 employees, apresence in 74 countries and sales covering a
global market, our purpose is to unlock theextraordinary potential of light for brighter
lives and a better world.

The global landscape continued to evolve thisyear, marked by ongoing political andeconomic shifts. Building on the previous
year’s challenges, despite an easing ofresource scarcity and supply chain
normalization, higher interest rates, weakereconomic outlooks and increased geopoliticaluncertainties had a marked impact. These
factors influenced both consumer andbusiness spending. The trend towards
energy-efficient solutions continues to be ofimportance, fueled by the desire to mitigate
rising costs and adopt sustainable practices.

We have pioneered many key breakthroughsin lighting over the past 130 years and havebeen a driving force behind several leading
technological innovations. Signify continues
to innovate in LED lighting and is leading theindustry’s expansion to lighting systems inboth the professional and consumer markets.

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 abroad spectrum of internal and external
stakeholders, are instrumental in forecasting

Our position as industry leader in connected
lighting, makes Signify the lighting company
for the Internet of Things (IoT).

future trends and assimilating global and local
stakeholder insights. This strategic approachis crucial in navigating the risks andopportunities that affect our sustainablelong-term value creation potential.

Who we are

Following our 2023 review, despite ademanding environment that necessitated
expedited actions in certain domains, ourcommitment to the 5 Frontiers strategy andthe advancement of our Brighter Lives,
Better World 2025 goals remains as pertinent
as ever.

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Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Sustainability focus and UN SDGs

Consolidated financial statements

Doubling objectives

Climate action

Double the pace we achieve
the 1.5°C scenario of the Paris
Agreement

Circular economy

Double our Circular revenues
to 32%

Better WorldWe are Signify-----------------------------------------------------------Food availability
Safety & security
Health & well-being

Double our Brighter Livesrevenues to 32%

Great place to work

Double our percentage ofwomen in leadership to 34%

Brighter Lives

11

Signify Annual Report 2023

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A colorful commute through the world’s
longest purpose-built pedestrian andcycle tunnel
Unique lighting design creates a vibrant - and safe- route through the depths of Løvstakken
mountain.
The newly opened Fyllingsdalen tunnel, apart of the Bybanen tramline in Bergen,
Norway, is 3 km long and carves throughLøvstakken mountain, connecting theresidential areas of Fyllingsdalen with
Mindemyren and Bergen city center.
The municipality saw an opportunity totransform this space into a fast, efficient,and safe route for pedestrians andcyclists, 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 inits 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 thecolors 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 theunderground location. Since the grandopening in April 2023, over 200,000
cyclists and pedestrians have used thetunnel. The unique light also enhances theblue 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 andbicycle tunnel were the main focus of the
project. The lighting system helps tosubstantiate that the tunnel is perceived
as safe, clear, welcoming, andcomfortable. A good collaboration
between lighting designer, installation
contractor, lighting supplier and client has
provided good solutions, which has led tothe project also receiving considerable
international attention. The tunnel iswidely used, both for commuting to andfrom work, and for fitness training for
sports teams and individuals.”
Svein Arvid Oppedal, Construction
manager, Bybanen Utbygging

Color Kinetics - Fyllingsdalen tunnel, Bybanen Bergen, Norway

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An elevated guest experienceat 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 featureof the Singapore skyline. Guests at thisultra-luxury hotel come here to enjoy
exceptional comfort, stylish facilities, andworld-class hospitality.
The hotel’s staff works tirelessly tomaintain a seamless luxury experience, fromthe harmonious décor to highly
personalized services that create amemorable visit for each guest.

In this atmosphere, access to businessintelligence and data to work smarter isvital. 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 toequip hotel staff with unparalleled insights
into room conditions, system health, andhistorical 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, anddrapery 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%.

Interact - Marina Bay Sands hotel, Singapore

Signify Annual Report 2023

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Smart lighting and home monitoring at
your fingertips
Philips Hue and Wiz offer a complete connected lighting and monitoring system for thehome.
Light and security go hand in hand. Now,
Philips Hue and WiZ customers can maketheir connected lighting system worksmarter with home monitoring products
and features, accessed directly from theirsmartphone.
Beyond smart lighting with Philips Hue
SecurePhilips Hue Secure cameras feature aclear 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 Huelights and sound alarms, or you canactivate 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 torecognize whether a notification istriggered by a person, a pet or a package
runs on the camera itself instead of thecloud, which means end-to-end
encryption is always enabled.

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

Contact sensors trigger an alert when awindow, door, cabinet, or safe opens, andcan even activate lights.

The Security Center in the Philips Hue app
gives access to light alarms, camera
controls, presence mimicking, real-timealerts, 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 mimicpresence or trigger light alarms, andcameras with night vision and motion
detection, WiZ keeps an eye on yourentire 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 camerafeatures to detect unexpected activity,
deter intruders, and keep up to date withreal-time alerts. With end-to-end
encryption by default, customers can be
confident that content from the camera
remains private.

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Premium partnership for Signify andWerder Bremen
Lighting solutions extend from the stadium to the homes of fans.
Fans of German Bundesliga football club
Werder Bremen can show their support intheir very own homes with a customized,
3D-printed pendant lamp from Philips
MyCreation. The eye-catching luminairefeatures a transparent sleeve in the club’s
distinct green color, embossed with theWerder diamond. Most of the materials
used in the luminaire are from biocircularmaterials 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 canbe recycled at the end of their useful life.

"In a soccer stadium, many different
requirements for modern lighting cometogether. We are very happy to have founda partner in Signify who was able torespond to our individual wishes and evenmake the hearts of our fans beat fasterwith a branded Werder luminaire from the
3D printer.”
Klaus Filbry, CEO SV Werder Bremen GmbH& Co KG aA

This unique item is an extension of apremium partnership between Signify andWerder Bremen dating back to 2022. In thefirst phase of its partnership with Signify,
the club installed UV-C air disinfection
lighting in team areas, meeting rooms, andoffices to permanently neutralize viruses
and pathogens using ultraviolet light,
improving health and well-being at the club.
This was followed by VIP area lighting, LEDaisle lighting, and e-sports room lighting.
3D-printed pendant and table lamps extend
the green and white theme through the VIP
areas.

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

Signify Annual Report 2023

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Signify Annual Report 2023

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 abetter 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 throughmultiple distinctive brands.

• Grow tiered offering sales including Bbrands, 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 byfocusing on growth areas for sustainability:
Climate action, Circular economy, Foodavailability, Safety & security, Health & wellbeing.

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 goalof 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 backends 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 adiverse 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 excellencecapabilities.

• 29% women in leadership positions.
• Employee NPS: 26.
• 63% active learners in digital andcommercial teams.

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Bright spaces to learn and grow
The Signify Foundation has partnered with NPH to provide energy-efficient LED lights inresidential homes.
NPH (Nuestros Pequeños Hermanos) is acharitable organization that creates life–changing opportunities for disadvantaged
and vulnerable children and youth living in
extreme conditions. Through acomprehensive approach that embraces
the whole child, NPH supports children to
become independent, caring adults whogive back to their communities, shaping
better futures for themselves, theirfamilies, 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, theFoundation 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.

LED conversion - Central America

Highly suitable for retrofit projects, Philips
TrueForce Core LED lights create awelcoming 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 forthose in need. Signify’s unwavering
support and dedication to both the wellbeing of the children and the sustainabilityof Nuestros Pequeños Hermanos makes alasting difference.”
Marlon Velásquez, National Director, NPH
Honduras<≡>

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Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023<≡>

Philips RGB flood lights and direct view nodes Bandra-Worli Sea Link bridge, Mumbai, India

Illuminating a Mumbai icon
Bandra-Worli Sea Link comes alive with colorful dynamic lighting, specially designed for harshenvironments.
"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 cityof 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 withWorli in South Mumbai and is considered amodern day architectural and engineering
marvel.

Signify brought the bridge to life at nightwith 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 lightshows for special occasions, while the useof 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 andaccessories were specifically designed andmanufactured for this project. A customdesigned track accommodates the nodes
and the cables, which fits perfectly on the
diameter of the cable stay to preserve thebridge’s aesthetics.

19

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

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 thestate of Arizona. The city set out toupgrade its street lighting to LED to takeadvantage of the substantial cost-saving
benefits, but quickly identified an
opportunity to advance its smart city planand unlock greater value for its citizens.
This effort aimed to deliver free Wi-Fi
connectivity to citizens, enabling digital
equity, supporting community safety, andcomplementing Dark Sky efforts.
30,000 street lights were upgraded withconnectivity, 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 upwardreflection, helping to preserve the area’s
famous clear desert skies. Signify’s Interact
control system allowed the city to haveaccess to diagnostic and energy data. With
Interact, city managers know instantly
when a light goes out, so they canefficiently deploy a maintenance team to fix
it. By extending its street lighting
infrastructure with connected technology,
Mesa laid the foundation to unlock evenmore value for its city and citizens.

Mesa also saw an opportunity to advancedigital 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 evolveits street lighting plans to meet thechanging demands of a growing smart city,
including sensors to monitor traffic, air
quality, and noise, and further drive qualityof life improvements for its people.
"With Signify’s technology, our street
lighting network has evolved into a multipurpose smart city platform. It supports
our sustainability efforts, has allowed us toexpand broadband access into key
neighborhoods, and gives us parking
analytics and so much more.”
Harry Meier, Deputy CIO for Innovation, Cityof Mesa

BrightSites - City of Mesa, Arizona, USA

Signify Annual Report 2023

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20

We are Signify

3.3

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023<≡>

Our sustainable value createdThrough 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 andsociety 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
Climate change

The SDGs

Stakeholders

Resource scarcity
Demographic change
Urbanization

Financial

Input

Output• 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.

Environmental • 3,237 terajoules energy and100% renewable electricity;• EUR 2,816 million materials;• 1,057 thousands of m3 water.

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.

• 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 freeconsumer packaging.

• 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.

ImpactBrighter Lives
We created EUR 355 million
in value for society
through total shareholder
returns, income taxes, andinterest payments.
We created EUR 1,216
million in value for society
through employees’salaries & wages andlearning & development
combined with the costs tosociety of injuries &
illnesses at work.

Better World
Our environmental
footprint caused EUR 22.9
billion in costs to society.
At the same time, wecreated EUR 28.7 billion
through CO2-equivalent(CO2e) avoided by shifting
to LED and conserving
biodiversity through ouroffsetting projects.

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Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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 atits 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 ofreliable, 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.

Philips GreenPower - Baiyi Yinong International Flower Port, China

Year-round production comes with asupply of steady, local jobs for the region.
And the success of Baiyi Yinong
International Flower Port is not just goodnews for China’s rural economy, but also
for the country’s dual carbon goals. This
full LED solution uses at least 50% lessenergy than conventional HPS lighting,enhancing the sustainable development ofagriculture 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 canclearly see the important role oftechnology in sustainable development
and rural revitalization. We look forward tofurther cooperating with Signify to drive
regional economic development andsupport China in its rural revitalization andindustrial development at the local level."
Zetian Li, Deputy General Manager, Baiyi
Yinong International Flower Port

<≡>

22

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Next-level environmental monitoringand space management
Advanced sensing and analysis capabilities offer building managers a competitive edge.
Working in combination with two new stateof 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, easyto-access data, building owners cananalyze their space, environmental
conditions, and occupancy more effectively
to create attractive buildings for potential
tenants.

With this intelligence on board, property
managers can create human centric
workplaces and healthier building
environments, plus advance goals toachieve healthy building standard
certification such as the WELL BuildingStandard, which links design, policies, andbuilt environment strategies to health andwell-being outcomes. This standard, in turn,can attract high-quality tenants and secure
longer, more valuable lease contracts.

Environmental sensors distributed aroundthe office space monitor temperature,humidity, carbon dioxide levels, levels ofvolatile organic compounds, andatmospheric 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 efficientmeasures for reduced energy costs and alower carbon footprint.

Interact Space Analysis, Global

Signify Annual Report 2023

<≡>

23

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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 withthe limitations of this system. Metal halidebulbs 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 inparts of the center, maintenance hours
and costs quickly stacked up. And evenwhen the system was in good repair, thelighting required a 15-minute warm-up
period to get up and running andproduced an audible humming sound.
The building’s management knew thatsomething had to change, but they were
not yet ready to replace the center’s
existing lighting controls. Working withpartner Reflex Lighting, BCEC selected aretrofit solution featuring Metalux
Benchmark LED High Bay fixtures fromCooper Lighting Solutions. 378 fixtures
were installed in three phases so thatexhibition halls could remain open while
the work was underway.

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

Results were visible from the outset.
Warm-up time and color inconsistency area 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 halidebulbs 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 towork 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. Manyof 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 tomention the 56% energy savings. We
couldn’t be happier.”
Tom Finn, Electrical Foreman, BCEC

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24

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

A bright passage through the hills ofNorth 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 routefor the region’s villages, connecting ruralcommunities and inland tourism sites withthe breathtaking shores of Lake Toba.
Recognizing the Toba region as animportant strategic area for tourism
development, the Ministry of Public Worksand Public Housing wanted to ensure that
the Aek Natulo road would be safe andwelcoming for people and motorists by day
and night. They wanted a solution thatwould provide high-quality lighting in areasthat are difficult to reach through theelectrical grid, with minimal impact on thearea’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 installedeasily 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 witha greater sense of security, which in turnopens 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 thegovernment'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 thegovernment's program to support Toba
Regency as a national tourism strategic
area. One of the challenges of building thisroad is the complex electrical installationthat 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 canincrease safety for motorists to passthrough the route without worry."
Ellys Denny Loan Aruan, Field Supervisor of
PPK 2.6 North Sumatra Province, Ministry of
Public Works and Public Housing

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

We are Signify

3.4

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Our contribution

Better World

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.

SDG 7: Affordable and clean
energySDG 12: Responsible
production and consumption

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.

We aim to preserve value and minimize waste bydeveloping Circular lighting, sustainable packaging,and good waste management practices. We areplastic-free in our consumer packaging in most of ourmarkets.

2023 contribution:• 100% renewable electricity in our operations;• Power Purchase Agreements (PPAs) enabled
generation of 139,443 MWh renewable electricity.

2023 contribution:• 33% Circular revenues;• Sending zero waste to landfill, and 88% recyclingrate;• Fossil-fuel based plastic free consumer packaging

SDG3: Health and well-being

Brighter Lives25

SDG 8: Decent work andeconomic growth

SDG 13: Climate action
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 of2025.
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 throughCO2 avoided by shifting to LED, our carbon credit
projects and the conservation of biodiversity.*

SDG 11: Sustainable cities andcommunities

We contribute to improving health and well-being by
creating light that increases food availability andenables people to see, feel and perform well.

We foster decent work and economic growth bycreating a fair and inclusive workplace anddevelopment opportunities for our employees andsuppliers. We provide training and access to finance tolighting entrepreneurs in developing countries.

We enable smart and secure roads and urban areas
and enable safe and sustainable workplaces, while
accelerating the renovation rate of buildings. Throughthe Signify Foundation, we provide access to light tooff-grid communities.

2023 contribution:• 31% Brighter Lives revenues;• Employee NPS of 26;• More than 45,000 Solar & LED lamps donated.

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, andEUR 1,216 million through employees' salaries &wages and learning & development.*

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/annualreport.

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26

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

4 Brighter Lives,
Better World

GovernanceCorporate statements

4.1

Consolidated financial statements

Approach tosustainability
reportingSignify’s sustainability program Brighter Lives,
Better World 2025 is embedded in our
purpose and integral to our strategy and theway 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 andcommitments. We report our contribution to
six SDGs where we believe we can make thegreatest 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 wehave made our approach towards long-termvalue creation transparent by preparing thisAnnual 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) anddisclosures can be found in section 17.5 EU
Taxonomy.

Signify Annual Report 2023

Our value creation model, presented inchapter 3, Creating sustainable long-termvalue, shows how our business activities
depend on various financial, environmental,
and social resources that are converted to
outputs. Our activities and their outputs leadto outcomes in terms of the impact made on
our stakeholders and society at large. Since
2017, Signify communicates its impacts inmonetary terms, enabling more effective andefficient decision making and giving a holistic
view on our most prominent risks andopportunities. It also provides furthertransparency to our stakeholders oncompany performance. By publishing theresults of our analysis and being transparent
on the methodology, we strive to contributeto 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 inchapter 3, Creating sustainable long-termvalue, sections 3.2, Our impact and 3.3, Oursustainable value created, section 5.2,
Sustainability performance and chapter 4,
Brighter Lives, Better World. The section
Responsible tax policy as included insubsection 4.3.5, Business ethics, the 2019baseline 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.

<≡>

Creating value

4.1.1

Sustainability
governance

Brighter Lives, Better World

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 andSustainability department, under the
responsibility of Alice Steenland, Chief
Strategy & Sustainability Officer.
Sustainability progress is reviewed on aquarterly basis with the Supervisory Board,
Board of Management and the Leadership
Team. During these meetings, progress on
our strategic programs is reviewed andcorrective 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, andlogistics. Targets on sustainability are set at
corporate, division and market levels.

Corporate performance

Governance

Program targets

4.1.2

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 of2025, with a baseline year from 2019. 2023 is
our third reporting year. For our Brighter
Lives, Better World 2025 doublingcommitments, we used best estimates for2019 as a base.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Changes in targets, policies, definitions, or
scope are specified annually. To ensure our

4.1.3

efforts are in line with the targets of the Paris
Agreement, we have approved ScienceBased Targets for our GHG emissions.

Signify aims to provide stakeholders withcomplete and transparent information on oursustainability programs, our performance andprogress against our goals, and key
challenges we see in this work. We recognize
there is a desire for standardization acrossreporting frameworks, and we are continually
evaluating reporting options and listening tostakeholder feedback to report in the mostclear and concise manner. Chapter 3 and 4 ofthis 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 thescope of GRI. An overview of the information
on data definitions, measurements and any
uncertainties inherent to measurements canbe found in the Sustainability Supplements to
the Annual Report, available on our webpage:https://www.signify.com/global/our-Program 2025 targets

Better WorldWe are Signify

Brighter Lives

27

Doubling objectives

Continue and strengthen

Double the pace we achieve the 1.5°C
scenario of the Paris Agreement

100% renewable electricity*

Double our Circular revenues to 32%

Zero waste to landfill and sustainable
packaging

Double our Brighter lives revenues to
32%

10 million lives lit through our Signify
Foundation

Double our % of women in leadershipto 34%

Safe & healthy workplace with a TRC
rate less than 0.30
Supplier sustainability performance of95%*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, andtherefore, 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

Reporting standards

company/investors/financial-reports/annualreport. References to the Corporate
Sustainability Reporting Directive (CSRD)
standards are included in Chapter 17.
Our supplement to this report includes thefollowing indexes and additional information:
GRI Content Index, the Taskforce on Climaterelated Financial Disclosures (TCFD), ourTaskforce 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 annualCommunication on Progress (COP) towards
abiding by these principles. We also respond

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28

We are Signify

Creating value

Brighter Lives, Better Worldto the CDP Climate questionnaire and makethat disclosure publicly available.
New Signify ventures and acquisitions areincluded 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 andsocial reporting.

4.1.4

Materiality assessment

Our commitment to sustainability holds
significance and influence when directed
towards addressing the most relevant issues.
Long-term success hinges on acomprehensive understanding andconsideration of our societal andenvironmental impacts, recognizing thepotential effects of environmental, social, andgovernance (ESG) factors on our business. It
is imperative to gauge the perspectives ofour stakeholders on these ESG issues andalign our focus accordingly. This section
outlines the approach and outcome of ourdouble materiality assessment that was
conducted in 2023. The gathered insights
play a pivotal role in defining our sustainability
objectives, priorities and framework; andshape 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 theguidance and interpretation of the CSRD
guidelines ESRS 1: General requirements andCorporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

ESRS 2: General disclosures (draft version
November 2022), as the full CSRD legislation

Identify ESG Topics

was not yet finalized at the time of thisassessment. This assessment was conductedin partnership with an independent, external
third-party sustainability consultancy withexpertise and guidance on how to best alignwith relevant standards and best practices.

relies on a comprehensive list of ESG topics,
encompassing all areas potentially relevant toSignify. As a starting point, desk research was
conducted consisting of a review of internaland external documentation. The internal
analysis was performed by analyzing strategic
documents, previous materiality analyses andstakeholder dialogues and linking thecontents with the 10 ESG topics and various
underlying sub-topics described in theEuropean 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 aanalysis demonstrated that most external
actors are actively reporting on and engaged
in similar sustainability topics, while theimportance and focus varies slightly.

primary emphasis on climate mitigation
through energy efficiency.

stakeholders were selected based on subject
matter knowledge and their ability torepresent a broader view of external
stakeholder groups.

Our double materiality assessment was
carried out considering the impact that
Signify’s activities have on the environmentand stakeholders (outward -impact
materiality) and the impact that theenvironment, people and stakeholders haveon Signify’s business activities (inward–
financial materiality).

It is crucial that our materiality assessment

Next, external analysis was performed for ourpeers, suppliers and customers. The external

Stakeholder perspectives
We engaged with the stakeholders
considered most relevant to our company
including customers, employees, suppliers,
investors and analysts, governments, and civilsociety organizations. These stakeholders
are most likely to be impacted by ouractivities and have the most influence on
achieving our commitments. Internal

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 andengagement 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<≡>

Brighter Lives, Better World

Corporate performance

GovernanceCapturing perspectives from multiple
stakeholder groups enables us to gain

The assessment of materiality followed thelogic prescribed by the CSRD. For impact

broader insights into value creation andcontribute 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 ourlast 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 andpositive impacts of Signify’s own operations
and its value chains.

materiality, the assessment was based on‘severity;’ which looks at scale, scope andremediability; and ‘likelihood’, stemming fromthe 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.

Using the insight from the internal analysis,external analyses, and the interviews, ourshortlist of ESG topics was drafted. Theinterviews 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

Reporting Standards (ESRS), describing themanagement approach of the identified
material issues, updating policies andprocedures and reviewing and setting targets
for each of the material topics. Additionally, inthe next year we will further integrate andregister the associated risks andtopics.

opportunities of the material issues into ourEnterprise Risk Management process allowing
us to manage and mitigate potential impacts,on the business.

Assessing outward and inward
impacts
As a final step, in line with the principles ofdouble materiality, we held workshops withinternal subject matter experts to determine
the potential impacts that our ESG topics
could have on Signify’s performance andbusiness overall, in terms of risks andopportunities which could have an impact on
our ability to create value and the impact ofSignify on people, environment and society.

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

Corporate statements

Consolidated financial statementson the basis of CSRD, and therefore included
in our strategic focus and this chapter. We

2023 Conclusions
The outcome of our double materiality
assessment confirmed that Climate action
and Circular Economy are the two mostmaterial topics. Human Rights, Diversity,
equity and inclusion, Health & safety at work,
Talent & development, Cybersecurity andprivacy, Digitalization and Responsible mineralsourcing are also identified as material topics

will continue to report on Business ethics, as
our Integrity code sets the standard forbusiness conduct of our employees and forthe company itself and underpins relatedmaterial policies. The result of the materiality
assessment has been reviewed and approvedby the Leadership Team and the Supervisory
Board.

Double materiality matrix
Climate action

Circular economy

Human rights
Diversity, equity and inclusion
Health and safety at work
Responsible mineral sourcing
Biodiversity
Hazardous substances
Social impact of light
Responsible packaging
Business ethics

We plan to conduct a comprehensive
sustainability materiality assessment every
two years, however, will continue to engage
stakeholders annually on ESG topics toensure we remain focused on the mostmaterial topics.

Signify Annual Report 2023

High

Creating value

Impact materiality

We are Signify

Talent & development
Cybersecurity and privacy
Digitalization

Water management
Climate change adaptation
Product safety

Low

29

Low

Financial materialityl Environmental¢ Material topic

l SocialHighl Governance

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We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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

Signify Topic

Definition

Climate Change

Climate action(climate change
mitigation)

Signify’s actions to combat climate change
and its impacts by doubling the pace of theParis Agreement 1.5ºC scenario. This
includes offering energy-efficient andsolar solutions to reduce the emissions of
our customers and driving carbon
reductions at our suppliers.

Resource use
and Circular
economyOwn Workforce

Circular economy

Health and safety
at workSignify’s efforts to reduce waste andpreserve value by aligning customers’
goals, the growth of the business, and thefuture resources of the planet. This
includes developing products that can be
repaired, refurbished, reused or recycled,
and sending zero waste to landfill.

Signify’s actions to ensure a safe andhealthy workplace by reducing injuries andillnesses of Signify employees andcontractors.

SDG

7.2, 7.3

Boundary

Impact, risks and opportunities

Own
operations;
Supply chain;
Use phase

Designing energy-efficient products and transforming manufacturing
to sustainable production can have a positive impact and reduce thenegative 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.

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 canalso 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
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 suchas unsafe work situations and neglecting mental health, as well as
direct and indirect costs associated with safety incidents andcompliance with regulations which would impact the business
reputation.

Own
operations

The successful roll-out of learning and development programs
coupled with a well-aligned talent strategy present opportunities toimprove employees' skills and personal growth, drive innovation andrevenue growth, enhance the global employer brand and reputation,
improve employee retention, and increase productivity. It alsopresents risks due to the lack of implementation or poor execution
which would lead to lower productivity, potential lost sales, andhigher personnel and recruitment costs.

Own
operations,
supply chain

A well-aligned diversity, equity and inclusion strategy can lead toopportunities 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 todiscrimination and reduced social safety must be addressed andmitigated.

13.2, 13.3

12.2, 12.5,
12.7

3.4, 3.9
8.8

Talent anddevelopment

Signify’s focus on employee engagementand development to enrich the lives andcareers of our employees, enabling
growth, engagement, and fulfillment.

8.1, 8.5, 8.6,
8.8

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 thecompany we build and to drive long-termvalue creation.

8.1, 8.5, 8.6,
8.8

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31

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

CSRD Topic

Signify Topic

Definition

Own Workforce& Workers in thevalue chain

Human rights

Signify’s adherence to human rights
principles in its own operations as well associal responsibility in its supply chain. This
includes topics like labor conditions andliving wages.

Workers in thevalue chain

Responsible
Mineral Sourcing

Business

Digitalization

Conduct

Cybersecurity andprivacy

GovernanceConsolidated financial statements

Signify Annual Report 2023

Boundary

Impact, risks and opportunities

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 acompany's reputation, leading to decreased customer trust andinvestor confidence as well as be subject to legal fines for noncompliance and forced replacement of non-compliant suppliers.

Signify focuses on responsible sourcing ofrare earth minerals used in products.
Through our Conflict Minerals program andpartnerships, we take actions to sourceminerals that are not being mined andextracted in conflict zone areas.

Supply chain

Implementing responsible mineral programs can lead to increasing
the enforcement of human rights standards as well as mitigating thepotential environmental damages affecting nearby communities. The
main risks are human rights abuses, environmental damage, healthrisks, and increased costs which could lead to legal repercussions
and fines, and reputational damage.

Signify’s efforts to digitalize its go-to-

Own

Digitalizing interfaces, processes, and offers can provide

market approach and business processes
by building technology platforms that
address customer needs in a connectedworld and support Signify’s growth.

operations,Use phaseopportunities for companies to maintain a competitive advantage,increase sales and brand reputation as well as lower operationalcosts. It often requires an investment in the necessary skills tomaintain a good position in the long-term. The uptake of digitalproducts such as connected lighting systems will drive energy
efficiency and contribute to the reduction of GHG emissions.

Own
operations,Use phaseContinuously improving cybersecurity and privacy measures provides
opportunities for companies to protect their infrastructure andcustomers from cyber attacks, ensuring business continuity andsafeguarding 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.

Signify’s efforts to protect information,
products, and operations from cyberattacks and security breaches, protect
customer privacy, and ensure that productdevelopment, software applications, andecosystems comply with security
standards and best practices.

SDG

Corporate statements

8.7, 8.8

8.1, 8.2

8.1, 8.2

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.

<≡>

32

We are Signify

4.2

Creating value

Brighter Lives, Better World

Sustainable
innovation

Innovation is an important pillar of Signify's
purpose to unlock the extraordinary
potential of light for brighter lives and abetter world. Our sustainable products andsystems must demonstrate provenmeasurable benefits in one or more of theeight 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 andservices, and solar systems and solutions.
• Circularity – optimally preserving value andavoiding waste via serviceable luminaires,
circular components, intelligent asset
management, and circular services.
• Packaging - reducing packaging weight andvolume, 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 productweight, selecting recycled and/or
renewable materials, and increasing
commonalities.

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

And three Brighter Lives SFAs:• Safety & security - providing light that has

4.3

a positive effect on reducing crimes likeburglary and theft in cities and houses,
increases safety in traffic and protection
against cybercrime.
• Health & well-being - designing light tosupport health, well-being, andperformance of humans, animals andwildlife through unlocking the visual,biological, and emotional benefits of light.
• Food availability - providing light thatenables the production of more andbetter-quality food, while optimizing theuse of land, water and energy and avoiding
the use of pesticides.

As part of our company strategy and our
Brighter Lives, Better World 2025
sustainability program, we aim to double ourpositive 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 thepercentage of women in leadership by theend of 2025. We will also strengthen ourcommitments to employee safety, sustainablesupply chain and access to light.

Our sustainable innovations continue totransform the lighting industry. In 2023, weinvested EUR 271 million in sustainable
innovation which represents 88% of Signify
R&D expenses (89.5% in 2022). We believethat sustainable innovation will help create anincreasingly future-proof and purposeful
portfolio of products, systems and services.

Sustainable innovationin millions of EUR
300
250
200

266
92.9%

150

264

271

89.5%

88.0%

2022

2023

100
50
0
2021

As a % of R&D spent

Brighter Lives

Kiran Brar,
Chief HR Officer, Signify"In response to uncertainties in themacroeconomic environment affecting
the talent marketplace and our
employees, we prioritized key areas tocontinue a Great Place To Work. Our
2023 people strategic initiatives
centered around leveraging diversity,
equity and inclusion (DE&I) as ourcompetitive edge, strengthening our
performance culture, and developing
our internal talent.
We reinforced our commitment to drive
equitable and inclusive practices in theorganization and increased
representation on both on gender andgenerational diversity. In 2023, weparticularly focused on hiring 400+
campus hires which is also inline with ourtalent strategy to hire at the entry levelof our organization and promote fromwithin. We filled more than 50% of ourvacancies in all the levels of ourSignify Annual Report 2023

organization with internal talent. We
continued to focus on key
developmental interventions like ourupskilling program, Basics & Beyond, forCommercial 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 togauge the level of inclusivity
experienced by our employees andensure every voice is heard.
We further built on Unlock Performance
practices through constructive checkins, feedforward, continuous learning,
and a culture of appreciation. Our
Employee Share Purchase Plan
expanded covering more than 70% of
our employees fostering ownership. Ourtransformation continues with changes
in our operating model. In order toleverage the full power of our new
operating model, we are sharpening ourdefinition of our values and behaviors
which will be required for us to perform
and win.
I am proud of the resilience andadaptability of our employees in the faceof complexities and challenges. I have a
lot of confidence that we will continue
to be Greater Together in the face ofcontinuing business challenges in 2024."

<≡>

33

We are Signify

4.3.1

Creating value

Brighter Lives, Better World

Talent and development

Corporate performance

GovernanceCorporate statements

in factory)
Total adjusted

The total size of the Signify workforce at theend of 2023 was 31,920 FTEs, compared to34,619 at year-end 2022. The data provided
in subsections 4.3.1 and 4.3.2 excludes
contingent workers and employees that havenot been fully integrated in our humanresources system which represents 28% of
our FTEs.
Employees in FTEs
Signify total

2021

2022

2023

36,824

34,61931,920Approximately 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 commercialorganizations, focusing on sales andmarketing. The remaining 15% worked incorporate 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 ongoingexternal workforce changes and digitaltransformation, and we expect the nature of
the current workforce will continue to
evolve.
In 2023, Signify’s adjusted employee turnoverwas 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 andSignify Annual Report 2023

Employee turnover breakdown in 2023 in %Staff (majority

Employment

Consolidated financial statements

1

Professional

Mid-Level

Senior-Level

Professional

Professional

Leadership

Grand Total

1%

–%

17%

5%

9%

2%

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

therefore causes a significant impact on aconsolidated basis. Signify applies highstandards in its factories around the world toensure 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 willcontinue 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 andgrowing people from within. We want ouremployees to have a challenging andrewarding 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 andleadership skills, whilst attracting new,diverse talent where critical capabilities areneeded to strengthen our talent pool.
Retaining our talent remained a key priority inthe course of 2023 and we have been
focusing on fostering internal mobility bysupporting the match of our talents withinternal opportunities.

In 2023, next to our acquisitions, wewelcomed 6,878 external talents to help
bring our business vision to life, most ofwhom were employed in manufacturingfunctions. In line with our people philosophy
to promote talent from within theorganization, close to 60% of our senior
management and leadership roles were filledinternally.

A robust global employer brandIn 2023, we continued to build on our
Employer Value Proposition (EVP): while ourpillars 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 forstrengthening our EVP to stay relevant in thetalent marketplace.
In 2023, we received recognition for being an
employer of choice in various countries, forexample: 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, theCampus Program won the Handshake’s Early
Talent award and was recognized as a bestplace 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, todrive our transformation and growth andbuild talent pipelines. In 2023, we focused onreaching 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 fromproven high-quality sources:• Internal - Over the last few years we havefilled approximately 50% of our vacancies
internally.
• Employee referral – 14% of total externalhires 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, inalignment with our values and EVP.

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34

We are Signify

Creating value

Brighter Lives, Better World

CultureOur 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 arecollective, and by working closely together,
our impact is greater. Our workplaceprinciples were designed to foster
inspiration, cooperation, and a sense of
belonging: three essential ingredients toachieve our purpose. The workplaceprinciples reinforce our commitment tofurther build an inclusive work environmentthat offers employees flexibility to work fromhome when needed and set reasonableboundaries for conducting the company’sbusiness.
Throughout 2023, we have been enhancing
our performance culture to improve
execution and ownership for a morecompetitive business. This performance
culture is reinforced by our performance
practices, where both employees and people
managers take an active role, together, todrive individual and company performance. It
starts with a steadfast commitment toregular, open, forward-thinking performance
conversations between employees andmanagers.
During these conversations, employees canshare their progress against goals and theirlearning and development priorities.
Managers demonstrate support throughactive listening and coaching to enable
employees to break through performance
obstacles and grow. We promote the

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

practice of feedforward, which is future
focused and aims to identify potential

together. Engaged employees are committed
to our company. They help us to meet ourand it has proven to be a positive driver of
employee engagement to increase teamopportunities for growth. In our latest Teamsurvey, quarter 4, 2023, 83% of ouremployees 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 andsupported in their professional and careerdevelopment.

business goals and sustainability
commitments, whilst contributing to a
dynamic, high-performance workplace.

effectiveness. As a result, we have continued
to run the Team survey every quarter tomonitor employee engagement and takecorrective actions when needed. In 2023, wehave updated the questions to stay on top of
the trends around employee engagement.
Furthermore, insights into the inclusivity inteams and the impact of our managers areprovided. In 2023, 90% of our employees said
that we truly put our Customer First (2022:92%); 88% of our employees acknowledgedthat we are Greater Together (2022: 89%);
88% of our employees felt that we are aGame Changer (2022: 86%) and 87% of ouremployees agreed that we have Passion for

As we look to 2024 and beyond, we willcontinue to reinforce these practices andenhance our processes, as we move to a new
operating model. Through coaching our
employees, strengthening feedforward andbuilding capability in our managers, we plan toembed the change and further unlock
performance at Signify. To emphasize thefocus on our customers and speed indecision-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 andintegral to our people vision: creating aworkplace where people belong, have impact
and take pride in the company we build

In 2023, we continued our grassroots
initiatives across the globe to createawareness about employee engagement &well-being:• Coffee Corners and global webcasts, toreinforce the connection between ourpeople and our leaders.
• Well-being Webinar Program (online
webinars) and activity clubs.
• Health checks in Greater China, foremployees to get personal feedback on
their health and specific suggestions onfollow up.
• Employee Assistance Program in India, withmonthly webinars offering freeteleconsultation support to all employees
and their family for any kind of wellness
query and support.
• Broaden time-off policies in the US tofocus on well-being, making specificmention of mental and emotional healthand evaluated medical leave of absence
procedures to ensure they are inclusiveand 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 withthe business practices of Signify.
Our Signify Team survey poses questions inline with our company purpose and values,

Results (2022: 89%). We noted that we needto continue improving in the areas ofprocesses and systems. Initiatives to address
our improvement points are driven at a teamlevel 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 usedas part of our Team survey. Employees are
asked to rank how likely it is that they would
recommend our company as a great place towork. In 2023, the Team survey had an
average employee response rate of 83%(2022: 83%). At the end of 2023, werecorded 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 importantrole in attracting and retaining talent. In
2023, people connected virtually on our
knowledge exchange platforms to consume

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We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Governanceor to share their knowledge with colleagues.
We updated our methodology to calculate

For a third year in a row, we delivered our"Impact program" for Key account managers.

the rate of active learners only focused onvoluntary training (in 2022 mandatory
courses were included). On average in 2023,
the learning experience platform
Learning@Signify reached an active learnerrate 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 createdlearning pathways around critical areas toshare their knowledge with others bringing
our vision “everyone is a student; everyone isa teacher” to life.

It introduces a consultative and innovative
approach to selling, with a greater emphasis

Signify employees are 'the driver of their own
career’. This year we deployed the Learning
Week in July and October and the#OwnYourdevelopment newsletter tostrengthen the learning agility of ouremployees. In July’s edition, we focused on
self-reflection. Masterclasses on careerdevelopment, harnessing your strengths, andempowerment were offered to ouremployees. In October, the focus has beenon Future in-demand skills such as Workplacecuriosity, Agile and Problem-solving. Thisinitiative has been a success with over 12.500
attendees.

Upskill for greater customer impact
This year our focus remained onstrengthening our commercial skills and welaunched the "Basics & Beyond" program forcommercial 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.

Corporate statements

4.3.2

Consolidated financial statements

Signify Annual Report 2023

Diversity, equity &inclusion

on relationship building and trust.

Upskill for digitalization
We continued to invest in digital reskilling andskill assessments for skills like Robotic
process automation (RPA), Data and analytics(AI / Machine learning / Data analytics), Cloudcomputing, Information and cyber security,
Programming languages, and IT
architectures.

Leadership development
We continued to ensure that our leadershipdevelopment experiences are aligned with
our manager framework of lead, develop, andinspire and with our talent philosophy. We
have piloted interventions to increase theeffectiveness of first-time people managers
in 2023, by covering the essentials of people
management; emotional intelligence andsituational 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 specificprogram for 31 leaders in manufacturing. This
ensured that our people leaders continued
to get support in their roles for Signify tobuild a pipeline of future-ready leaders who
can further drive excellence and sustainablegrowth. In 2024, we will continue to improve
the leadership offerings ensuring our leaders
are equipped to lead, develop, and inspire
our people.

At Signify, we believe that a diverse
workforce and an inclusive work environment
are essential to a thriving innovative businessand long-term value creation. We are an
equal opportunity employer committed toDiversity, equity & inclusion (DE&I) in theworkplace. This means we celebrate andfoster an environment in which all ideas,
perspectives, experiences and styles arehighly valued and where all individuals aretreated fairly with equal access toopportunities and resources.
Diverse representation in our workforce iscritical for our long-term success as acompany. It enables us to understand,connect and communicate with ourcustomers, 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 forbrighter lives and a better world. Our DE&I
roadmap reinforces our Greater Together
value, enabling us to make better decisions,boost innovation, create growth, andstrengthen our culture.
In 2021, we signed the United Nations (UN)
Women Empowerment Principles, which
underpins our commitment to double thepercentage 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’sDay, colleagues from across the worldorganized events celebrating theachievements and acknowledging thechallenges 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 selfgoverning, 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 theongoing development and refinement of ourmulti-year DE&I roadmap. We continued toemphasize 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 spacefor 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 ourprogress, highlighting the areas where we

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We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Gender diversity in %100

51 52 50

36 38 4075

25 27 28

23 25 25

77

75 75

25 28 29

Consolidated financial statements

75

100

53 51 5172

45 47 44

55 50

40

43 67 50100

55 53 56

47 49 49

25

25

0

0
21 22 23

21 22 23

21 22 23

21 22 23

21 22 23

Staff

Professional

Mid-level
professional

Senior-level Leadershipprofessional

21

22

23

61

61

61

18

17

16

21

22

23

Under 30

30 - 50

Over 50

80

50

Women

41 46 36

71

62 60

Signify Annual Report 2023

Employee per age category in %75

49 48 50

Men

Corporate statements

New hire diversity in %

75 73
72
64

50

Governance

59

60

64
58

54
45

57

50

50

40

33

20
0
21 22 23

21 22 23

21 22 23

Staff

Professional

Mid-level
professionalMenstill need to act and telling the story of ourcontinued journey towards a more inclusive
and equitable workplace. In this report, weannounced we achieved gender pay equity
within Signify. Our most recent DE&I report isavailable on our website: https://www.signify.com/global/our-company/
about-us/diversity-inclusion.

process, fair decision-making, candidate
experience, equity).

In 2023, we continued to drive positive
actions to increase diversity recruitment andinternal mobility at all levels (inclusive job
posting, diverse shortlist, diverse hiring
panel). We set up plans to address gaps andaccelerate our progress, so that our talentpipeline reflects all aspects of diversity in themarkets in which we operate. To strengthen
these efforts, we established a “licenses tohire” training for all people managers toenhance their skills and knowledge during
recruitment around DE&I (e.g., fairness of

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 withequitable access for everyone and make thecourse material available to all employees on
Learning@Signify.

In partnership with Harvard Business
Publishing, we continue to focus on ensuring
DE&I is a cornerstone of our culture througha learning and education series available to all
Signify employees.

In 2023, 40% of Signify employees were
women (2022: 41%) and 29% of leadership

Women

21 22 23

21 22 23

Senior-level Leadershipprofessionaln

Not disclosed

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 willcontinue to focus on external hiring forsenior positions by actively pipelining andensuring equal slates before hiring for
positions. Additionally, we will focus on
increasing the succession health throughcareer development opportunities. This will
be enabled through transition toolkits andmentoring for women moving into new roles
to enable them to succeed.

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 morediverse workforce, especially in management
and executive positions. Therefore, over thelast two years, we have intensified ourefforts on increasing the representation of
women and early-career talents in ourcompany. 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.

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 theambition to attract and retain more earlycareer talents to build a sustainable talentpipeline.

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 avariety of social media channels.

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37

We are Signify

Creating value

Brighter Lives, Better WorldIn 2023, we were awarded #1 forHandshake’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 morediverse representation in the areas of genderand 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, andpromotional guidelines to ensure equity.
Furthermore, Signify performs regularreviews designed to ensure compliance with
our policy of equal pay for equal work andmeet local legal requirements in countries inwhich we operate. Our annual review processincludes a comprehensive statistical analysis
of pay to employees across the world. Any
statistically significant variance within any
employee group is promptly addressed. Moredetails can be found in our Diversity, Equity &Inclusion Report.

Supplier Diversity
To ensure an inclusive business model, Signify
collaborates with key strategic suppliers todrive better DE&I performance across its
value chain. In 2023, we engaged with key

Corporate performance

Governancesuppliers to exchange best practices via a
dedicated online program and we included
the topic of DE&I in our Tritium program (seemore 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. Ourcommitment 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 isbased 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 mostsalient ethical and social principles thatgovern our relationship with stakeholders
worldwide.
In 2023, we strengthened our process for
identification of new salient human rightissues, by introducing a quarterly review of
the cases raised through our Ethics line withour compliance team. This allowed us tounderstand if there were any issues thatwere not properly covered by our policy andhow to drive corrective actions. As result ofCorporate statements

Consolidated financial statements

this review, we have decided to create a
specific Anti-Discrimination and AntiHarassment 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 seniorleaders of the company, where the objective
is to sign-off on the selection of the salient
human rights issues and agree on thecorrective actions in case of any finding
through our different assessment processes.
The table on the following page shows, inrandom order, the salient issues identified
and the stakeholders they affect, as well as
references to the subsections of this reportthat contain the progress Signify made in
addressing these issues.

Human rights risk assessment
Compliance with the Human Rights policy isgoverned through our Integrity code
processes, combined with dedicated steps
that help ensure adherence. In 2023,
employees were requested to complete elearnings that helped interpret our Integrity
Code. Dedicated communication campaigns
urged everyone to speak up and reportconcerns of possible violations. In those
campaigns, the availability of our Ethics
hotline was also highlighted. This initiative isan integrated and ongoing activity we haveembedded in our business and businessprinciples, which we redeploy on a regularbasis and share with our new employees aspart of their on-boarding program.

Signify Annual Report 2023

Based on a country risk assessment, multiple
manufacturing locations were considered tohave an increased likelihood of policy
violations. We currently have 19 sites locatedin “highest or high risk” countries. Since 2017,
these locations are requested to periodicallyfill in a dedicated self-assessment on humanrights. In 2023, we made a profound revisionof our assessment, to ensure that itreflected the latest developments on humanrights. As result, we added 20 new questions
and revised the wording of 15, to ensure wecovered 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 inthree locations; India, Mexico and China. The
audit focused on 2 aspects: 1) Do sampledorganizations adhere to the Human Rights
Policy? What is the control effectiveness?;and 2) Checking the quality of the selfassessment questionnaires andcorresponding 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 morethan 6 days in a row; b) Improvement of theprocess governing the Human Rights Policy,
by, for example, clarifying the roles andresponsibilities concerning the policy'scontrol activities towards the sites andclarifying some questions of the self
assessment questionnaire.
As result, seven improvement actions wereidentified and agreed, out of which, six havebeen completed and one is still due execution
in 2024.

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38

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Salient human rights issues
Salient human rights issues

Rights holders covered in our programs

1 Freedom of association and collective bargaining
2 Safe & healthy workplace
3 Working hours
4 Equal employment opportunities and respect

5 Recognition and reward

6 Modern Slavery & Human Trafficking(3rd party)
employees

Directsuppliers••

4.3.5: Business ethics
4.3.3: Human Rights••

4.3.4: Safety at work
4.3.3: Human rights••

4.3.5: Business ethics
4.3.3: Human Rights••

4.3.2: Diversity, equity & inclusion
4.3.3: Human rights
4.3.5: Business ethics••

4.3.2: Diversity, equity & inclusion
4.3.3: Human rights
4.3.5: Business ethics

•

•

•

4.3.3: Human rights••

4.3.3: Human rights

7 Forced and child labor
8 Employee development

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 towork and grow. Fair remuneration isconsidered a precondition for our employees
to flourish. Signify provides totalcompensation 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, ensuringthat their everyday needs are met. The

Reference to our disclosures

Indirectsuppliers•
guiding principles of our pay policy include
providing competitive compensation relative
to all labor markets, ensuring equity, andproviding 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 ofsalaries and benefits for employees globallywith respect to a living wage, covering thenecessary living costs. We focus on
employees who have a higher risk of notreceiving a living wage by analyzing 35 regionsin 6 different countries (representing 70% of
the overall Signify population). We compare

4.3.1: Talent & Development
4.3.5: Business ethics
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 aredeveloping remediation actions to close thegaps identified in these four regions. Two
new regions were identified with living wages
issues, which represent 20% and 18% of thetotal employees analyzed in those regions.
One region identified during the 2022
analysis had 47% of the population not

Signify Annual Report 2023

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 thenational minimum wage. Four other regions
identified during the 2022 analysis no longer
have employees below the living wage, due toincreases 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 thisregion, it is common practice for employees'
wages to be adjusted once they successfullycomplete 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 withmore 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 humanrights violations in its supply chain. These
programs cover the assessment anddevelopment of supplier sustainability
performance (audits and training) and
responsible minerals sourcing.
As part of our Brighter Lives, Better World
2025 sustainability program, we commit toexecute an on-site audit program that covers
our high-risk, high-spend suppliers.
We track our supplier’s maturity rate throughon-site assessments against the RBA Code of

<≡>

39

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Conduct. In 2023, 88% of our suppliers (witha spend over 1 million Euros) are either fromThe SSD is derived from the Responsible
Business Alliance (RBA) Code of Conduct andaudit cycle. Suppliers that pass the audit withno need for corrective action will be

In the RBA Code of Conduct and in our SSD,
special attention is given to the prevention of

low-risk countries or of high maturity (scoreat least 70 initial points out of 100 points
during the audit).

sets out the standards and behaviors werequire 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.

exempted from the audit program until acomplaint or an issue is raised by internal
stakeholders or from external sources.

human slavery as referred to in the United
Kingdom (UK) Modern Slavery Act Disclosuresand the California Transparency in Supply
Chains Act. The formal statement on theselaws can be found on our website.

Our Tritium program helps us develop astrong supply base with best-in-class
suppliers and is based on selection andrewards criteria against our strategic
priorities. The Tritium rating strongly drives
continuous improvement of our suppliersustainability performance. Sustainability
maturity and initiatives on Human rights,
Working conditions, Climate action and DE&I
are rewarded in the Tritium system withreward points. Non-compliance is penalized
and needs to be corrected or will result inconsequences for the business relation.
Our targets are periodically reviewed bysenior 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). Thisdeclaration 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.

We continue our DE&I program in our supply
chain. Through our audit program, we haveidentified 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

At the end of 2023, 280 suppliers were partof our audit program (66% of Signify's total
spend). Among them, 271 suppliers (97%) arecompliant 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 withour consequence management process. At
the end of 2023, our compliance rate was
97%, well above our annual target of 95%. In

The assurance of freely chosen employment
in our supply chain is a key element of oursustainability objectives. Forced and Childlabor 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 andperformed by an independent audit firm forselected suppliers in risk countries with aspend threshold of EUR 1 million per year. The
audit program also covers new suppliers
introduced by our recent acquisitions (with aspend threshold on anticipated spend over
100k Euro). To improve sustainable practices

2023, we audited 157 suppliers (including
supplier onboarding audits) on-site andreached close to 50,000 workers employedat the sites audited. Most of Signify suppliers
are based in China (78%), followed by Mexico(8%) and India (5%).

Child Labor in Supply Chains Act. Our forcedlabor 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. Thisin our supply chain, we want to increase thenumber of our suppliers that either are lowrisk 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.

The following table shares our suppliersustainability performance and indicates thecompliance rate from the audit prior to
supplier corrective actions. Overall, thecompliance rate is 88%, which is slightly
lower than last year due to the introductionof 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 thestorage and handling of hazardous
substances.

includes channels for workers and/or theirrepresentatives to openly communicate andshare ideas and concerns with management
regarding working conditions andmanagement 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.

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 thisgroup made significant progress (from atypical audit score of 40 to 82 points). For
suppliers that score well but require
corrective actions, we keep the three-year

<≡>

40

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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

EthicsGeneralFreely chosen employment
80-100%Occupational safety
60-80%

Environmental permits andreporting80-100%Business integrity
80-100%

RBA code
80-100%Child labor prohibition/
Young worker management
80-100%Emergency preparedness
60-80%

Pollution prevention andresource 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

Physically demanding work

Air emissions

Fair business, advertising and

80-100%80-100%80-100%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 andgreenhouse gas emission
60-80%

Privacy
80-100%Non-retaliation
80-100%Training and development
Procurement employees and employees who
have direct contact with suppliers undergointernal training modules on our suppliersustainability 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 Codeof Conduct focusing on the top 20 mostfrequent 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 inthe areas of working hours and fire safety (19attendees). 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 andfinancing of conflicts in the extractive sector.
Global supply chains in the lighting industry
are long and complex, typically with morethan seven tiers between the finishedproduct and the source of raw materials
used for manufacturing. However, we believethat 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 inthe Democratic Republic of Congo (DRC). We
support and follow the OECD Due Diligence
Guidance for Responsible Supply Chains ofMinerals from Conflict-Affected and High-

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We are Signify

Creating value

Brighter Lives, Better World

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-freestatus and to identify sources of 3TG andcobalt 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 ourlist of smelters using the CMRT and/or the
EMRT information provided by our Tier 1
suppliers.

Corporate performance

Governancethe Fair Cobalt Alliance (FCA) with Fairphone,
Huayou and Impact Facility.
This multi-stakeholder action platform offers
actors across the cobalt supply chain a precompetitive environment for collaboration to
help strengthen and professionalize DRC’s
artisanal cobalt mining sector and contributeto local economic development at large. For
more on the FCA program: https://www.faircobaltalliance.org/.

4.3.4 Safety at work

Corporate statements

Consolidated financial statements

capabilities at a site level by launching a
dedicated qualifications campaign withbehavioral safety through our cross-site
Safety Alerts process. Our injury prevention

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 fivedomains: ergonomic safety, personal
protective equipment, equipment safety,
mobile equipment, and EHS resources.

framework has been further strengthened in
the operational Lean framework, theManufacturing Standards platform and the
Signify Quality System.

At a corporate level, we strengthened the
management of high-risk activities bydeploying 25 global standards that describe

On our journey to a zero-injury workplace,
we faced some challenges in controlling
residual risk and maintaining an injury
prevention mindset. To counter thischallenge, we intend to re-design our
behavior observation process in 2024, toreinforce our capability to identify andeliminate these residual risks. Going forward,
we will continue the development of global
and local EHS competencies and thestrengthening of site adherence to ourminimum 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.

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

The health and safety of our employees is a
top priority. We commit to provide a safe
working environment for our employees andwe contribute to the achievement of SDG 8:

the minimum Signify requirements whenconfronted with such risks. Our annual Safety
Week campaign was dedicated to the topic of“Health and Well-being”. As part of thiscampaign, we held a global competition for“Health & Well-being Champions”. This
campaign was very successful with over 200

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 reassessment and 6 smelters did not close
their corrective action plan. RMI had tosuspend assessments in Russia due to thewar. More details can be found on our
website in the responsible minerals section.

Decent work and economic growth,submissions from our sites across the globe.

Cobalt is present in our battery supply chain
only for emergency lighting and remotecontrols. To enhance transparency in thecobalt supply chain, in 2018 we co-founded

Health & Safety performance

The total recordable cases (TRC) rate is thecentral indicator through which we measure
our overall safety performance. Targets forthis indicator are set and managed at acompany-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 tocommit to a safe and healthy workplace witha TRC target of 0.30 by the end of 2025, andthe ambition for each single site to reach it.
In 2023, we focused on increasing
Environmental Health and Safety (EHS)

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

0

0

0

Fatalities

In 2023, we continued our drive to improveequipment safety, warehousing safety, andWe 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 norecordable injuries. There were 18 industrialsites 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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42

We are Signify

Creating value

Brighter Lives, Better World

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 haveprocedures in place to foster compliancewith 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 ourcommitment to always act with integrity, bothin our internal and external interactions. The
code sets the standard for business conductof 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 andmade some minor changes. While the core
principles remain the same, we have madesome updates to reflect changes in theorganization and the outside world as well as
progress made against our priorities. The
revised Integrity code was published andbrought to the attention of employees in Q3
2023.

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Most commonly reported concerns

unauthorized use of the company’s assets,theft, cyber security or other IT-related

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.

Human resources

concerns.

Compliance risk assessments

Business integrity

In 2023, we performed our annual risk
assessment for the legal compliancedomains. In that assessment we analyzed therisks related to a number of topics, such as

The second most reported type of concern
relates to business integrity. This, forexample, includes concerns relating toconflicts of interest, fraudulent

bribery and corruption, and used theoutcome as an input for the plannedcompliance activities for the coming year.

disbursements or any other fraudulent
suspected behavior. The number ofcomplaints reported in this segment
represents 27% of the total cases reported
in 2023 (31% in 2022).

Training and engagement of employees
We dedicate part of the training of our

In 2023, 274 Integrity code concerns were
captured via the Signify Ethics line andthrough our network of compliance officers,
a 12% increase compared to 2022. The
number of concerns raised is substantiallyhigher than in the previous year. Details per
category are shown in the table below.

The most reported concerns were related tohuman resources, representing 54% of thetotal cases reported (53% in 2022). This
category, includes concerns that, forexample, related to equal and fair treatment,harassment, or other human resources
related topics.

Security

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 during2023, 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 withcorrective actions. Such corrective actions
can include additional measures, such as
training, strengthening of internal controls,
creation of additional policies or othermeasures 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 andcoaching to verbal and written warnings andto termination of employment, depending on
the severity of the matter.

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) andrelates, for instance, to concerns about

Responsible tax policy

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

Our tax principles are based on therecognition 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 withintegrity means paying the right amount oftax, in the right place, at the right time. Beinga responsible taxpayer is aligned with our
purpose, business strategy and Integrity
code. We are committed to providing timely,

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

regular, and reliable information on Signify’s
tax position, including the Group effective tax

Signify has a Tax Control Framework in place,to monitor and test the execution of critical

Total tax contribution

rate, our total tax contributions, and our main
tax exposures (see chapter 15, Consolidated
financial statements, note 9, Income taxes).

tax processes as well as for risk
management. Our Tax Controls are part ofour Business Control Framework and ourinternal 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 partof the audit of our Annual Report.

year 2023 amounted to EUR 1,024 million.
This amount consists of both taxes borne andtaxes 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 usedin this chapter, refer to chapter 20,
Definitions and abbreviations.

We embrace the Tax Governance Code, as
published by the Confederation of
Netherlands Industry and Employers (VNONCW) in 2022 and provide more informationon our Tax Principles, Tax Strategy, Tax
Organization and Tax Contributions in our Tax
Report: https://www.signify.com/global/ourcompany/investors/governance.

Stakeholder engagement

Tax governance, control and risk
management

Signify maintains an open dialogue with our
stakeholders and we engage constructively innational and international dialogue with

The responsibility for Signify’s Tax Strategy,
Tax Principles and how we manage our tax
risks, ultimately rests at our Board ofManagement with the CFO. At least once a
year, the Tax Principles and Tax Strategy as
well as the Tax Risks are discussed withgovernments, business groups and civilsociety to support the development ofeffective tax systems, legislation andadministration. We regularly participate inmeetings of business groups, to learn fromour stakeholders and to provide our view on

Signify’s Board of Management and the Audit
Committee of the Supervisory Board. Ifneeded these principles and strategy are
updated and subsequently approved by our
Board of Management to ensure continuousalignment with our purpose, businessstructure and overall corporate social
responsibility.

tax developments.

Signify’s Tax Principles ensure compliancewith local and international tax laws andregulations for all our group entities. These
principles govern how Signify operates withcustomers, suppliers, contractors, andemployees. We aim to prepare and file all
required tax returns on time, providing
complete, accurate and timely disclosures toall relevant tax authorities.

Signify aims to build and maintain acooperative and healthy working relationshipwith all relevant (tax) authorities. The
transparency in our tax policy is a key factor
in building mutual respect and trust with tax
authorities.

Signify Annual Report 2023

Total tax contributions byregion EUR million

Our total tax contributions in the financial

187

Total tax contributions by type
EUR million

50 81

535

609

Americas
EuropeRest of the World

84

274

228

2023 Signify corporate income tax paid
per main countries
Countries

Corporate income tax
Customs duties
VAT
Payroll taxes
Other taxes

The Netherlands

EUR
million
21

China

12

India

10

Poland6

Indonesia

5

Canada4

France

3

Spain

2

United States of America

1

Other

17

Total

81

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

The amounts of corporate income tax paid
reflect the geographic spread of Signify’s

Signify’s Cybersecurity team provides threat
intelligence, guidance and assurance

Our overall approach to cybersecurity andprioritization of activities is risk-based, andexposed Signify assets. We also rolled out
and operationalized the ‘SaaS Security

activities. The most significant amounts arepaid and accrued in the Netherlands, China
and India where Signify has substantial
business operations. In the United States weused losses from prior years, resulting inlower income tax paid.

services, and manufacturing cybersecurity
services. Our Threat Intelligence team has adefined process for gathering, analyzing, anddistributing 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, andestablishing an enterprise security
architecture to keep our digital identities,
data and environment secure. Our Assurance
team performs independent assessments andpenetration testing activities to validate
implementation of standards and assess

we recognize identity as the perimeter tomaintaining the required security (viz, Zerotrust 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 ourcybersecurity services directly to businessand IT stakeholders and is available to clarify
their questions and doubts aboutcybersecurity-related matters. Additionally,
all our employees are expected to completea 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

Posture Management (SSPM)’ solution,
targeting multiple SaaS-based criticalapplications through which we can scanthese environments for misconfigurations on
a constant basis for early detection andmitigation of risks. Manual risk assessments
were also conducted on several criticalassets to identify and report risks and their
mitigations to the respective stakeholders.

residual risks and gaps. Our Operational
Technology Cybersecurity team provides
guidance and assurance services to ourmanufacturing and distribution operations.
Our security operations center is responsible
for the detection, mitigation and resolutionof cybersecurity-related incidents, enabling

cybersecurity threats and best practices toteach employees to avoid the risks of fallingprey to them. Focused trainings are also
conducted as required. Phishing simulations
are conducted monthly which include newhires. Dedicated learning pathways are
created for those who fail the simulation

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 knowledgesharing sessions. Revised security awarenessaction 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.

tests.

of topics related to Ransomware and new AIbased phishing trends have been rolled out.
Challenges in available resource bandwidthand budget continue to impact how much andhow fast the desired changes can beaddressed by the Cybersecurity team.

4.3.6

Cybersecurity

Digitalization is one of our strategic frontiersand our connected lighting offer is
expanding. We are focusing on improving ourdigital 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 thataccess 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 secondline of defense, is assurance and control
function that oversees security risk, sets the
security controls framework and monitors
the deployment of the controls within thefirst-line of defense.

Our cybersecurity requirements also apply to
our external partners and suppliers as part ofthe 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 bestpractices (such as the National Institute ofStandards and Technology (NIST), and theCenter of Internet Security (CIS)).

Early 2023, we completed an attack
simulation and penetration testing in order to
identify security vulnerabilities andrecommendation. 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 ofCybersecurity. With an increased focus oncontinual assurance, the Cybersecurity team
implemented and operationalized ‘External
Attack Surface Management (EASM)’
platform to enable continuous vulnerability
management and monitoring of externally

We conducted Cyber (tabletop) drills at
eleven of our manufacturing sites. We areconstantly trying to evolve and improve ourcybersecurity guidance by regularly updating
our existing standards and publishing new

All cybersecurity activities are reported toand monitored by the Security Board, chairedby our Chief Executive Officer, Eric Rondolat.
Other members of the Security Board are theChief 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.

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We are Signify

4.3.7

Creating value

Brighter Lives, Better World

Digitalization

Corporate performance

Governance

DigITal ambition is to elevate Signify's
standing in the lighting industry by cultivating
and sustaining a competitive edge throughthe delivery of an exceptional digital
experience in the following areas:

Digitalization is a key pillar of Signify’s 5
Frontiers strategy, which equips us to seize
the opportunities and tackle the challengesof the major global shifts that affect ourbusiness. With a focus on becoming
customer-centric, digitalized, andsustainable, our strategic initiative, DigITal
Foundation, is enhancing our IT capabilities toenable 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 tosustainability targets. To achieve theseobjectives, we are investing in upgrading ourcore IT infrastructure, implementing new
tools and technologies, and developing theskills and capabilities of our IT workforce. We
are also embracing agile methodologies toaccelerate the delivery of new digitalsolutions and services to our customers.
By strengthening our core IT capabilities, weare better positioned to drive innovation,
improve efficiency, and enhance the overallcustomer experience. Moreover, the initiativealigns with our commitment to sustainability,
by reducing our environmental footprint
through increased automation and optimized
operations.
Signify's DigITal Foundation is a key driver forour ongoing success in the digital era and our

Digitalizing customer interfaces
We are committed to providing the best-inclass experience for our B2B partners,
making our customer interface the preferred
one-stop-shop for OEMs, wholesalers,
agents, specifiers, and installers. We aim toachieve this by offering an easy-to-use andintuitive digital platform that simplifies thepurchasing process. For B2C customers, weare focused on creating a seamless andenjoyable digital experience across allchannels, including mobile and web.

Digitalizing offers
We are dedicated to offering innovative
connected products and services in themarket 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 thatcan be controlled through mobile devices.
Moreover, we are exploring new businessmodels by collaborating with partners invarious industries, such as horticulture andentertainment.

Digitalizing processes and operations
We are committed to delighting customers
and partners with delivery reliability andproduct availability by implementing
touchless, automated, and analytics-driven
internal processes. In addition, we areinvesting in enablers such as digital
capabilities for our teams, data management
and enablement, systems architecture andCorporate statements

Consolidated financial statements

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 inmeasuring and tracking sustainability
progress, reducing emissions, resource
optimization and drive a more circular
economy. Enhanced connectivity and theInternet 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 thequantification of product environmental
impacts throughout the full life cycle.
Through digitalization, we can generate
Environmental Product Declarations (EPDs) ata large scale while considering standard andlocation specific requirements whenrequired. This allows us to develop strategies
to reduce our environmental impact, identify
opportunities for sustainable innovation, andcommunicate our sustainability performance
to stakeholders.

4.3.8

Signify Annual Report 2023

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 moresecure society. We commit to double our
Brighter lives revenues to 32% by the end of2025, which means our revenues comingfrom lighting innovations that increase foodavailability, safety and security, or health andwell-being. At the end of 2023, our Brighter
lives revenues were 31% (2022: 27%).
Through our actions, we directly contributeto the achievement of SDG 3: Good healthand well-being and SDG 11: Sustainable cities
and communities.

Health & well-being
Light is essential for life, and equallyimportant as food, water and air. Light allows
us to see and to experience the world aroundus. It affects us visually, biologically andemotionally, supporting comfort, well-being
and performance. Scientific evidence showsthat light has a powerful impact on ouremotions and important physiological andbiological processes in our body. Circadianlighting in an office environment makes anoffice more liveable and can enhance mood,boost concentration and productivity.
In 2023, we continued to focus on the qualityof light in our LED portfolio meeting the
EyeComfort criteria which include factors

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We are Signify

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Brighter Lives, Better World

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.

Corporate performance

GovernanceCorporate statements

Consolidated financial statements"I really feel like I'm outside" is the mostcommon reaction from customers. There arespace and enabling local production, at least
a 90% reduction in water use, and avoiding

fit. Trulifi by Signify offers a range of LiFi
systems, providing a two-way wirelessadditional melanopic benefits from the blue
enriched light which can have a positiveeffect on subjective alertness, vitality andperformance.

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.

communication that is reliable, secure, andfast. Next to this, Trulifi is immune to any
electromagnetic interference from, forexample, industrial processes.

Food availability

Signify also advanced its professionalmelanopic lighting, a part of biological lightwhich plays a major role in synchronizing theinternal body clock in line with non-visual
effects of light. When melanopic lighting isproperly designed in buildings, it brings thebenefits of natural daylight indoors,enhancing visual comfort, well-being andworkplace 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 thesky and daylight and receiving enough lightespecially becomes relevant when a room
does not have daylight access. Recent
studies have shown that NatureConnect has
a positive impact on the alertness and vitalityof office workers.

Signify Annual Report 2023

To meet the needs of a growing population,
we need to consume resources more
efficiently. According to the UN Food andAgriculture Organization (FAO) global fooddemand will rise by 70% by 2050, while 50%of arable land globally is already farmed. Manyof the vegetables we consume are notproduced locally and are transported overlong distances. Approximately, 17% of the

Safety & security

world’s available food is either spoiled orthrown 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 greenhousegas emissions. To address these challenges,

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.

significant changes to our food systems areneeded to ensure enough safe, healthy,
accessible and affordable food for all in the
future.

We expanded our home connected systems
by integrating smart lighting and smart home
security, incorporating new Philips Hue
Secure cameras, sensors, and app featuresdesigned to enhance the security of yourhome. The monitoring is in real time andmotion notifications are instantly received;
actions like triggering light and sound alarms
can be taken via the security center in thePhilips Hue app.

Horticulture LED technologies can provide ananswer by realizing extremely efficientfarming with high yields, efficient use of

For the last decade, lighting has gone
through a significant technologicaltransformation, opening new possibilities inusing 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

Today, more than 50 billion devices areconnected to the Internet, most of themwirelessly. This is placing wirelesscommunication under increasing pressure,and the radio spectrum is becoming
congested. In addition, there are areas
where radio frequency wirelesscommunication is not permitted or the best

Access to light
As a company that is committed to givingback to society, we use our expertise andknowledge of lighting to make a positivesocial 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 threefocus areas: Lighting Lives, HumanitarianLighting, 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 incollaboration with local groups and aid
agencies have made a positive impact oncommunities, providing better access tohealth care, essential services, sports, andproductivity.
The Lighting Lives program focuses on ruralcommunity facilities such as schools andhealthcare centers.

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We are Signify

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Brighter Lives, Better World

Corporate performance

Governance

Schools

Healthcare centers

In schools, well-lit classrooms boost
productivity and cultivate an atmosphere ofcreativity and joy, even after the sun has
gone down. Similarly, well-lit outdoor areas
are crucial for the safety and security of bothstudents and staff and create opportunities
for sports and socialization in the evenings.
Yet, the power of light goes beyond
illuminating spaces.

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.

In 2023, we donated 3,000 portable Solar
Lamps to adolescent schoolgirls in rural
Mozambique, in collaboration with PathfinderInternational. These regions have been
deeply affected by conflict and civil unrest,
resulting in limited access to energy andheightened safety concerns. Many of theseyoung 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 cancomplete their homework and safely enjoy
their leisure time.

Corporate statements

Consolidated financial statements

emergency kits with solar lights were
distributed to families and medical centers,
thanks to the Foundation's partnerships andthe generous contributions of Signify
employees.

Signify Annual Report 2023

The project trained them as electricians andentrepreneurs, and focused on developing
soft skills, business skills, and technicaltraining. This approach empowered thewomen trainees to be active in a sector thatis traditionally dominated by men. In the
coming year, these proud trainees will belinked to job opportunities and start a journeyof self-dependence.

Humanitarian Lighting
Throughout the year, the Signify Foundation
continued to address pressing humanitarianneeds 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 andrebuilding efforts.
With a multitude of crises compounding, theSignify Foundation prioritized disastersupport based on the scale of the disaster,
the feasibility of reaching affected
populations, and the potential for lighting toprovide relief. In immediate responses,
lighting can be installed in shelters andprovides support for aid workers during
search efforts or relocation. In rebuilding,recovery efforts, and medium-term
development, lighting plays an important rolein building or restoring infrastructure andpeace for the affected communities.
In 2023, the Signify Foundation partneredwith GlobalMedic to respond to thedevastating earthquake in Turkey and Syria,
which claimed over 50,000 lives anddestroyed over 84,000 buildings. 12,700

In refugee settlements, lights enhancesafety, reduce gender-based violence, crime,and create livelihood opportunities forrefugees. This year, to mitigate the impact ofGender Based Violence for internallydisplaced 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 iscommitted to building capacity andcompetency to ensure the long-term impactof lighting lives. Young adults are given
vocational training to develop skills needed
to operate and maintain lighting installations
provided to their communities. One suchproject in partnership with BRAC took placein the Philippines. The project provided
training for 50 unemployed young women andgirls aged 16-30 from marginalized
communities in the lowest income bracket.

Despite the Foundation’s successful year
ending ahead of track for the approaching2025 target of lighting 10 million lives, muchwork 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 isfurther exacerbated. 2024 will be the yearthat the Foundation expects to achieve ourfirst milestone of lighting 10 million lives, and ayear to reflect on what is next. By increasing
our ambition level, forging broader
partnerships for collaboration and funding
opportunities, the Foundation aims to makean even greater impact in the years to come.

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4.4 Better World
Maurice Loosschilder
Head of Sustainability, Signify"Throughout the hottest year inrecorded history, extreme weather andclimate events posed increasing socioeconomic challenges, impacting themost 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 awayfrom fossil fuel. These commitments
reflect a growing recognition of theurgent need to safeguard our planet’s
boundaries, address global warming andaccelerate the transition to a net-zeroworld. The global focus on energy
consumption and energy efficiency
solutions has intensified, with renewableenergy sources taking center stage. As
we navigate this era of transformation,
we know our collective actions today will
shape the landscape of tomorrow.

Corporate performance

GovernanceThrough our ‘Brighter Lives, Better
World 2025’ sustainability program, we
aim to double our positive impact on theenvironment and society. We are on
track to reduce our emissions acrossour full value chain at double the pacerequired by the Paris agreement's 1.5°C
scenario and have reduced our carbon
emissions by 19% YoY. We continue torely on 100% renewable electricity and in
2023 invested in a new virtual Power
Purchase Agreement further supporting
the green energy transition. And we areproud that we have surpassed our 2025
circular revenues target.
As the global leader in lighting and apioneer in sustainable lighting solutions,our focus remains on innovating inenergy 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 tothe transition toward a sustainableeconomy"Corporate statements

4.4.1

Consolidated financial statements

Climate action

Climate leadership
At Signify, we acknowledge the findings of theIntergovernmental Panel on Climate Change(IPCC) and believe we have an important roleto play in the transformation towards a lowcarbon economy, with deep decarbonization
across our value chain. In 2018, Signify was
one of the first companies committing toverified Science-Based Targets in line with
the Paris Agreement's 1.5°C pathway, to cut
GHG emissions in our operations as well as inour value chain. We commit to reduce 70% of
absolute scope 1 and 2 GHG emissions and
30% of absolute scope 3 GHG emissions fromuse 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 andsixth year, respectively, for our 2022
performance. We continued to partner with
the Climate Group’s EV100 Initiative tooperate 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

Signify Annual Report 2023

improve the sustainability performance of ourbusiness travel.
Through our partnership with the RE100
Initiative, we shifted to 100% renewableelectricity use since 2020. As an active
member of Clean Cargo and the WBCSD
Transforming Heavy Transport project, we
engage in cross-industry collaboration andstrive to lower the carbon footprint of ourfreight transport. We renewed ourpartnership 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. Ourcontinuous pledge to the World Green
Building Council’s Net Zero Carbon Buildings
commitment facilitates improvement inenergy efficiency as well as reduction inelectricity consumption in our non-industrial
buildings.
In 2023, we continued to evaluate ourclimate-related risks and opportunities
through our internal cross-department task
force aligned with the Task Force on Climaterelated Financial Disclosures (TCFD)
recommendations and the Corporate
Sustainability Reporting Directive (CSRD). As aresult, 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 ourmanagement framework are based on theinternational ISO 14001 standard. In 2023,
87% of our manufacturing sites were ISO
14001 certified.

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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 theemission 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.

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

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

7

10

13

Category 7: Employee commuting

n.a.

39

35

contributors are our energy-efficient LED
and connected LED lighting, such as the Ultra
Energy Efficient A class product families

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

99% of our value-chain emissions lies in the
product use phase. By offering energyefficient products, we help our customers
reduce millions of tonnes of CO2e.

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

We track our progress, and we report our full
Scope 1, 2, and 3 GHG emissions, shown intable to right. We reduced 53% GHG
emissions across our full value chain at theend of 2023, 22% year-on-year. This
reduction is mainly attributed to theincreased share of sales of energy-efficient
LED and connected LED lighting which drives
energy saving and emissions reduction for ourcustomers during product use. The key

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 theParis Agreement.

Category 6: Business travel

Decarbonizing our operations
Signify is committed to climate action, thisstarts 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 since2010, and continues to do so, throughimplementing initiatives in our factories,
offices, logistics, and business travel. Ouroperational carbon footprint calculation
includes scope 1, scope 2, and scope 3:
business travel and logistics.

Signify Annual Report 2023

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 operationalemission intensity in tonnes of CO2e per
million-euro sales was 37 in 2023 (2022: 34).
As a manufacturing company, we haveunavoidable residual emissions, such as
emissions from the use of natural gas inindustrial 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 ofour emission reduction strategy, rather weinvest in high quality carbon credit projects tobalance 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 beencertified 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.

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Operational carbon footprint inkilotonnes

300

200

100

290

124
7
7

252

249

87

87

15
10

29
13

152

140

120

2021

2022

2023

0

Logistics
Non-industrial operations
Business travel
Manufacturing

Manufacturing
In 2023, manufacturing accounted for 48% of
our operational carbon footprint andamounted to 120 kilotonnes. This is adecrease of 14% compared to 2022. We
continued to lead operational changes andefficiency improvements, which resulted inless energy intensive activities and lessenergy consumption.

Non-industrial operations
GHG emissions from non-industrial operations(offices, warehouses) represented 12% of
our total operational carbon footprint. Ouremissions from non-industrial operations
increased by 14 kilotonnes compared to 2022
due to increased energy consumption in
offices.

Corporate performance

Governance

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 sustainablelogistics operations, such as reducing
reliance on emission-intensive mode oftransport - air transport.

Corporate statements

Consolidated financial statements

participation in Power Purchase Agreements(PPA). In 2023, our most recent PPA in Finland

By delivering cleaner and more energyefficient solutions, we are proud towent live and complements our other two
PPAs in Poland and the US. Our virtual PPAs
contribute to the transition to moresustainable electricity grids and reinforce ourlong-term commitment to using renewableelectricity.

contribute to the achievement of SDG 7:
Affordable and clean energy.

Business travel

Enabling carbon reduction for ourcustomers

Business travel accounted for 5% of ouroperational carbon footprint in 2023. Our
GHG emissions from business travel increased
30% in 2023, mainly driven by an increase inbusiness air travel.

Phasing out conventional lighting andswitching to energy-efficient LEDs,
introducing solar lighting, and further
enhancing energy saving with smart
connected lighting has significant

Energy use in operations
Signify’s total energy usage in 2023 amounted
to 3,237 terajoules (899,285 MWh). Ouroperational 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 tooperational 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 ourelectricity from renewable sources. This
achievement directly contributes to SDG 7:
Clean and affordable energy. All electricity
consumed by our operations worldwide wassourced from renewable sources or matchedwith Energy Attribute Certificates (EACs).
Approximately 9% of our renewableelectricity was contracted via our energy
providers, 54% was sourced through theprocurement of renewable energy
certificates, and 37% came from our

Signify Annual Report 2023

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.

Philips Ultra Efficient LED luminaire
Signify’s portfolio of Ultra Efficient LED
solutions expanded in 2023, with theintroduction of UE indoor luminaires.
Designed to allow you to immediately
save up to 20% energy compared to thecurrent best offering within the same

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 climatechange 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 andharmonized measures throughout theindustry.
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 thefirst luminaires in this category.

range. Ultra Efficient luminaires also meet
Signify strict Lighting for Circularity
criteria.
The products’ high level of energy
efficiency and long lifetime dramaticallyreduce both waste and carbon emissions.

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Corporate performance

Governance

Enabling carbon reduction at our
suppliers

Setting Science-Based
Targets in China

In 2023, 183 suppliers reported emission
reduction activities (2022: 263). 134 suppliers
reported that their emissions decreased
compared to the previous reporting year,

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 nominatedWe increased the number of supplierscommitted 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 that29 million metric tons carbon of CO2e were
saved in our supply base (2022: 24 million
metric tons).

Consolidated financial statements<≡>

Signify Annual Report 2023

CDP reporters per region and topics reported

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 partnershipwith the CDP Supply Chain program. In 2023,
we invited 491 of our strategic suppliers to
the program, of which 61% submitted their
CDP questionnaire.

26% of suppliers reported renewable energy
usage, and 28% suppliers engaged their own
suppliers to reduce emissions.

Corporate statements

four of our high-impact China-based
suppliers, of which two have now formallysigned 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 insuppliers' evaluation. Once suppliers haveformally committed to the SBTi, anemission calculation tool was provided tothem to help the establishment of
accurate emission rates.
Our collaboration with CDP was key tosupport our suppliers and monitor theirprogress and progress reports wereshared at management level, to initiate
actions where needed.

Greater

Rest of the

China

world

EuropeAmericasTotal

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

4.4.2

Circular economy

Accelerating the transition to acircular economy
At Signify, we identified five strategic areas
where we will grow our business whilefurthering our contribution to a better andmore sustainable world. These growth areas
are defined based on the major trends facing
society, and on the United Nations
Sustainable Development Goals. One of thesegrowth areas is Circular economy.

With circular lighting solutions we canpreserve value and avoid waste. That is why,as part of our Brighter Lives, Better World
2025 sustainability program, we have theambition to double our revenues from circular
products, systems, and services to 32% by
the end of 2025.
Additionally, we are committed to moresustainable packaging, removing fossil-fuelbased 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 towaste management) and directly contributeto the achievement of SDG 12: Responsible
consumption and production.

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Corporate performance

GovernanceLighting for Circularity portfolio
In our efforts to transition to a circular
economy, we extended our lighting forcircularity portfolio in 2023. Via wellestablished 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 canbe upgraded, serviced, reused, refurbished,or recycled. For more information about theperformance and benefits of our lighting forcircularity solutions, visit our website.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

In 2023, Signify launched the Spring Oasis 3Dprinted pendant lamp, made from recycled

We closely monitor and report the progressof the circular portfolio contribution, and atwater jugs commonly found in offices andhomes for drinking water.

the end of 2023, 33% of our revenues camefrom 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 theenvironmental impact, we create an
ecosystem that extends the life of ourlighting products and provides a better future
for the next generation.

Our circular innovations cover four

4.4.3

categories: Serviceable luminaires, Circularcomponents, Intelligent asset management,
and Circular services.

Environmental incidents

Serviceable luminaires are fixtures that are
upgradable, serviceable, connectable,energy-efficient, reusable, and recyclable.
In 2023, we introduced the StoreFlow retaillighting, which enhances customer
experience with a new concept in highcontrast 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 productlongevity.
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 retailsegment, 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 ina modular way and easily upgradable. 3D
printing technology also supports
sustainability by eliminating waste using
recycled and mass balanced bio-circularmaterials. Supporting the reduction of CO2
emissions through local and on demand
production.

Circular components are exchangeable andhave 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, andmanpower.
Circular services aim at prolonging lifetimes
and provide customers with services thatcombine lighting design, installation andmaintenance in a single contract.

In 2023, Signify experienced no significant
environmental incidents.

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Corporate performance

Governance

5 Corporate
performance

5.1
5.1.1

2022
Comparable sales growth

1

6,704

1.2%

(8.3)%

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

1

Adjusted indirect costs

1

2,806

2,660

(2,171)(2,075)

1

762

670

as a % of sales

10.1%

10.0%

82

(221)

844

449

Adjusted EBITA

Restructuring, acquisition and incidental items
EBITA

1

Basic earnings per share in EUR

1

4.18

1.61

1.50

1.55

Shareholders’ equity

2,920

2,817

1

1,356

1,071

Dividend per share in EUR

Net debt

Working capital2

1

Net cash provided by operating activities

1

2

564

461

376

696

1

445

586

as a % of sales

5.9%

8.7%

Free cash flow

Financialperformance
Company performance

2023

7,514

Gross margin

Adjusted gross margin

Consolidated financial statements

The business environment in 2023 saw somenotable developments.

Key figures in millions of EUR unless otherwise statedSales

Corporate statements

For a reconciliation to the most directly comparable IFRS financial measure, see chapter 19, Reconciliation of non-IFRS
financial measures.
2023 Dividend subject to approval by the 2024 Annual General Meeting of Shareholders.

The consumer segment remained weakthroughout the year, in particular theconnected home business which had
experienced two strong years of growthduring 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 weakthroughout the year.
As the supply chain environment improved
overall, Signify's customers continued toreduce 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 oflower 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 declineof 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 realestate assets. Net cash provided by

Signify Annual Report 2023

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 andindoor 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 ofsales, 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 nonstrategic real estate assets in 2022 and otheradjusted 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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gross margin improvement was offset by anunder-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 toincidental 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 thedevaluation of the Argentine peso, separation
costs, real estate gain/loss, incidental
warranty costs, environmental provisions forinactive sites and the discounting effect oflong-term provisions.
Net income decreased to EUR 215 million,
mainly due to lower income from operations
and higher financial expenses, partly offset bylower income tax expense. Last year's income
from operations benefited from the one-time
gain on the disposal of non-strategic realestate assets.
Compared to December 2022, working capitaldecreased by EUR 103 million, mainly due tolower inventories, lower receivables andother working capital items, partly offset bylower payables. As a percentage of lasttwelve-month sales, working capitaldecreased by 60 bps to 6.9%. Including lasttwelve-month sales pro forma for Fluenceand 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, andCorporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

lower receivables. In 2023, net capital
expenditures were EUR 110 million. In 2022,

products, systems and services are used in
multiple market segments, including offices,

Strategic priorities

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 thehigher net cash provided by operating
activities.

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 andhas increasingly been integrated into broader
connected ecosystems.

global professional lighting leadership
position by further innovating in LED
products, winning in connected lighting andunlocking the potential in businesses such as
agriculture, solar, and 3D printing. At thesame time, Digital Solutions leverages its
scale to reduce the cost of production.

Shareholders' equity decreased to EUR 2,817
million, mainly due to the dividend distribution
and currency translation results, partly offset
by net income.

Acquisitions

Market developments

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 theconnected lighting portfolio.

As the world leader in the professional
lighting market, Signify is well-positioned tobenefit from powerful global trends, such as
the shift to connected lighting, growing
demand for food security, and climate action.

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 byhigher free cash flow, lower purchases ofbusinesses 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

Key figures Digital Solutions
in millions of EUR unless otherwise stated
Sales
Nominal sales growth
Comparable sales growth

result of the debt issuance.

Income from operations(or EBIT)

At year-end 2023, Signify had a postemployment liability of EUR 322 million,
compared with EUR 327 million at the end of2022. The reduction is mostly related tobenefit payments and one-off gains related
to restructurings and plan amendments,
partly offset by actuarial losses.

EBITA

Performance Digital Solutions
About Digital Solutions
Signify is the world leader in the professional
lighting market for products such as LED andsystems and services, with strong positions
across key geographies. Professional(6.9)%

7.8%(5.4)%

256

285

374

358

424

422

10.0%

10.7%

321

458

13,93013,8831, 2

Number of employees(in FTEs)

2

20.1%

as a % of sales
Free cash flow

Performance by Division

2023
3,937

1

Adjusted EBITA

1

5.1.2

1

1

2022
4,231

For a reconciliation to the most directly comparable IFRS
financial measure, see chapter 19, Reconciliation of nonIFRS financial measures.
Excluding non-allocated free cash flow items (e.g. tax,
interest and central functions).

Digital Solutions focuses on strengthening its

The transition to connected lighting is driven
by economic benefits for customers, based
on total cost of ownership. At the end of2023, 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 theindoor professional lighting market. The
agricultural lighting market was impacted byhigh energy prices, due to which growers
were investing less in their businesses. At thesame time, the outdoor professional lighting
market continued to be strong, supported bygreen stimulus programs in various
geographies.
Despite the weakness in the indoor
professional lighting market and the

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Corporate performance

Governanceagricultural lighting market in 2023, bothmarkets are expected to resume their• Introduction of Interact Space analysis:
Signify launched Interact Space analysis

growth. The indoor professional lighting
market is expected to continue benefitingfrom the shift to connected lighting andgrowing demand for energy efficient lighting.
The agricultural lighting market is expected tobenefit 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 thisgrowing market through its heritage, its
unique know-how, and patented light recipes
for various crops.

together with two new sensors: theEnvironmental sensor and the People
sensor. It is a data-driven solution thatgives building owners the information theyneed 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 theold generation of LED fixtures with themodern and energy-saving Philips Maxos
Fusion LED products resulted in 43%
energy savings. Integration of the lightingwith the Interact system will increaseenergy savings by an additional 35%.

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

2023 Financial performance

integrate security cameras, environmental
sensors, Wi-Fi and other devices. The
installation reduces energy consumption by
about 60% and operational costs by about50%;• Supported Dublin Port Tunnel with a fastroute to energy efficiency: retrofitting all
1,800 light fixtures with new LED trays andgear 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 andwas partially funded through the European
Green Deal;and Intelligent Lighting Controls. Comparable
sales decreased by 5.4%, against a high baseof comparison of 7.8% growth in 2022.

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

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.

Corporate statements

Consolidated financial statements

2024 and beyond

Signify Annual Report 2023

Key figures Digital Products
in millions of EUR unless otherwise stated

Digital Solutions supports Signify's growth forsustainability strategy through attractive
growth platforms such as connected lighting,agriculture lighting, solar lighting, 3D printed
luminaires, and human-centric lighting. The

2022

2023

Sales

2,469

2,117

Nominal sales growth

0.7% (14.2)%

Comparable sales growthdivision maintains a strong financial profile
with unmatched global scale and is wellpositioned to capture growth from global
stimulus programs.

Income from operations(or EBIT)
EBITA

1

170

272

176
205

as a % of sales

12.0%

9.7%

170

291

14,264

13,4861, 2

About Digital Products

Number of employees(in FTEs)

2

265
297

Free cash flow1(3.8)% (10.5)%

1Adjusted EBITA

Performance 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, toOEMs for professional luminaire applicationsin 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

1

For a reconciliation to the most directly comparable IFRS
financial measure, see chapter 19, Reconciliation of nonIFRS financial measures.
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-

player in selected home luminaires markets.
Based on proprietary research, the company
believes it held the number one position insales in the global LED lamps and electronics
market in 2023.

led socket-base conversion and on IoTtechnology for consumer-connected lighting,while strengthening its financial profile
through growth and innovation.

Philips Hue is the global market leader inconnected lighting for consumers, with acontinuously expanding product offering.

As anticipated in Signify's strategy, traditional
LED lamps are continuing to be replaced byhigher quality, connected and moresustainable 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

WiZ Connected further extends theaccessibility 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.

Market developments

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customers pay attention to the energy
efficiency of lighting products in theirpurchase decisions.

Corporate performance

Governanceextended the range of energy-efficient
alternatives. These LED alternatives

While Signify expects that the LED lamps
market will decline in the next few years, thecompany is well-positioned to continue toprovide energy savings between 45% and70%;• 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 cangenerate energy savings of up to 55%;
• Launch of new Philips Hue products andfeatures: product introductions include thegrow market share by building on its strong
position in lighting distribution. The decline in
the LED lamps market is expected to becompensated by the growth of integrated
LED luminaires and connected lighting.
Legislation, such as the banning of
conventional lighting technologies, isPhilips Hue Sync TV app for Samsung TVs,
the new Philips Hue luster E14 bulb, Philips
Hue panels with new shapes, new andenhanced features to the Hue app, andPhilips Hue Secure cameras, sensors andapp features to help secure consumers'
homes;

Despite the slowdown of the consumer
market in 2023, the company expects theselong-term trends to continue for theforeseeable future. These long-term trends
provide a solid growth path. Signify has theambition to drive market share gains byraising the energy efficiency bar throughinnovation and leadership in functional
luminaires and connected lighting.

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 theshift to connected lighting and theLEDification 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 banof CFL-ni lamps in February, and T5 and T8
linear fluorescent lamps in August, Signify• Expansion of the WiZ portfolio: productlaunches include the new Color Filament
range, the new Neon flex strip, newoutdoor lights, including a spotlight, a walllight and a bollard, new WiZ homemonitoring 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 decreasedby 10.5% as growth in LED lamps andluminaires was more than offset by weakness
in the consumer connected and OEM
businesses.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Income from operations decreased to EUR
170 million. Adjusted EBITA was EUR 205

technologies. This includes HID, TL, compact
fluorescent, halogen, incandescent, as well as

million and excluded restructuring expensesof 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.

lamp electronics for conventional lamps(electronic ballasts and drivers) and specialty
lighting, including projection lighting.
Conventional lamps are used in a wide varietyof residential and professional applications
and are bought by consumers, electricalinstallers and professional end-users througha wide range of channels. Lamp electronics
are mainly sold to luminaire manufacturers
directly and as replacement products toelectrical wholesalers. Specialty lighting
lamps and drivers are sold to the OEM market
and to specialized distributors.

2024 and beyond
The Digital Products division targets market
share growth in LED lamps throughdifferentiation with a multi-brand offer of Abrands, B-brands and Private Label sales.

Key figures Conventional Products

The division also plans to grow sales of LED

in millions of EUR unless otherwise statedluminaires by innovating and expanding its
product portfolio and by leveraging its LED
R&D and distribution strength.

Sales
Nominal sales growth
Comparable sales growth

It aims to further accelerate growth in its
Consumer Connected business with a two-

Income from operations(or EBIT)

system offering of Philips Hue and WiZ, and bycontinuing to innovate in relevant consumer
benefits, such as ambiance, well-being andsecurity.

EBITA

1

Performance Conventional Products
About Conventional Products
Signify is the global market leader in theconventional 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

2627(7.9)% (20.9)%
1(12.6)% (18.4)%
60

62

60

62

116

129

as a % of sales

14.6%

20.6%

56

99

6,093

4,216

1, 2

Number of employees(in FTEs)
1

2023

793

1

Adjusted EBITAFree cash flow

Digital Products will drive growth in LED
electronics through the transition to smart
lighting, leveraging its innovation leadership inconnected components and throughdedicated offers for specialty segments.

2022

For a reconciliation to the most directly comparable IFRS
financial measure, see chapter 19, Reconciliation of nonIFRS financial measures.
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 thecompany's drive to lead the transition toconnected LED products. Specialty lighting

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Corporate performance

Governanceproducts see a much slower conversion rate
to LED. The division continues to proactively

2024 and beyond

manage its manufacturing footprint andreduce operational costs to optimize its
profit margin and free cash flow.

on optimizing market share, profit and cash, inline 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.

Market developments
The conventional lamps market is expected tocontinue to decline in the coming years dueto the ongoing adoption of LED lighting
technologies and regulatory changes.
In 2023, Europe banned the production of
CFL-ni, and T5 and T8 linear fluorescenttubes, accelerating the transition to LED
technologies.

2023 Business highlights
Signify estimates that the conventional
lighting market declined at a faster pace thanits Conventional Products division in 2023 andthus the business continued to gain marketthshare for the 7 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 expensesof 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.

Conventional Products will continue focusing

Performance Other"Other" represents amounts not allocated tothe 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 restructuringcosts 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 realestate assets in Q2 2022. Adjusted EBITA was
EUR (86) million, compared with EUR (75)
million in 2022.

Corporate statements

Consolidated financial statements

Performance bygeographic cluster

5.1.3

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 effectof 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.

Signify Annual Report 2023

In the Rest of the world, sales declined by
11.0% to EUR 1,522 million and included anegative currency effect of 7.6% and apositive effect of 1.3% from the consolidationof 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 effectof 4.1% from the consolidation of Fluence.
Comparable sales declined by 14.4%, mainly
due to Klite and Fluence.

Sales by market in millions of EUR unless otherwise stated

EuropeAmericas

1

2022

2023

Change

CSG

2,230

2,023

(9.3)%(8.7)%

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)%

7,514

6,704

(10.8)%(8.3)%

Total
1
2
3

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

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Sustainability
performance

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Sustainable performance by geography

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 ourrevenues came from products, systems andservices contributing to Food availability,
Safety & security or Health & well-being(2022: 27%). Our safety performanceindicator (TRC rate) was 0.19 per 100 FTEs
(0.16 in 2022). We achieved a supplierperformance rate of 97% (2022: 94%), andsince 2017 we have lit the lives of 9.4 million
people through the Signify Foundation.

FTEs
2022

2023

Manufacturingsites
2022 2023% Women in1
leadership2022 2023

Operational
CO2e (kt)2022 2023

Safety TRC
rate
2022 2023

Europe10,024 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
–

Better World performance

Germany, Austria and Switzerland

383

372

–

–

100%

67%

5

4

–

We are on track to deliver against our
ambitious goal of doubling the pace of theParis Agreement’s 1.5ºC scenario. In line with
our ambition to contribute to a more circular
economy, 33% of our revenues came from ourcircular portfolio (2022: 29%). At the sametime, we sourced 100% renewable electricity
and sent zero waste to landfill.

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
Americas
Canada

328

280

1

1

n.a.

–%

2

2

–

–

9,468

8,275

18

18

25%

21%

55

77

0.34

0.41
0.69

643

640

2

2

–%

–%

11

5

0.24

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

–

–

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

–

–

Far East

1

Excludes Klite.

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Proposed
distribution toshareholders

Pursuant to Article 10 of the Articles of
Association of Signify N.V., a dividend will firstbe 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 sharessubject to shareholder approval after yearend. 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 Associationof Signify N.V., the Board of Management candetermine what portion of the net income
shall be retained by way of reserve, subject tothe 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 theAnnual 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, isbefore appropriation of the result for thefinancial year 2023.

5.4

Corporate performance

GovernanceOutlookFor 2024, Signify expects:• An Adjusted EBITA margin improvement of
up to 50 bps, including first benefits fromthe 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 areduction of US pension liabilities.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

6 Three-year overview
Three-year sustainability summary

Three-year financial summary in millions of EUR unless otherwise stated
2021

2022

2023
Sustainable innovation, as a % of adjusted research& development spend

Income statement
Sales

6,860

7,514

6,704

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

Comparable sales growth11

Adjusted EBITA
as a % of sales
EBITA

1

Net income (loss) attributable to shareholders
Earnings per share in EUR
Dividend per share in EUR

2

795

762

670

11.6%

10.1%

10.0%

636

844

449

397

523

203

3.18

4.18

1.61

1.45

1.50

1.55

Brighter Lives revenues, as a % of total sales
Women in leadership, as a % of total leadership roles
Employee Net Promoter Score

8,256

8,286

8,004

Shareholders' equity

2,459

2,920

2,817

1

1,156

1,356

1,071

250

564

461

Net debt

Working capital

1

2

90%

88%

25% - 27%

27%

31%

25%

28%

29%

30

36

26

0.17

0.16

0.19

0.09

0.12

Fatalities

–

–

–

Initial and continual supplier conformance audits,
number of audits

92

79

157

98%

94%

97%

7.2

8.3

9.4

Cumulative carbon reduction over value chain, in
1
million tonnes CO2e

On track

2

177

334

Operational gross carbon footprint, in kilotonnes
CO2e

290

252

249

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%

21% - 25%

29%

33%

Circular revenues, as a % of total sales

Cash flow from operating activities

704

376

696

Total waste to landfill, in scope of commitment

<1%

<1%

<1%

Net capital expenditure

(91)

69

(110)

614

445

586

ISO 14001 certification, as a % of all reportingorganizations

83%

70%

87%

ISO 45001 certification, as a % of all reportingorganizations

60%

61%

83%

Free cash flow
1

93%

0.12

Lives lit, cumulative since 2017 (in million)

Investments and cash flow

2023

Lost workday injuries, per 100 FTEs

Carbon neutral, as % of total operations
Total assets

2022

Total recordable cases, per 100 FTEs

Supplier sustainability performance

Balance sheet

2021

1

For a reconciliation to the most directly comparable IFRS financial measure, see chapter 19, Reconciliation of non-IFRS financial
measures.
2023 Dividend subject to approval by the 2024 Annual General Meeting of Shareholders.

1

2

The cumulative yearly difference between the GHG emissions of Paris Agreement 1.5°C pathway and the actual value chain
emissions of Signify.
Based on current level of availability and accuracy of data.

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Corporate performance

GovernanceCorporate statements

GovernanceConsolidated financial statements

Signify Annual Report 2023

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023<≡>

7 Board of Management
Signify N.V.'s Board of Management is entrusted withthe management of the company.
The Board of Management is responsible for the
deployment of the company’s strategy and the achievementof the operational and financial objectives of the company,

Eric Rondolat
Born 1966,
Italian/French
Chief Executive Officer
Chair of the Board of Management
since May 2016

and is chaired by the Chief Executive Officer. The Board of Management
is accountable for its actions and decisions to the Supervisory Boardand is answerable to shareholders of the company at the Annual
General Meeting of Shareholders. The Rules of Procedure of the Boardof Management are published on the company’s website.

Maria Letizia Mariani *Born 1960,
ItalianChief Commercial Officer
Member of the Board of Management
since May 2020

Corporate governance
A full description of the company’s corporate governancestructure is published in chapter 11, Corporate
governance.

Javier van Engelen *Born 1968,
Belgian/Portuguese
Chief Financial Officer
Member of the Board of Management
since October 2020

Harshavardhan Chitale
Born 1972
IndianDigital 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.

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

8 Supervisory Board
The Supervisory Board supervises thepolicies, management and general affairsof Signify. It also provides advice to theBoard 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 theSupervisory Board in 2023 see chapter 9,Supervisory Board report, and chapter 10,
Remuneration report.

Arthur van der Poel
Born 1948,
Dutch

Gerard van de Aast
Born 1957,
Dutch

Chair

Vice-Chair
B,C

A,B

Sophie Bechu
Born 1960,
French/American

D

Committee(s)Chair of the Corporate Governance andNomination & Selection Committee
Member of the Supervisory Board since
2016; second term expires in 2024

Committee(s)Chair of the Remuneration Committee
Member of the Supervisory Board since
2017; second term expires in 2025

Committee(s)Chair of the Digital Committee
Member of the Supervisory Board since2023; first term expires 2027

Former member of the Board ofManagement of Koninklijke Philips N.V.

Former CEO of Imtech and VolkerWessels,
and former member of the Executive Boardof Reed Elsevier (later: RELX). Currently
Chair of the Supervisory Board of KPN.

Former Chief Operations Officer on the
Executive Committee of Royal Philips andformer Vice President, Strategic
Outsourcing, North America Delivery at IBM.

A

Member of the Audit Committee.

B

Member of the Remuneration Committee.
Member of the Corporate Governance and Nomination & Selection Committee.
Member of the Digital Committee.

C
D

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Supervisory Board

Pamela Knapp
Born 1958,
GermanRita Lane
Born 1962,
AmericanA,BFrank Lubnau
Born 1969,
GermanC,DBram Schot
Born 1961,
Dutch
C,D

A,D

Committee(s)Chair of the Audit Committee

Committee(s)Member of the Supervisory Board sinceCommittee(s)Member of the Supervisory Board sinceCommittee(s)Member of the Supervisory Board since

Member of the Supervisory Board since2020; first term expires 2024

2016; second term expires in 2024

2020; first term expires 2024

2022; first term expires 2026

Former CFO of the Power Transmission andDistribution Group of Siemens, former CFO
of GfK SE. Currently member of theSupervisory Board of LANXESS andCompagnie de Saint-Gobain, and memberof the German Monopolies Commission.

Former Vice President of Operations at
Apple Inc. Currently member of the Boardof Directors of L3Harris Technologies andAmphenol 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 andCentral Europe at Capgemini.

Former CEO of Audi Group, member of theManagement Board of Volkswagen Groupand Vice-Chair of Porsche Holding
Salzburg. Currently non-executive memberof the Board of Directors at Shell,
Cognizant and Richemont, senior advisor todifferent companies, including Carlyle
Group, and Associate Professor of PracticeCorporate Strategy at Bocconi University,
Italy.

A
B
C
D

Member of the Audit Committee.
Member of the Remuneration Committee.
Member of the Corporate Governance and Nomination & Selection Committee.
Member of the Digital Committee.

1

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Corporate performance

9 Supervisory Board
reportGovernanceCorporate statements

Consolidated financial statements

Letter from theChair
I am pleased to present our Supervisory
Board report for 2023.
Market conditions remained challenging in
2023. The volatility remained high, andgeopolitical tensions continued. Our financial
results were negatively affected by continued
softness in consumer, indoor professionaland 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 forthree Brighter Lives, Better World 2025
sustainability commitments, with thepercentage of circular revenues surpassing
the 2025 target this year. We see thecompany being well positioned to capture
opportunities under governmental stimulus
programs promoting sustainability focusedinvestments in the US, Europe and othercountries, and to help our customers to saveenergy 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 ofSignify Annual Report 2023

the company. We support the transition to a
new operating model and structural measuresannounced in December 2023 and believethese will strengthen the company's agility
and performance.

Arthur van der Poel
Chair of the Supervisory Board

9.1

Introduction

This report provides information on how theSupervisory 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 theBoard of Management.
Our four committees cover key areas ingreater detail: the Audit Committee, theCorporate 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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Key discussion
topics andmeetings in
2023

Meetings and information
Supervisory Board members are in principle
expected to attend all Supervisory Board
meetings. A Supervisory Board member shallattend at least 85% of the Supervisory Board
meetings as scheduled annually in advance asreferred 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 thereasons for the absence.
The Supervisory Board held seven regularmeetings in 2023: four for the quarterly
results plus a meeting in May, September andDecember. Six out of seven meetings were
held in person. The attendance rate of theSupervisory Board meetings was 100% in
2023. The attendance record matrix in thischapter 9.2 gives details for both theSupervisory Board and committee meetings.
In addition to the seven regular meetings, acombined Supervisory Board/Audit
Committee is held ahead of the publication of
the annual report each year. In 2023, theSupervisory 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.

Corporate performance

GovernanceCorporate statements

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Supervisory Board and Committee attendance record

Total meetings

Supervisory
Board

Audit
Committee

77Nomination
Committee

Remuneration
Committee

DigitalCommittee

5

3

4

5/5

3/3

Arthur van der Poel

7/7

Gerard Van de Aast

7/7

Sophie Bechu ¹

4/4

Pamela Knapp

7/7

Rita Lane

7/7

5/5

4/4

Frank Lubnau

7/7

4/5

4/4

7/7

3/3

7/7

3/3

2/2

Bram Schot

7/7

6/7

Total attendance

100%

95%

1

3/4
93%

100%

93%

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.

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

In 2023, the Supervisory Board discussed awide range of topics throughout the year.
Key topics and activities included thefollowing:

As part of the Strategy Review in
September, we also had three strategic
deep dives: on the company's current
performance, future growth and brandstrategy. Each of these deep dives wasa variety of matters. Our members also
individually interacted with members of theBoard 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 theBoard of Management or senior management.

• Strategy review and strategy execution

prepared with guidance and input of aSupervisory Board member. As a follow-up
on the growth deep dive, management
updated the Board on how the company
builds its market forecasts.

There were no apparent conflicts of interestof material significance in 2023, which would
have called for one of the members not toparticipate in the decision-making.

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 macroenvironment trends and changes, theimpact on the lighting market forecast andcompetitive trends. We looked at thecompany's financial and sustainability
performance, customer experience, andperformance on our 2023 strategic
initiatives. We discussed the strategic
implications of the current macroenvironment, enterprise risks, and how wewill address these as part of the overall
company's 5 Frontiers strategy andstrategic initiatives for 2024.

The Strategy Review was followed by astrategic plan discussion in December inwhich management presented the2024-2026 strategic plan, including
financial objectives. We also discussed andapproved the company’s financial targets
for 2024 within the context of its 2024
operating plan.
In addition to these meetings dedicated tothe company's strategy, management
updated us on a quarterly basis on the

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Governanceprogress made on the company's strategic
initiatives and targets for 2023, whereby• Culture
In addition to the Board's attention to thethis year we selected four strategic
initiatives to focus on at Board level. We
continued our practice started last year, tohave a dedicated quarterly discussion on
trends and developments in the company's
competitive landscape, together with adeep dive on a competitor.

company's culture throughout the year, we
had our annual discussion dedicated to thecompany's culture. In this discussion, we
reviewed the alignment of the company's
purpose, its values, sustainability anddiversity, equity & inclusion with how it isembedded and fostered in the company's
strategy and organization. This year, we
focused on diversity, equity & inclusion andon how to best reinforce values andbehaviors.

Throughout the year, we discussed themarket trends, risks and opportunities, andtheir strategic implications as part of themarket and division updates and strategic
projects.
Both on a quarterly basis and as part of the• Business performance
Each quarter, we discussed the company’sbusiness performance in detail. These

division and market updates, we discussed
pending and potential acquisitions anddivestments contributing to the company's
strategy execution. The Board also
discussed performance and learnings frompast acquisitions, including Cooper
Lighting, Fluence and Intelligent Lighting

discussions included updates on thecompany’s financial performance on key
financial metrics and factors impacting
performance and forecasts, both on a
global and on a division and market basis.

Controls.

were the continued higher inflation,affecting both the company's costs andcustomer demand.

We have reviewed, challenged, and advised
the Board of Management on thecompany’s implementation of its strategicplan 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.

Among the factors impacting performance

We discontinued the separate detailed
quarterly reporting to the Board on
operations, which was introduced in
COVID-19 times. We did continue toaddress (potential) impacts of geopoliticaltensions on the supply chain and thecompany's adaptation of its operational
strategy thereto.
• Sustainability
Sustainability is an inherent part of thecompany's 5 Frontiers strategy. In
pursuance thereof, the company
developed a five-year sustainability

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

program: Brighter Lives, Better World
2025. Throughout the year, we were

program, the company's climate transition
plan and sustainability reporting, Our

updated on the company’s targets,
progress on this program, and thecompany's strategic initiatives for 2023 todrive growth for sustainability. Also outside
meetings, there is contact on sustainability
matters between individual members of theSupervisory Board and the Head of
Sustainability and the Chief Strategy &Sustainability Officer.

external auditor Ernst & Young, LLP
completed the program with insights into
their assurance approach and the role of
the auditor as to sustainability reporting.

As part of our last year's Supervisory Board
performance evaluation, we agreed that
the Supervisory Board oversight ofsustainability strategy remains a topic for
the full Board, and that sustainability
reporting best resides with the Audit
Committee.
Both the Audit Committee and the fullSupervisory 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 purposeof the program was to further enhance theknowledge and understanding of theSupervisory Board on ESG, with a focus onreporting, as such to be better equipped
to supervise and advise management onsustainability matters. The broad part ofthe 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• Digital delivery
At the start of the year, the full Board
reviewed and discussed the company's
digital year plan and focus in 2023 toaccelerate digitalization, together with thegovernance for prioritization. The Board
was also separately updated on a key
digital customer interface project inEurope. Throughout the year, the Board
remained updated on progress on thecompany's digital roadmap through thequarterly update on the company's global
digital strategic initiatives and via its DigitalCommittee report back, see sub section
9.3.4 for more details.
• Capital allocation, financial reporting andinvestor relations
We reviewed the capital allocation policy ofthe 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 arisingfrom Signify’s long-term incentive andother employee share plans, debt profileand 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, andrelated press releases.

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Throughout the year, the Investor
Relations department updated us on

The Board had a more extensive view of thecompany's dynamic architectural lighting

period. Performance and succession of thecompany's leadership team and otherpresentations of two finalist candidateauditors for the period 2026-2028. The

feedback from and interactions withinvestors and analysts, developments in thecompany’s share price and analyst
recommendations, as well as updates in theshareholder base. After the publication ofeach quarterly results, the Investor
Relations department updated us on themarket reaction and analyst views. A
portfolio manager was invited to allow theSupervisory Board to ask questions on his
investor view on the company, in a
discussion facilitated by Investor Relations.

business of Color Kinetics, and a tour
highlighting buildings and a bridge with
Color Kinetics lighting in Boston.

people in key positions were discussed with
the Supervisory Board in more detail.

committee reported its findings to the fullSupervisory 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 ofeach meeting, the committee holds a privatesession 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 totime. The committee Chair also has regularcontact with the CFO, the Head of Internal
Audit and the external auditor outside of• 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, theBoard 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 newtechnology portfolio. In our Burlington
office, the company’s innovation
department gave demonstrations of recent
and future technologies being developed.

• 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 andassessment, 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 andimprovements 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 thecompany's roadmap and initiatives toaddress cybersecurity risks. This wascomplemented by written cybersecurity
updates in the other two quarters.
For more information on the company's key
risks, risk management and the company’sbusiness 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

9.3

Key activitiesof theSupervisory
Board
committees in
2023

committee meetings.

9.3.1

Audit Committee

Our Audit Committee assists the Supervisory
Board in fulfilling its oversight responsibilities
for, among other matters, the quality andintegrity of the company’s financial andsustainability reporting, the effectiveness ofthe design and operation of the internal risk
management and control systems, theinternal and external audit process as well ascompany's process for monitoring
compliance.

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,•••

Pamela Knapp is the Chair, and Gerard van de
Aast and Bram Schot are members of the
Audit Committee.

•

The Audit Committee had seven regularmeetings in 2023: upon the conclusion ofeach quarter, twice in February (annual
report and auditor report; second meetingcombined Supervisory Board/Audit
Committee) and in December (hard close). In
2023, an additional meeting was held for•sustainability results and related press
releases;
Developments in larger legal cases
together with any related provisions as wellas material investigations;Fraud related risks and investigation;
Internal audits performed and follow-up
actions taken and improvements made;The annual audit plan and programs foreach quarter, the internal audit charter aswell as the functioning and effectiveness of
the internal audit function. The committee
approved the internal audit plan andinternal audit charter;
The enterprise risk management selfassessments, together with the risk
management framework and external risk
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• The company's annual integrity report overthe past year, and key observations as to• Financing and US pension de-risking
The committee addressed the turbulenceSupervisory Board to submit to the 2024
Annual General Meeting of Shareholders afees and the independence of the external
auditor. The committee reviewed thedevelopments in integrity cases. For more
information, see chapter 4, Brighter Lives,
Better World, section 4.3.5, Businessethics;• The annual impairment test analysis;• The company’s internal risk management
and control systems, and any significant
changes and improvements thereto, andthe effectiveness of internal control overfinancial reporting.

in the banking sector in the first half of2023.

proposal to appoint the company's new
external auditor, starting on January 1,
2026, for a period of three years.

professional fitness and good standing of
the external auditor and its engagement
partners. For information on the fees of
Ernst & Young Accountants LLP, refer tochapter 16, Signify N.V. financial
statements, note B, Audit fees.

In 2023, the Audit Committee also dedicatedtime to the following matters:

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 thecommittee and the full Supervisory Board.
The committee reviewed and discussed thepossible termination of a US defined
benefit plan in order to de-risk thecompany's financial exposure and toeliminate ongoing costs and funding needs.

• Sustainability reporting
In addition to the quarterly review of thereporting under the company's Brighter
Lives Better World 2025 program, thecommittee also reviewed progress onreporting under the EU taxonomy, andpreparations for the company's reporting
under the EU Corporate Sustainability• Tax policy update
The committee reviewed and discussed thecompany's tax policy and tax developments.

Reporting Directive (CSRD). The committee
discussed the double materiality
assessment made, and the split ofsustainability information now applied inthis 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 thecompany'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.

the committee and management, theSupervisory Board decided to propose there-appointment of the current external
auditor for another period. In accordancewith this proposal, the 2023 Annual
General Meeting of Shareholders reappointed Ernst & Young Accountants LLP
for the period 2023-2025.

• Re-appointment external auditor
2023-2025
Following a performance assessment by• Proposal external auditor 2026-2028
As EU law requires a rotation of theexternal audit firm after the firm hascompleted the company's statutory audit
for ten consecutive years, a new auditor
will need to be appointed for the period asfrom January 2026. The committee wasengaged in the auditor tender, resulting in
the committee's recommendation to the• 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 withmanagement 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 andobservations in relation thereto. In thereports, the external auditor also highlights
other areas, developments or audit
procedures performed, and theirobservations and considerations on
management judgement and estimatesapplied in the preparation of the financial
statements. In 2023, the committee
introduced having an additional meeting toreview the external auditor's draft yearend audit report and final draft annual
report, ahead of the combined Audit
Committee and Supervisory Board meetingon the annual report and audit.
In the Audit Committee meetings, theexternal 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 withaccounting standards and compliance with(financial) legal requirements. Other areasof the Audit Committee review included the
proposed external audit scope, approach,

The audit by the external auditor, including
a discussion of the key audit matters, isdiscussed in the auditor's report which isincluded in chapter 18, Combined
independent auditor's report.

9.3.2

Corporate Governanceand Nomination &Selection Committee

The Corporate Governance and Nomination &Selection Committee assists the Supervisory
Board by preparing the selection criteria andappointment procedure for members of theBoard of Management and the Supervisory
Board, periodically assessing the succession
planning for the individual members of theseboards and arranging interviews of potential
candidates. The committee also supervises
the policy on the selection and appointmentof certain other key management positions.
The committee is charged with reviewing thecompany’s corporate governance (for more
information on corporate governance referto chapter 11, Corporate governance). The
performance evaluation of the Board ofManagement and the Supervisory Board is led
by the committee.
Arthur van der Poel is the Chair, and Rita Laneand Frank Lubnau are the members of thiscommittee.

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The committee held five regular meetings in
2023 and reported its findings to the fullAs the company moves to a new operating
model announced in December 2023, it has

The Supervisory Board recommends theappointment of Jeroen Drost in view of his

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 andthe Chief Legal Officer. Committee members
are regularly in contact on topics ahead of acommittee meeting, resulting in efficientdecision-making during the meetings.

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 reappointment at the AGM to be held in May
2024.

wealth of experience in banking andinvestment activities across numerous
industries, which will bring a thoroughinvestor's perspective to our Board.
Subject to his appointment by ourshareholders, Jeroen Drost will become
the new Chair of the Audit Committee.

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• Composition Supervisory Board andonboarding
Following the selection process led by thecommittee, 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 anddevelopments in the Dutch corporate
governance landscape and the company’s
corporate governance structure.

management, and followed our cybersecurity training for Supervisory Board
members.

In 2023, the committee specifically dedicatedtime to the following matters:

In December 2023, the company
announced that the Chair of theSupervisory Board, Arthur van der Poel, will

• Composition Board of Management
Following a review and assessment by thecommittee, the Supervisory Board
proposed to re-appoint Eric Rondolat as
CEO and Chair of the Board ofManagement, at the AGM to be held in May
2024, for a period of four years.

step down at the close of the AGM to beheld 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 December 2023, the company
announced that Javier van Engelen, whojoined the company as its CFO in 2020, had
decided to leave the company on April 1,
2024. The committee initiated the searchand leads the selection process of his
successor.

In 2023, the committee prepared and led
an assessment and selection process that
resulted in the proposals by theSupervisory Board to appoint Jeroen Drost
as a new member to our Board, and to reappoint Pamela Knapp and Rita Lane at the
AGM to be held on May 14, 2024.

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 inaccordance with the Dutch corporate
governance code, her proposed reappointment is for a period of two years.
The Supervisory Board recommends her
re-appointment for continuity and in viewof her valuable contributions to the Boardand 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 expertiseand experience as well as the desiredboard size. For the re-appointments, therespective performance and board
evaluations have also been taken into
consideration.

Signify Annual Report 2023

• Board size and profile, including diversity
We believe it is of strategic importancethat our Board of Management andSupervisory Board are composed in linewith Dutch and international corporate
governance best practices and that they
have the expertise needed for a goodunderstanding of current affairs andlonger-term risks and opportunities
related to the company’s business, taking
into account our objectives that promote
diversity at board level. Our boards’ profileand the Supervisory Board skills andexpertise matrix reflect the areas that thecommittee and Supervisory Board regard
to be most relevant to address thetransition in the lighting industry and theexecution of the company's 5 Frontiers
strategy.
In 2023, the committee reviewed the skills
and expertise matrix and concluded thatcurrently no categories need to be added
nor removed. At the committee's initiative,
as from this Annual report, the number ofchecks per person are limited to the mostimportant categories for the member
concerned. The biographies of theSupervisory Board members maintained on
the company's website complement the
information included in the matrix.

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GovernanceSupervisory Board skills and expertise matrix
1
Fields in which the members of the Supervisory Board have a particular skill or expertise

Skill/experience item

ArthurGerardvanvan deder Poel Aast

CEO roleüüIndustrial experienceüüSophie
Bechu

ü

ü

ü

ü

ü

Business transformation

ü

Digital businessprocessesüüIT, cybersecurity

ü

ü
ü

ü

ü

ü

ü

ü
ü

Operations/Supply chain

1

ü

ü
ü

Diversity elements:
Gender identity, age,nationality

Frank
Bram
Lubnau Schotü

Projects/infrastructure

Technology/innovation

Rita
Lane

ü

Finance, expert level
Sustainability

Pamela
Knapp

ü
Male
75
Dutch

Male
66
Dutch

ü

FemaleFemale Female
Male
Male
63
65
61
54
62
French/ German American German Dutch
AmericanMr. 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.

The committee also reviewed the Boards
profile, including diversity, and concluded
that currently no update is required. For
the Supervisory Board members, and in linewith Dutch law, we aim that at least onethird 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 ofManagement members, we aim at having atleast one man and at least one woman for aboard 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 thisobjective. For more details on the profile,including the diversity of the Board ofManagement and Supervisory Board, referto 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, thecommittee concluded that a board ofabout seven members is a good size for thecompany.

Corporate statements

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Signify Annual Report 2023

The committee will continue to periodicallyassess its size and composition, including

As per our practice to engage an external
party to facilitate the performancethe desired diversity, and initiate searches
where indicated.

evaluation of the Supervisory Board and its
committees about every four years, thecommittee selected an external facilitator
for the 2023 evaluation process.

• ESG committee
We noted the suggestion from somestakeholders to companies in general toconsider establishing an ESG committee
from among their supervisory boards tosupport 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 fullSupervisory Board is and will continue to beengaged in the strategy, including
sustainability, whereas the review of thesustainability reporting is within the scopeof responsibilities of the Audit Committee.
In view of this, we saw no need to establish
an ESG committee from among theSupervisory Board. The committee
reconsidered the establishment of an ESG
committee again this year, and came to thesame conclusion. It will continue to monitor
the sustainability developments and needsin 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 theexecution of the strategy at theSupervisory 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.

• New Dutch corporate governance code
The committee discussed the new Dutch
corporate governance code that wasissued in December 2022, and reviewed
how the company embedded the updated
Code in its organization. The committee led
the review of the updates to theSupervisory Board Rules of Procedure,Supervisory Board committee charters andthe Board of Management Rules.

9.3.3

Remuneration
Committee

The Remuneration Committee assists theSupervisory Board by, among other matters,
reviewing and preparing remuneration
policies for the Board of Management andSupervisory Board, remuneration proposals
for individual members of the Board ofManagement and other key management
positions, as well as proposals for targets
relevant to the variable compensation ofmembers of the Board of Management andthe review of their performance.
Gerard van de Aast is the Chair, and Pamela
Knapp and Arthur van der Poel are themembers of this committee. Currently, no
member of the Remuneration Committee is amember of the executive management boardof another listed company.

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GovernanceIn performing its duties and responsibilities,
the Remuneration Committee is assisted byfor the Board of the Supervisory Board wereshared and discussed with the fullan external consultant and an in-house
remuneration expert.

Supervisory Board.

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 eachmeeting. The CEO, the Chief HR Officer, theHead 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 otherkey management employees. Following those
consultations, the committee prepareddecisions and advised the Supervisory Board.
As part of the standing agenda, theRemuneration Committee discussed, among
other matters, base salary levels for the
Board of Management, the target setting forvariable remuneration, the final and interim
performance results on variable
remuneration, scenario analyses, disclosurein the remuneration report and AGM voting
results on the remuneration report.
In 2023, the Committee performed a reviewof the remuneration policies for the Board ofManagement and for the Supervisory Board.
The committee Chair engaged with key
stakeholders, such as shareholders,shareholder representative groups and theDutch Central Works Council, to obtain
feedback on the proposed remuneration
policies, executive remuneration in generaland 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

Also refer to chapter 10, Remuneration
report, for further information on the
remuneration policies review and theimplementation of the current policies in
2023.

9.3.4

Digital 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 thegovernance for deciding on digitalprioritization.
As from her appointment in May 2023, Sophie
Bechu succeeded Frank Lubnau as the Chairof the Digital Committee. Rita Lane, Frank
Lubnau and Bram Schot are the members of
the Digital Committee.
The Digital Committee held four regularmeetings in 2023 and reported its findings to
the full Supervisory Board after eachmeeting. 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 theChief 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 aroadmap covering three focus areas:
digitalizing customer interfaces, digitalizing
processes and digitalizing offers. To enable
this roadmap, the company also has focused

Corporate statements

Consolidated financial statements

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 planand focus in 2023 to accelerate digitalization,
together with the governance forprioritization.
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

Signify Annual Report 2023

identify strengths that we want to keep andto identify matters that the Supervisory
Board or the company can improve. In mostyears, the evaluation of the Supervisory
Board's performance is organized internally,
led by the Nomination and GovernanceCommittee. About every four years, theSupervisory Board engages an external party
to facilitate the performance evaluation. Inline 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 instrengthening its effectiveness. They
facilitated the Board in evaluating its own

Europe, the company's system & services
business, advanced analytics, and thecompany's portfolio optimization andstandardization, including enterprise
resource planning (ERP) enhancement.

functioning, the functioning of its fourcommittees and its relationship with theBoard of Management and otherstakeholders. The evaluation started with aquestionnaire, followed by interviews witheach of the members of the Supervisory
Board and Board of Management as well as

9.4

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, firstwith the full Supervisory Board only andthereafter also with the other interviewees.

Performance
evaluation

We evaluated the performance of the Boardof Management and of the Supervisory Boardand its committees in 2023.
The Board of Management evaluated theirteam and personal targets performance, andshared their views with the Chair and Chair of
the Remuneration Committee, which werediscussed 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

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 areeasy to mobilize if necessary and which is

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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 ofthe long-term value creation process were
evaluated positively. To add to this, theambition was formulated to further balance
the focus of the Supervisory Board on shortterm performance with long-term strategic
portfolio developments. This is considered
important given the ongoing geopoliticalturbulence and uncertainties in markets.
The Supervisory Board makes use of fourcommittees: Audit, Remuneration, Digital andNomination & Governance. Their functioning
is evaluated positively. Previous actions todefine the scope and focus of the DigitalCommittee more clearly, have beensuccessful. The entire board followed an ESG
training in 2023 and decided thatsustainability remains a key topic for theentire board as it is deeply rooted in every
part of Signify. Specific elements, such as
regulatory changes, organization culture andsocial aspects, will be reviewed in depth in
the relevant committees.
The Supervisory Board expresses theambition to further involve and expose
second level leadership and potentials, bothformally and informally. This is based on
positive experiences in the recent past andconsidered important to maintain oversight
regarding organization development andculture, against the background ofannounced changes within the Board ofManagement.

9.5

Corporate performance

Governance

Financialstatements
2023 anddividend

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 haveapproved these financial statements.
We recommend to the General Meeting of
Shareholders to adopt the financial
statements for 2023.
We likewise recommend to shareholders thatthey adopt the proposal by the Board ofManagement to declare a cash dividend of
EUR 1.55 per ordinary share from the 2023
net income.

Corporate statements

9.6

Consolidated financial statements

Appreciation

Market conditions in 2023 remained
challenging. We would like to thank the Boardof Management and all Signify employees fortheir continued commitment, ability to adapt
to the changing environment, andperformance throughout the year.
We would like to thank our departing CFO
Javier van Engelen and CCO Maria Letizia
Mariani for their important contributions tothe company over the years.
In May 2024, I will step down as Chair. I haveall confidence that Gerard van de Aast will bea 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

Signify Annual Report 2023

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Corporate performance

10 Remuneration
reportGovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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 ofManagement 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 andthe Supervisory Board. We continued our engagement with key stakeholders, such as
shareholders, shareholder representative groups and the Dutch Central Works Council, tounderstand their views on remuneration in general and to solicit feedback on the proposedchanges for the remuneration policies. These interactions were very productive, leading to agood dialogue and valuable feedback, particularly related to improvement opportunities that wehave included in this remuneration report as well as the policy proposals that will be on theagenda 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 atrelatively high levels, depressing consumer spending. The uncertainty in the geopoliticalenvironment continued and yet another conflict erupted. It was therefore another year ofadaptation 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 andindoor 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 maintainprofitability 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 differentiatedposition 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 ourcollective impact on the planet. The year 2023 demonstrated a readiness by business and publiccustomers 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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Corporate performance

Governancegaining ground in connected professional systems and services, with connected lighting andgrowth 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 thepositive impact on the environment and society by the end of 2025. This year was the third yearof 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 thetargets to achieve the 2025 outcome.
Signify customers have reported an improved experience as the customer net promoter scoreincreased 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 ascore of 36 at the end of 2022. This decline was expected and attributed to the announcementin 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 theAnnual General Meeting of Shareholders, held on May 16, 2023.
In preparation for the 2023 Remuneration Report and the proposed changes for theRemuneration 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, andultimately 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 fromthose interactions:

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

• 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 performancemeasures 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 inlight of Signify's evolution as an independent organization, market practices, expectations ofshareholders, and developments in corporate governance. During 2023, we undertook adetailed review of the policies with an external remuneration expert to challenge us, bring bestpractice 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 proposedchanges.
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 byremoving 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 nonfinancial 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 thebase salary and the clawback clauses.
We very much appreciated those discussions and we have enhanced the policy based on the
feedback received.

<≡>We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

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

The proposal for the revised Remuneration Policies for the Board of Management and theSupervisory Board will be included in the convocation documents for the 2024 AGM.

LTI
Better World

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

Brighter Lives76

Climate action

25%

25%

Circular economy

Food availability
Safety & security
Health & well-being

Great place to work

25%

Relative TSR
Sustainability

25%Free cash flow
ROCE

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 asa leader in its approach to sustainability, the degree of reporting on these metrics and therelated link to the long-term incentive plan. Additional input from stakeholders related to adesire for the inclusion of ESG metrics in the short-term incentive plan. While Signify believes

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 reportand 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

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

Gerard van de Aast
Chair of the Remuneration Committee

improvement which drives them.

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Corporate performance

Governance10.2 Remuneration Board of Management
Introduction
Signify has a balanced compensation policy for its employees, from our CEO and other membersof 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 andsustainability targets. The remuneration policy also serves a communication purpose as it clearlystipulates and supports a common approach to deliver on the company’s strategy.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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 thecompany’s purpose and long-term strategic objectives, while taking the interest of all thecompany’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 ofcompensation at risk;• Remuneration should drive long-term value creation from a financial, non-financial andsustainability perspective;• During the policy design and review process, stakeholder feedback and legal provisions,
including the Dutch Corporate Governance Code, are taken into consideration.

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 onenvironment 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 ensuresthat the interests of the organization, society at large, and our impact on the environment inwhich 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.

Remuneration components
The compensation package for the members of the Board of Management consists of thefollowing 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.

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

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

The report included in this chapter constitutes the remuneration report within the meaning ofsection 2:135b of the Dutch Civil Code.

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*

NexansRheinmetall Group

BAM

Nordex**New companies to the labor market peer group<≡>We are Signify

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Summary of Remuneration
Compensation Element

2020 Policy Summary

Application in 2023 Summary

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 acollective labor agreement (CLA) increase agreed for the CLA populationin the Netherlands.

Base salary as follows:
E.H.E. Rondolat
H.M. Chitale
F.J. van Engelen Sousa
M.L. MarianiCEO:On-target: 80%
Maximum: 160% of base salary

Measures:• Comparable sales growth (20%)• Adjusted EBITA (30%)• Free cash flow (30%)• Team/individual (20%)

Annual cash incentive

Total direct compensation

78

Other BoM members:
On-target: 60%
Maximum: 120% of base salary

80% is related to financial performance measures and focuses on therealization of strategic business objectives.
20% is related to team and individual performance measures.

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

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 equallyweighted: 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.

Actual payout:
E.H.E. Rondolat
H.M. Chitale€ 985,223€ 644,000€ 644,649€ 644,649

In % of target:

F.J. van Engelen Sousa
M.L. Mariani

55.8%
55.8%
56.8%
57.8%

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

• 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)<≡>We are Signify

Other compensation

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Corporate performance

GovernanceCorporate statements

Compensation Element

2020 Policy Summary

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 toparticipate in a net pension arrangement by investing the net (after tax)
amount.

Additional benefits

Consolidated financial statements

Signify Annual Report 2023

Application in 2023 Summary
Accumulated annual pension as of
Dec 31, 2023:
E.H.E. Rondolat
H.M. Chitale
F.J. van Engelen Sousa
M.L. Mariani€ 47,702€ 11,586€ 6,562€ 6,715CEO:€ 36,960€ 23,920€ 6,800

Other BoM members:€ 31,560€ 6,000

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:

H.M. Chitale and F.J. van Engelen
Sousa (per contractual agreement
related to family relocation):
Allowance international school (net):€ 12,500<≡>

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GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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/
1salary Annual incentive

Performance2
shares costs

Restricted share
3
rights costs

Pensionallowances

Pension scheme
costs

Other
4
compensation

Termination5
benefits

Total
remuneration
costs

2023
E.H.E. Rondolat

985,223439,804

570,304–

214,103

31,834

41,536–2,282,804

H.M. Chitale

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

31,83433,515–

1,101,622

M.L. Mariani

644,649

223,564

266,689–

128,960

31,834

49,166644,649

1,989,511

2,678,188

1,018,899

1,001,646–

552,755

115,456

144,952

644,649

6,156,545

E.H.E. Rondolat

947,330

90,944

705,530–

240,492

28,13331,725–2,044,154

F.J. van Engelen Sousa

619,855

44,630179,199

96,799126,247

28,13329,404–

1,124,267

6

2022

M.L. Mariani
1
2

3
4

5

6

619,855

44,630349,509–126,247

28,13342,262–

1,210,636

2,187,040

180,204

1,234,238

96,799492,986

84,399103,391–

4,379,057

The annual incentive is related to the performance in the year reported and which is paid out in the subsequent year.
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.
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.
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 useof 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.
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 basecompensation/salary (currently estimated to be a gross amount of EUR 644,649), which is payable in June 2024.
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 prorata 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 notbeen 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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Corporate performance

GovernanceTo support the remuneration objectives, the policy includes significant variable components inthe 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.

CEO

Other BoM members

42%

25%

28%

Base compensation/Salary
Annual incentive
Long-term incentive

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.

Base compensation/Salary
Annual incentive
Long-term incentive

The table below shows the actual remuneration mix in 2023.

Fixed

4

Proportion fixed/variable

1,794,604

41%/59%3,4525,088

135,835

79%/21%

838,958

219,69679%/21%

854,609908,71248%/52%

M.L. Mariani

32

1,272,696

F.J. van Engelen Sousa

2

Variable

E.H.E. Rondolat
H.M. Chitale

1

1

4

Base salary

The base salary compensates for the individual's experience, skills, duties, responsibilities andthe contribution of the individual within Signify. The Supervisory Board determines the basesalary 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 adjustmentof the base salary, it aligns with (collective and merit) increase as agreed for the CLA populationin the Netherlands. The Supervisory Board regularly reviews the total direct compensation(including base salaries).

33%

36%

Signify Annual Report 2023

employed. Scenarios included minimum, threshold and maximum performance all under a 0%
share price appreciation assumption. Additional scenarios included maximum performance withboth 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 performanceand 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 toappropriate remuneration.

10.2.236%

Consolidated financial statements

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

Mix of remuneration elements

10.2.1

Corporate statements

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.
Annual incentive realized as reported in the table "Remuneration and remuneration costs of individual members of the Boardof 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.
Remuneration costs present the period functioning as member of the Board of Management as of May 16, 2023.
The variable remuneration for H.M. Chitale and F.J. van Engelen Sousa does not yet include an LTI vesting value as Board ofManagement member and therefore the mix fixed/variable differs from the mix for the other Board of Management members.

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

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We are Signify

10.2.3Creating value

Brighter Lives, Better World

Corporate performance

Governance

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, longterm value creation and sustainable performance. Variable pay is based on both financial andnon-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 theannual cash incentive and the long-term equity-based incentive. The target definition for thesevariable 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 willassess 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 thecompany’s long-term objectives.
Under the 2020 remuneration policy, the Supervisory Board can annually select two or threefinancial performance measures from the following list, and determine the weighting perperformance 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) andinvestment return (such as return on capital employed).
The possibility to annually select financial performance measures from the above list gives theSupervisory Board a certain level of flexibility to ensure continuous alignment of theperformance measures with the company’s strategy and financial objectives for the mid-term.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

The financial performance measures used in the annual incentive to track performance over2023 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 withthe 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 thecompany 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 andultimately 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 andresults 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 assuch the achievement of that metric was 136%. Overall, it was a mixed financial performance forthe 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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Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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 the individual goals, the outcomes were modest. Cash optimization and inventory
significantly improved while quality and service levels were protected as evidenced in thefor 2023.
For the team objectives, the overall assessment was good but with mixed results across thedifferent priorities. With respect to culture change and people engagement, there were somevaried outcomes. Investment in future talent via campus hiring was strong compared to prioryears 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% withwomen 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 Net Promoter Score and improvements in order and delivery. The Board ofManagement 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 toposition Signify very well relative to the ambitious targets set for the 2025 program.

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

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 thewas 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.

individual objectives.

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Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

The summarized outcomes realized on all measures are as follows:
Threshold50%

ActualPayout %Weighted
payout %(3.0)%(8.3)%

–%

–%

10.6%

10.0%

–%

–%

8.7%

136.0%

40.8%

136.0%

40.8%

Financials (80% weighting)

WeightingComparable sales growth20%

Adjusted EBITA

30%Free cash flow

30%

6.0%

Payout level financials

Minimum

Non-financials (20% weighting)Expected

Exceptional

Weighted
payout %Team targets (10% weighting)Description and achievements

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 withlwomen representing 57%; 1% increase in gender diversity with women representing
38% of total population.
US business performance

Growth below expectations; profitability stable with strong cash performance.

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%.

Organization redesign

New operating model defined, structured and communicated in Q4 2023; ready for
implementation in Q1 2024.

Payout level team targets

l
l
l
l

8%
E.H.E. Rondolat

H.M. Chitale

F.J. van Engelen

M.L. Mariani

Payout level individual targets(10% weighting)

7%

7%

8%

9%

Payout level non-financials (20%)

15%

15%

16%

17%

Total payout level

55.8%

55.8%

56.8%

57.8%

l
l
l

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Creating value

Brighter Lives, Better World

Corporate performance

Governance

The multiple achieved results in the following payout for each Board of Management member:
Annual incentive realization 2023 in EUR

Annualbase

On-target% ofannualbase

985,223 x

80%

x

55.8%

x

1 =

439,804

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

E.H.E. Rondolat
H.M. Chitale

11Multipleachieved

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

Pro-rata
factorRealizedannualincentive(in EUR)

Corporate statements

10.2.5

Consolidated financial statements

Signify Annual Report 2023

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%) andsustainability (25%);• Payout per performance measure can vary between 0% and 200%.

Performance measures

25%

25%

Relative TSRFree cash flow
Sustainability
ROCE

25%

25%

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Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Relative TSR

Performance-incentive zone for TSR in % of grant value

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

Ranking

15

14

13

12

11

10

9

8

shareholder return (TSR) measures the share price growth plus dividends paid over the threeyear performance period. Performance is expressed as a percentage. This percentage iscompared to the TSR performance of companies included in the peer group specificallycompiled for this purpose. The TSR performance is determined for each company in the peergroup and the performances are ranked from top to bottom. Signify’s position in the ranking,
together with the payout curve, determines the payout level.

Payout

0

0

0

0

0

0

0

75 100 125 150

7

6

5

4

3

2

Free cash flow

In 2023, the peer group consisted of the following companies:
TSR Peer Group

Sustainability
Honeywell Int.

Panasonic

Acuity Brands

HubbellSignify

Eaton Corporation

Johnson Controls

Schneider Electric

FagerhultLegrandToshiba

Hitachi

MLS Co Ltd

Zumtobel GroupThe 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 remainsaligned with the strategic objectives, the geographical spread and the business characteristicsof 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.

1

175 200 200 200

The vesting of another 25% of the annual long-term incentive grant is linked to performancemeasured by a free cash flow target over the three-year performance period. The targets andintervals around these measures are determined by the Supervisory Board, based on thecompany’s strategic, multi-year plan.

ABB

<≡>

Signify Annual Report 2023

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 andintervals around these measures are determined by the Supervisory Board, based on thecompany’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 discretionof 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 toperformance measured by a return on capital employed target. The targets and intervals aroundthese 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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Creating value

Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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

E.H.E. Rondolat

H.M. Chitale
2

F.J. van Engelen Sousa

M.L. Mariani

1

2

Vesting date

Unvested
openingbalance atJanuary 1,
2023

Number ofsharesgrantedin 2023

Number ofsharesvestedin 2023

901,70304.05.2023

45,932—

52,823

1,354,800—

21,312919,73729.04.2024

21,312———

21,31218.05.2022

23,256

947,33001.05.2025

23,256———23,25617.05.2023

33,052985,22301.05.2026—

33,052——

33,05217.05.2023

17,284515,200

01.05.2026—

17,284——

17,28420.05.2020——

04.05.2023

—

—

—

—

—

19.05.2021

11,156

481,440

29.04.2024

11,156———

11,15618.05.2022

12,172495,88401.05.2025

12,172———

12,17217.05.2023

17,300515,71901.05.2026—

17,300——17,30020.05.2020

23,228456,000

04.05.2023

23,228—26,713685,148—

19.05.2021

11,156

481,440

29.04.2024

11,156———

11,15618.05.2022

12,172495,88401.05.2025

12,172———

12,17217.05.2023

17,300515,71901.05.2026—

17,300——17,300Grant date

Number ofsharesoriginallygranted

Value atgrant date(in EUR)

20.05.2020

45,93219.05.2021

1

Value atUnvested
vesting
closing
date inbalance at2023 December 31,(in EUR)
2023

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.
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 inshares to H.M. Chitale, for which he received 2,547 dividend shares, and for which F.J. vanEngelen 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 theresults, nor to the original targets set for the 2021 grant.

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Brighter Lives, Better World

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Relative TSR (25% weighting)

Return on Capital Employed (25% weighting)

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

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

the 14th ranked company in the peer group as shown in the following table, resulting in an
achievement of 0%.

pension liabilities. Based on an 7% achievement of the ROCE metric, the Supervisory Board
determined the LTI Plan ROCE achievement as 0%.

January 1, 2021 – December 31, 2023
Rank Company

TSR performance

Below threshold

PayoutROCE %–%< 11.0%1

Hitachi

166.0%

Threshold

40%

11.0%

2

Hubbell

107.9%

Target

100%

14.0%

3

Eaton Corporation

107.4%

Maximum

200%

17.0%

4

Toshiba

78.5%

5

Acuity Brands

70.0%

Sustainability (25% weighting)

6

ABB

56.8%

7

Schneider Electric

51.5%

8

Panasonic

51.0%

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

9Fagerhult

42.2%

10

Legrand32.3%

11

Johnson Controls

26.3%

12

Zumtobel

19.3%

13

Honeywell

14

Signify(10.0)%

15

MLS(15.5)%

5.2%

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%

Target100%

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%.

deliver on the ambitions by 2025. This year was the third year of this five-year program, and thecompany is on track to reduce emissions across the entire value chain by 40% against the 2019baseline, driven by leadership in energy efficient and connected LED lighting solutions whichsignificantly reduce emissions during the use phase. Circular revenues increased, surpassing the2025 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. Womenin leadership, however, is behind the targets set for 2023, despite increasing the percentage ofwomen 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%.

<≡>

We are Signify

Creating value

Brighter Lives, Better World

Corporate performance

Better World

StatusClimate action

Circular economy

Cumulative carbon reduction,in million tonnes

Circular revenues

1

Governance

Result 2023

On track

1

Food availability
Safety & security
Health & well-being

Brighter lives revenues

Great place to work

Women in leadership
positions

E.H.E. Rondolat

31%
1

Off track29%

Achievement

Weighting

Vesting level

TSR

–%

25%

–%

Free Cash Flow

–%

25%

–%

Return on Capital Employed

–%

25%

–%

141.7%

25%

35.5%

10.2.7

Holdings as
1% of baseDecember 31,
2023

Holdings as
1% of base

231,570766.9%

259,633

733.2%

n.a.

n.a.

78,623339.7%

26,951

136.4%

27,297117.8%

M.L. Mariani

33,484169.5%

50,054216.0%

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).

Pensions and other benefits

The design of the pension plan for the members of the Board of Management is the same as forall other Signify employees in the Netherlands, which is referred to as a collective definedcontribution plan, based on career average salary.

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.

Total

December 31,
2022

F.J. van Engelen Sousa

10.2.8

Status versus Brighter Lives, Better World 2025 doubling target.

Sustainability

Signify Annual Report 2023

Signify shares held by Board members in number of shares

33%

On track

Consolidated financial statements

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.

334

On track

Corporate statements

H.M. Chitale
Brighter Lives

89

35.5%

Share ownership guidelines and holding requirement

Under the Signify share ownership guidelines, members of the Board of Management must hold acertain value in shares in the company. These guidelines are designed to further align theinterest 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 is300% of base salary and for the other members of the Board of Management it is 200% of basesalary. 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 ofManagement shall hold all after-tax shares received under the long-term incentive plan for aperiod of at least five years from the date of grant.

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 witha 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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Brighter Lives, Better World

Corporate performance

Governance

The table below gives an overview of the accumulated annual pension entitlements and thepension costs of the individual members of the Board of Management.

2019
E.H.E. Rondolat

57

44,672

268,625

47,702245,937

H.M. Chitale

51

n.a.

n.a.

11,586100,686

F.J. van Engelen Sousa

55

4,379

154,380

6,562

160,794

M.L. Mariani

63

4,528

154,380

6,715

160,7942
3

577,385

H.M. Chitale

Change in %Change of the remuneration and company performance

For the purpose of reflecting company performance, free cash flow generation and share pricehave been selected as the most relevant measures. The table below reflects the annual changeof 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 isprovided over the past five years.

1

Change in %Employees

2

Change in %Free cash flow (in millions of EUR)
Change in %Closing share price on lastbusiness day December
Change in %1

Members of the Board of Management are also entitled to other benefits, such as expense andrelocation allowances, medical insurance, accident insurance and company car arrangements.

10.2.91

Change in %M.L. Mariani

Total of entitlements under applicable pension scheme in Signify, including - if applicable - transferred pension entitlements
under pension scheme(s) of previous employer(s).
Cost includes paid pension allowances as well as pension premium paid by employer to collective defined-contribution plan.
Costs for H.M.Chitale are disclosed for the period starting May 16, 2023.

In the case of H.M. Chitale and F.J. van Engelen Sousa, to facilitate relocation to theNetherlands, as per contractual agreement, an allowance for the international school costs of
EUR 12,500 net was paid in 2023.

<≡>

Signify Annual Report 2023

2

3

2020

2021

3

2,822,104 3,245,335 3,228,091

1

F.J. van Engelen Sousa

668,211When 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 theBoard of Management.

1

Change in %Total
pensionrelated
costs
2,3
2023

E.H.E. Rondolat

Pension costs
1

Total Accumulated
pensionannual
related pension as ofcosts December 31,
2
1
2022
2023

Consolidated financial statements

Remuneration and company performance development in EUR unless otherwise stated

Accumulated annual pension entitlements and pension-related costs in EUR
Accumulated
annualAge at pension as ofDecember 31, December 31,
1
2023
2022

Corporate statements

2022

2023

2,044,154 2,282,804

10%

15%

(1)%

(37)%

12%

-

-

-

-

782,608

-

-

-

-

-

-

599,753

1,472,859

1,124,267

1,101,622

-

-

146%

(24)%

(2)%

-

1,225,491

1,727,286

1,210,636

1,344,862

-

-

41%

(30)%

11%

60,601

51,78051,33753,766

63,623

(1)%

(15)%

(1)%

5%

18%

529

817

614

445

585

73%

54%

(25)%

(28)%

31%

27.86

34.53

40.78

31.38

30.32

36%

24%

18%

(23)%

(3)%

Remuneration is based on total compensation costs as reported in the table "Remuneration and remuneration costs ofindividual 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 theamount 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.
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.
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 payoutof between 55.8% to 57.8% for Board of Management members driven by below-thresholdoutcomes on two measures as detailed in subsection 10.2.4.
Employee salary adjustments and general wage increases during the year were much higher thanin prior years and are reflective of the inflationary environment. Employee average totalcompensation has increased by 18% for 2023. This is primarily driven by the termination

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Signify Annual Report 2023

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,

The CEO pay ratio has declined from 2022 to 2023, as a result of lower performance sharecosts and the termination of the transitional pension allowance, offset by a higher annual

employee average total compensation has increased by 11%.

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 over2023 aligns with Signify’s performance for the year.

10.2.10 Signify's internal pay ratio

Claw-back and change of control

The remuneration design for the members of the Board of Management is an integral part of theoverall pay structure within the company. Signify uses the Hay system to evaluate and grade thevarious 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 thecompany. 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 ofManagement.

10.2.11

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: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 thecompletion of the change of control.

Fiscal year
2023
2022

2

3

2,282,804

63,623Resulting pay
ratio

2,044,154

53,76638

51,33763

2020

3,245,335

51,78063

20192,822,104

60,60147

3

No variable remuneration was clawed back in 2023.

36

3,228,091

2021

1

CEO total
Average total
1
2
remuneration compensation employees

The annual cash incentive and the long-term incentive of the members of the Board ofManagement 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 andunfair, (b) recover an incentive if it was granted on the basis of incorrect information on thefulfillment 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 Boardof Management concerned.

Remuneration is based on total compensation costs as reported in the table "Remuneration and remuneration costs ofindividual members of the Board of Management" under section 10.2.
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.
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%.

10.2.12Additional arrangements

Unless relevant law provides otherwise, the members of the Board of Management and of theSupervisory Board shall be reimbursed by the company for various costs and expenses, such asreasonable 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 amember of the Board of Management or a member of the Supervisory Board that can becharacterized 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 ofManagement 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

The fees and allowances for travel are as follows:

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

Remuneration Supervisory Board in EUR

Signify Annual Report 2023

Supervisory Board fixed annual fee

10.2.14

Severance arrangements

Contractual severance arrangements of members of the Board of Management comply with theDutch 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 Boardof 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.

10.2.15Loans

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 thecompany. 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.

Chair

110,000

Vice-Chair

85,000Member

75,000Committee fees
Audit Committee
Chair

22,500Member

13,000Digital Committee
Chair

22,500Member

13,000

Remuneration Committee
Chair

15,000Member

10,000Nomination Committee
Chair

15,000Member

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 tobe 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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Governance

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

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

-

-

-

-

78,450P. Knapp-

58,698115,000

125,000

125,000
113,000

1

S. Bechu
R.S. Lane

121,689

87,875108,000

123,000

A.P.M. van der Poel

110,000

25,0005,000

140,000

F. Lubnau-

51,470112,500

122,500

116,575

G. van der Aast

85,00028,0005,000

118,000

B. Schot

2

-

-

-

68,125106,000

46,875

14,07517,50078,450P. Knapp

75,00032,50017,500125,000

R.S. Lane

75,00020,50017,500113,000

F. Lubnau

75,00024,07517,500116,575Total

2

75,00026,0005,000

106,000

541,875

170,150

85,000797,025

A.P.M. van der Poel

110,000

25,0005,000

140,000

G. van der Aast

85,00028,0005,000

118,000

3

28,2259,800–

38,025

P. Knapp

75,00032,50017,500125,000

R.S. Lane

75,00020,50027,500123,000

F. Lubnau
4,5
B. Schot

75,00046,87530,000
16,25017,5005,000

122,500
68,125495,100

162,050

77,500734,6502022

E. Blok5

2020

Committees

B. Schot4

2019

Membership

S. Bechu

3

Signify Annual Report 2023

Other1
compensation

2023

2

Consolidated financial statements

Supervisory Board remuneration 2019 - 2023 in EUR (excluding VAT)

Remuneration Supervisory Board in EUR (excluding VAT)

1

Corporate statements

The amounts mentioned under other compensation relate to the allowance for (inter-)continental travel.
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.
Stepped down as member of the Supervisory Board on May 17, 2022.
Comparatives for 2022 were revised to exclude the fees and allowances paid during the observer period of Mr. Schot for theamount of EUR 28,125.
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 theSupervisory Board over the full financial years over the past five years.

1

2
3
4

5

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.
Appointment as a member of the Supervisory Board in AGM 2022.
Includes 20% COVID-19 reduction in Q2 2020.
Comparatives for 2020 were revised to exclude the fees and allowances paid during the observer period of P. Knapp for theamount of EUR 8,000 and for F. Lubnau for the amount of EUR 44,250.
Comparatives for 2022 were revised to exclude the fees and allowances paid during the observer period of B. Schot for theamount 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 membersof 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 withworking capital in response to feedback from stakeholders. For 2024, working capital andadjusted 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 ofsales 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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10.4.3Creating value

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Corporate performance

Governance

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 byremoving 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 whatshareholders 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 nonfinancial 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 andthe clawback clauses.
The proposed Supervisory Board remuneration policy does not reflect any material changes.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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Governance

11 Corporate
governanceIntroduction
Signify N.V., a public company with limited liability organized under Dutch law, is theparent company of the Signify group.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Signify N.V. has a two-tier board structure
consisting of a Board of Management

In line with the Dutch Corporate Governance
Code, other parts of the Annual Report

responsible for the management of thecompany and a Supervisory Board thatsupervises and provides advice to the Boardof Management. The two boards are
independent of each other and areaccountable to the Annual General Meetingof Shareholders (AGM) for the performanceof their duties.

address and explain the strategy and cultureof Signify aimed at sustainable long-termvalue creation. Signify’s strategy is describedin 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 toconsider the economic, social andenvironmental impact of our businessactivities.

The Board of Management and theSupervisory Board are responsible formaintaining an appropriate corporate
governance structure of the company.
Signify N.V.’s corporate governance

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,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

Supervisory Board report, which describe
how the Supervisory Board is involved in thecompany’s strategy as well as other topics
such as culture and diversity & inclusion.

implemented a code of conduct (the Integritycode), policies, directives and authorization
schedules throughout Signify in order tostrengthen its governance framework.

culture is centered around its four values:
Customer First, Game Changer, Greater
Together and Passion for Results, andanchored by the integrity norms described in
our Integrity code. An important aspect ofour culture relates to diversity & inclusion,
which is discussed and explained in the same
chapter.

In this chapter, the company addresses themain elements of its corporate governancestructure, reports on how it applies theprinciples 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 thecorporate governance structure of thecompany, when deemed necessary in theinterests of the company, will be disclosed inthis chapter.

As set out in chapter 4, Brighter Lives, Better
World, section 4.3, Brighter Lives, Signify’s

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11.1

Creating value

Brighter Lives, Better World

Signifyorganization

Throughout 2023, Signify’s business isorganized 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 thedevelopment of their strategy and productportfolio.
In addition, to manage its global sales
channels, the company’s commercialorganization is currently structured along
several geographical market clusters. These
market clusters are principally responsiblefor driving and managing sales, managing
customer relationships and delivering thecommercial activities of the business acrossthe 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 andinvestigations, finance, human resources,
strategy and sustainability, innovation andoperations.
On December 1, 2023, Signify announced a
new operating model, which includes four
vertically integrated businesses: Professional,
Consumer, OEM and Conventional, and is tobe implemented during 2024.

11.2

Corporate performance

Governance

Board ofManagement

The Board of Management is entrusted withthe management of the company. The Boardof Management focuses on sustainable longterm 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 affiliatedenterprises, taking into consideration theinterests of its stakeholders.
Among other responsibilities, the Board ofManagement drives the company’s
management agenda, defines and deploys thestrategic direction, identifies opportunities
and risks connected with its businessactivities and strategy, pursues theoperational and financial objectives of thecompany, and monitors sustainability matters.
The Board of Management is accountable to
the Supervisory Board for its actions anddecisions. The Chief Executive Officer andother members of the Board of Management
have regular contact with the Chair and othermembers 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 ofManagement require Supervisory Board
approval. These decisions include important
proposals for capital expenditures,

Corporate statements

Consolidated financial statements

acquisitions, divestments, decisions
concerning financial and operational
objectives and strategy to achieve suchobjectives, changes to corporate policies, aswell 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 anomination 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 atthe end of the AGM to be held in the fourthyear after the year of their appointment. Reappointment is possible for consecutive
terms of four years or, if applicable, until alater retirement date or other termination
date in the fourth year, unless the General
Meeting resolves otherwise. Members may besuspended by the Supervisory Board and theGeneral 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 andexperience among its members,
encompassing industrial, technology &Signify Annual Report 2023

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 befound 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 bodythat is independent of the Board ofManagement. The Supervisory Board
supervises the policies and management andthe general affairs of the company. The
Supervisory Board appoints a Chair and aVice-Chair from among its members. The
Chair ensures the members of theSupervisory Board and its committees
function properly in all respects and comply
with the Supervisory Board Rules ofProcedure. The Chair is the main contact onbehalf 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 theSupervisory Board are guided by the interestsof the company and the business of thegroup, taking into consideration the interestsof its stakeholders.

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Independence of the Supervisory
Board
The Supervisory Board is a separate
corporate body that is independent of theBoard of Management. Its independent
character is also reflected in the requirementthat members of the Supervisory Board canbe neither a member of the Board ofManagement nor an employee of thecompany. 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 areappointed by the General Meeting on thenomination of the Supervisory Board, which
nomination may be binding.
The term of appointment of a member of theSupervisory 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 theSupervisory Board are eligible for reappointment 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 ofa member of the Supervisory Board after aneight-year term must be included in thereport of the Supervisory Board.
As from 2022, a mandatory gender quota
applies under Dutch law requiring supervisory

Corporate performance

Governanceboards 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 beobserved in case of a new appointment of amember of the Supervisory Board and a reappointment of an acting member of theSupervisory Board after an eight-year term.
Any new appointment or re-appointment
after an eight-year term resulting in thecomposition of the Supervisory Board notmeeting this gender quota, will be null andvoid. 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 tothe Board of Management, see paragraph10.2 above.
The composition of the Supervisory Board
shall also be in accordance with the bestpractice provisions on independence of the
Dutch Corporate Governance Code as well as
Dutch law restrictions on the overall numberof supervisory positions that a member of theSupervisory Board may hold. Each member
shall be capable of assessing the broad
outline of the overall management of thecompany.
The size of the Supervisory Board may varyover time, as considered appropriate tosupport its profile. Until May 16, 2023, theSupervisory Board consisted of six and, asfrom that date, of seven independent
members.

Corporate statements

11.4

Consolidated financial statements

Supervisory
Board
Committees

In 2023, the Supervisory Board had fourcommittees: The Audit Committee, theCorporate Governance and Nomination &Selection Committee, the Remuneration
Committee and the Digital Committee. Eachof 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 andcomposition of the committees during 2023 isset out in chapter 9, Supervisory Board
report.
Each committee has a charter describing itsrole, responsibilities and functioning. These
charters are published on the company’s
website. The responsibilities of eachCommittee are described in more detailbelow.

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, theeffectiveness of the design and operation of
the internal risk management and control
systems, the internal and external audit
process, the internal and external auditor’squalifications, its independence and its
performance, as well as the company’s
process for monitoring compliance with laws
and regulations and the Integrity code. It

Signify Annual Report 2023

reviews the company’s annual and interim
financial statements (including sustainability
information) prior to publication andperiodically discusses the company's key
risks. It maintains contact with and supervises
the external auditor and prepares thenomination of an external auditor for
appointment by the General Meeting.
The Audit Committee meets at least once
before the publication of the quarterly andannual accounts of the company.

Corporate Governance andNomination & Selection
Committee
The Corporate Governance and Nomination &Selection Committee:• Advises the Supervisory Board on theselection and appointment of members of
the Supervisory Board and the members of
the Board of Management;• Prepares the selection criteria andappointment 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 andappointment of the company's leadershipteam, appointments of which are subject to
the Supervisory Board's approval;• Periodically assesses the size andcomposition of the Board of Management
and the Supervisory Board, and thefunctioning of the individual members, andproposes on appointments and reappointments;

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Governance• Leads the performance evaluation of theBoard of Management and Supervisory

Digital Committee

Board;• Reviews the corporate governance of thecompany and can make recommendations
to the Supervisory Board relating to thecorporate governance of the company atleast once a year.

The Digital Committee:• Is responsible for reviewing the company's
digital strategy, roadmap, resourcing andany changes thereto;• Assists the Supervisory Board insupervising the company's policy on digitalstrategies, tools and operations;• Reviews the company's digital objectives
and performance, periodically assesses theeffectiveness 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 thecompany 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 theSupervisory Board on the remuneration
policies for the Board of Management andSupervisory Board;• Reviews and prepares proposals for theSupervisory Board on the compensationlevels and individual remuneration of themembers of the Board of Management andcertain senior executives designated by
the Supervisory Board; and• Reviews and prepares proposals for theSupervisory Board concerning theobjectives for the variable remuneration ofmembers of the Board of Management, andreviews the performance of members of
the Board of Management against theseobjectives.
The Remuneration Committee prepares anannual remuneration report, which is included
in chapter 10, Remuneration report.
The Remuneration Committee meets at least
twice per year.

The Digital Committee meets at least fourtimes a year

Corporate statements

11.5

Consolidated financial statements

Other
governancematters
related to theBoard ofManagement
andSupervisory
Board

Diversity
Signify believes that a diverse workforce andan inclusive working environment are
essential to a thriving business and long-termvalue creation.
In view hereof, Signify aims that the Board ofManagement and the Supervisory Board
comprise members who bring a diversity ofskills and expertise relevant for achieving thecompany’s strategic and business objectives,different views and perspectives as well as
different backgrounds: nationality,
educational, working experience orotherwise. For the Supervisory Board
members, and in line with the Dutch law
requirement, Signify aims that at least onethird 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 aboard with five members.

Signify Annual Report 2023

Remuneration
The remuneration of the individual membersof 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 andthe members of its committees, is determinedby the General Meeting.
Pursuant to Dutch law, the remuneration
policies must be adopted by the AGM at least
every four years. The resolution of thegeneral 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 Boardof Management and the Supervisory Board
were adopted by the AGM in 2020. The
composition of the remuneration of themembers of the Board of Management andthe members of the Supervisory Board andthe remuneration policies are described inchapter 10, Remuneration report.

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Conflicts of interest

executive director in a one-tier board at
another company requires the approval of• Adopt amendments to the Articles of
Association and proposals to dissolve or

the voting rights of the company’s shares
exist. Subject to certain exceptions provided

Members of the Board of Management shallnot participate in the discussions anddecision-making process on a subject ortransaction that they have a direct or indirect
personal conflict of interest or have a conflictof interest within the meaning of the Dutch
Corporate Governance Code. Relevant
matters relating to conflicts of interests, ifany, must be approved by the Supervisory
Board and shall be mentioned in the Annual
Report for the financial year in question.

the Supervisory Board. The Chair of theSupervisory Board is required to be notifiedof other important positions (to be) held by amember of the Board of Management.

liquidate the company;• Issue shares or rights to shares, to restrict
or exclude preemptive rights ofshareholders 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.

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 thevotes cast if the resolution is adopted on a
proposal of the Board of Management.
Otherwise, such resolution requires amajority of at least three-fourths of thevotes cast provided that the majority
represents more than half of the issued sharecapital. Pursuant to Dutch law, no votes may
be cast at a General Meeting in respect ofshares which are held by the company.

The rules for conflict of interest applicable tothe members of the Board of Management
also apply to the members of the Supervisory
Board. No conflict of interest as referred toin this section occurred during 2023.

Outside positions
Pursuant to Dutch law, a person cannot be

The Supervisory Board member must informthe Chair of the Supervisory Board before
accepting a position outside the company.
All members of the Board of Management andthe Supervisory Board complied with therestriction as set out above for the financial
year 2023.

11.6

GeneralMeeting of
Shareholders

appointed as a managing or executive
director of a large Dutch company if he or she
already holds a supervisory position at morethan two other large Dutch companies or if
he or she is the chair of the supervisoryboard or one-tier board of another large
Dutch company. Also, a person cannot be
appointed as a supervisory director or nonexecutive 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 ofanother large Dutch company counts twice.

The main rights of the General Meeting areto:• Appoint, suspend and dismiss members of
the Board of Management and theSupervisory Board;• Adopt the remuneration policy and approve
equity-based incentive plans for membersof the Board of Management and adopt the
remuneration of the members of theSupervisory Board;• Adopt the annual accounts;• Declare dividends;• Discharge the members of the Board ofManagement and the Supervisory Board
from liability in respect of the performance

The acceptance by a member of the Board ofManagement of a position as a member of asupervisory board or a position of non-of their respective duties in the previous
financial year;• Appoint the external auditor as required by
Dutch law;

The AGM is held within six months after theend of each financial year to discuss theannual report and decide on the adoption of
the financial statements and dividend
proposal as well as the discharge of themembers of the Board of Management andthe Supervisory Board.
The AGM can be called by the Board ofManagement or the Supervisory Board. The
Board of Management is entitled todetermine the record date in accordancewith Dutch law. The agenda, explanatory
notes thereto and the procedure forattendance are published on the company’s
website. Holders of ordinary shares in theaggregate representing at least 3% of thetotal 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 ofManagement. Any written request mustcomply 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 areno special statutory rights attached to theshares of the company and no restrictions on

Share capital and repurchaseand 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 valueof 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 nolimitations either under Dutch law or thecompany’s Articles of Association, as to thetransfer of ordinary shares in the sharecapital of the company.
The Board of Management, to the extent
authorized by the General Meeting for a
specific period, may resolve to issue orrepurchase shares, subject to the approval of
the Supervisory Board. The Board of

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Brighter Lives, Better WorldManagement 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 ofManagement for a period of 18 months,
effective as of May 16, 2023, to issue sharesor grant rights to acquire ordinary shares aswell as to restrict or exclude the preemptive
rights accruing to shareholders, in each caseup to a maximum of 10% of the issued sharecapital as at May 16, 2023, and subject toapproval from the Supervisory Board. At thesame time, the Board of Management was
authorized to acquire ordinary shares on thestock exchange or otherwise, subject to theapproval of the Supervisory Board, at a pricebetween the nominal value of the ordinary
shares and 110% of the market price of theordinary shares on Euronext Amsterdam,
provided that the maximum number ofordinary shares the company may acquire andhold does not exceed 10% of the issued sharecapital as at May 16, 2023, plus an additional
10% of the issued capital as at that same datein connection with the execution of share
repurchases for capital reduction purposes.

11.7

Corporate performance

Governance

StichtingContinuïteit
Signify

Stichting Continuïteit Signify, a foundation('stichting') incorporated under Dutch law,has been granted a call option right toacquire preference shares in the sharecapital of the company. The possibility of
issuing preference shares in the share capitalof the company is a defensive measure. The
foundation may resolve to exercise the call
option at its sole discretion without theconsent of the company. On the exercise of
the call option, the foundation is entitled toacquire, and the company shall have theunconditional obligation to issue, preference
shares up to a maximum corresponding with
100% of the issued and outstanding sharecapital of the company. This shall exclude thepreference shares as issued and outstanding
immediately prior to the exercise of the call
option, less one preference share, fromwhich maximum any preference sharesalready placed with the foundation at thetime of the exercise of the call option must
be deducted.
The call option can be exercised by thefoundation in order to, for example:• Prevent, slow down or otherwise
complicate an unsolicited takeover bid forand an unsolicited acquisition of shares bymeans of an acquisition at the stock
market or otherwise;• Prevent and countervail concentration of
voting rights in the General Meeting; and/or
• Resist unwanted influence by and pressure
from shareholders to amend the strategyof the company.

Corporate statements

Consolidated financial statements

If the foundation exercises the call option,
the company issues such number ofpreference shares as for which thefoundation exercised its call option. No
preference shares had been issued as ofDecember 31, 2023.
The foundation’s objects are to further theinterests of Signify N.V., the enterprises
maintained by the company and thecompanies affiliated with the company in agroup. The foundation will act in such a waythat the interests of the company and of
those enterprises are optimally safeguarded
and that influences which could affect theindependence, continuity or identity of thecompany, the enterprise maintained by thecompany and the companies affiliated withthe company in a group in conflict with thoseinterests are deterred to the best of thefoundation’s ability.
The foundation has the right to file a petition
with the Enterprise Chamber of the
Amsterdam Court of Appeal to commence aninquiry procedure within the meaning ofsection 2:344 Dutch Civil Code.
As of December 31, 2023, the board of thefoundation 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 (defacto) control of the company, the Board ofManagement and the Supervisory Board are
authorized to exercise in the interests of
Signify all powers vested in them.

11.8

Signify Annual Report 2023

Change ofcontrol

The company is not a party to any material
agreement that takes effect, alters or
terminates upon a change of control of thecompany following a take-over bid asreferred to in section 5:70 of the Dutch
Financial Markets Supervision Act, other thanthe credit agreement entered into with a
syndicate of financial institutions which
established term loans and a revolving credit
facility, certain bi-lateral credit agreementsthat have been entered into to refinanceterm loans, the Eurobonds issued by thecompany 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 ofcontrol provision which allows the lenders tocancel the commitment and declare any
outstanding amounts under the agreement,
immediately due and payable whereupon suchamounts will become immediately due andpayable. The provisions applicable to all
Eurobonds issued by the company in 2020
contain a "Change of Control Put Event". Thismeans that if the company experienced suchan event with respect to such bonds, thecompany might be required to redeem orpurchase the bonds at its principal amount,plus accrued and unpaid interest, if any.

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11.9

Creating value

Brighter Lives, Better World

External
auditorUnder Dutch law, the external auditor of thecompany 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 thecompany for the financial years 2023 through2025.

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

The services provided by the external auditor
are pre-approved by the Audit Committee on

Auditor independence

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, allproposed services require such specific preapproval.

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; suchchange took place as of the start of thefinancial year 2021. Furthermore, EU law
requires the rotation of the external audit
firm after the firm has completed thestatutory audit of the company for a period of
10 consecutive years.

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 theSupervisory Board at which the report of theexternal auditor with respect to the audit of
the annual accounts is discussed, and atwhich the annual accounts are approved. The
external auditor may also attend the Annual
General Meeting to elaborate on its audit andauditor's report and is available for questions.

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 tothe company. Dutch law requires theseparation of audit and non-audit services,meaning the company’s external auditor is notallowed to provide prohibited non-audit
services.

11.10

Signify Annual Report 2023

Dutch
Corporate
Governance
Code

The company fully endorses the underlying
principles of the Dutch Corporate
Governance Code, and is committed toadhering to the best practices of the Code as
much as possible.
The company fully complies with the Code andapplies all its principles and best practiceprovisions that relate to the Board ofManagement or the Supervisory Board.

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Corporate performance

12 Investor relations

GovernanceCorporate statements

12.1

Consolidated financial statements

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 theyear, involving the Investor Relations
department and members of the Board ofManagement, to ensure that the topics thatmatter most to shareholders can beaddressed effectively.

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 performedin December 2023.
Geographical distribution of shares

24%

10%
5%

12%

Signify has an active investor relations
approach aimed at supporting the company’s
long-term ambitions by keeping existing andshareholders’ views and other relevant
developments.

1

9%

In 2023, Signify reached over 200 uniqueinvestment institutions through its Investor
Relations activities and covered more than
80% of its active shareholder base.

potential shareholders well-informed about
its strategy and the latest operational andfinancial 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. Theseearnings calls can be accessed and replayedon Signify's Investor Relations website. The
Supervisory Board receives regular updates
on share price developments, notablechanges in Signify's shareholder base,feedback from investors and equity analysts,
giving them a clear understanding of

Signify Annual Report 2023

26%

6%
8%

United States
Netherlands
FranceRest of Europe
1

United Kingdom
Germany
NorwayRest of the World

Excluding treasury shares, prime brokerage and retailinvestors.

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

The Dutch Financial Markets Supervision Act
requires institutions and individuals holding aMarkets (AFM). The AFM processes these
disclosures in its publicly available register,Dividend policy(potential) capital and/or voting interest of
3% or more in Signify to disclose such to theNetherlands Authority for the Financial

which can be found at www.afm.nl. The tablebelow includes the total interests of 3% ormore registered at the AFM on December 31,
2023, and the related actual interests.

Signify's dividend policy is to pay an increasing
annual cash dividend per share year on year.
The payment of dividends, if any, and theamounts and timing thereof depend on
several factors, including future sales,
profits, financial conditions, general
economic and business conditions andprospects. Other factors that the Board ofManagement may deem relevant, as well asother legal and regulatory requirements,
might also impact the amount, timing andpayment of future dividends. These might bebeyond the control of the company.

Signify shareholders%
1
Actual interest

Total %
2
registered

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

2

The actual interest reflects the % registered interest, excluding potential interests, such as options, futures, forward-rateagreements and other derivatives contracts.
The total % registered includes the actual and potential interests such as options, futures, swaps, forward-rateagreements and other derivatives contracts.

Source: AFM

12.3 Annual
GeneralMeeting of
Shareholders
The 2024 Annual General Meeting of
Shareholders will be held on May 14, 2024.
The agenda and the explanatory notes to theagenda 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, andwho have registered for the meeting, will beentitled to attend and vote in the meeting.

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 andmaintain an investment grade credit rating.
• To continue to invest in organic andinorganic growth opportunities in line with
its strategic priorities.

Proposed dividend
The company proposes a dividend of EUR 1.55
per share, in cash, from the net income forfull-year 2023. This is in line with its dividend
policy of paying an increasing cash dividend
per share year on year.

Signify Annual Report 2023

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 ofthe debt that will mature in 2024. Thisagreement 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.

The dividend payment is subject to approvalby 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 dateJune 3, 2024

In addition, as of December 31, 2023, thecompany 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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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 monthsof 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 2024with 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 ofless 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/shareholderinfo/debt-info.

Corporate performance

Governance12.6 Shareperformance
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 quarterof the year, Signify's share price started torecover, mainly narrowing the gap with the
AEX index. On a full-year basis, Signify's shareprice underperformed all three indices.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Share price development (indexed)
140
130
120
110
100
90

On a full-year basis, Signify's share pricedeclined by 3%, while the DJ Europe (excl.
UK) technology index increased by 38%, theS&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
calendarFinancial calendar 2024
Report/Activity

Date

Q1 2024 financial report

April 26, 2024

Annual General Meetingof Shareholders 2024

May 14, 2024

Q2 and first-half 2024
financial report

July 26, 2024

Q3 2024 financial report October 25, 2024

80
70
Jan

Feb

Signify

Mar

Apr

May

Jun

S&P capital goods

Jul

Aug

Sep

Oct

DJ Europe Tech

Nov

Dec

AEX

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

13 Risk factors andrisk management

13.1

Introduction

Signify’s risk management environment isembedded in the corporate governance, thebusiness control framework and the Integritycode.

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 controlledmanner. The company’s risk management and controls are designed to provide reasonableassurance 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.

Establish astrong risk
management
environment

Corporate governanceCorporate governance is the system by which
a company is directed and controlled. Good
corporate governance derives from, among
other things, solid internal controls and highethical standards.
The Board of Management is responsible formanaging the risks associated with thecompany's activities and for defining thecompany's risk appetite. The Board ofManagement is assisted by the company's
leadership team, which participates on aquarterly basis in audit risk and control
meetings to identify critical risks and toreview progress on the implementation of risk
responses. The Audit Committee of theSupervisory Board provides oversight for thesystem of internal business controls and risk
management. Internal and external audits arereported to and discussed by the Audit
Committee on a quarterly basis andmanagement self-assessment is reported ona yearly basis. An in-depth description of thecompany's corporate governance structure
can be found in chapter 11, Corporate
governance.

Signify Annual Report 2023

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 thecompany’s operations in order to ensure theintegrity of the financial reporting and related
disclosure, and (ii) compliance with applicablelaws 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 andimproves its BCF to align with businessdynamics and good practices.

Integrity code
Acting with integrity is the cornerstone forthe success of our business and for achieving
our purpose. It is integral to the values thatdefine us as a company. Acting with integrity
means making the right choices when facedwith ethical dilemmas, and holding ourselves
and each other to high standards of behavior.
The Integrity code was updated in 2023 andhas been approved and adopted by the Boardof Management. It applies to all employees ofSignify N.V. and its controlled subsidiaries.
The Integrity code formulates minimum
standards of behavior. The company has
underlying policies that form an integral partof the Integrity code.
To increase the level of awareness and tocreate 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 thisnetwork are focused on providing expertiseand 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 bymechanisms that ensure standardized
reporting, escalation and investigation ofconcerns. These mechanisms are based on
the Integrity code Reporting Policy that urges
employees and third parties to report any
concerns they may have regarding businessconduct 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. Allconcerns raised are consistently registeredin a single database and are investigated inaccordance with standardized investigation
procedures. An overview of the reporting
activities for 2023 is given in chapter 17, CSRD
disclosures, subsection 17.1 ESRS.

Corporate performance

Governance13.2 Define risk
appetite
Risk management in Signify focuses on thefollowing 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 isdifferent for each of the risk categories:

Strategic risks
Strategic risks include economic and politicaldevelopments and the effects of actions
taken to anticipate and respond to market
circumstances. The company has a medium
strategic risk appetite and is prepared totake 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 unexpecteddevelopments resulting from internal
processes, people and systems, or fromexternal events that are linked to the runningof each business. The company has a low
operational risk appetite and aims to minimize

Corporate statements

Consolidated financial statements

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 andsecurity breaches, new organizational
capabilities, and climate change.

Compliance risks
These risks cover unanticipated failures toimplement, or comply with, appropriate laws,
regulations, policies and procedures. The
company is, due to its global footprint,
exposed to risk of fraud and othermisconduct 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 fullcompliance 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 andreporting, 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, thecompany is committed to transparent andtruthful accounting and reporting to allow
users of the financial statements to takedecisions considering these risks.

Signify Annual Report 2023

13.3 Risk
assessment
and control
In order to provide a comprehensive view of
the company’s business strategy andactivities, 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, theleadership 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 therisks. Owners are assigned for each of thestrategic initiatives, and they are thenaccountable for ensuring adequate risk
mitigation and for monitoring theimplementation of mitigation measures. Eachquarter, the key risks are discussed during
the audit and risk committee meetinginternally 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 partof the business performance reviews. In
addition, on an annual basis, the top risks are
identified by company leadership. Relevantrisks, including those associated withbusiness opportunities, are prioritized interms of potential impact and likelihood,considering quantitative and/or qualitative
aspects, and are reviewed together with theBoard of Management. On a quarterly basis,risks and controls are reviewed with theDivisions, Market clusters and specificFunctions in the audit risk committee.

Compliance risk
The Integrity Committee is the ultimate bodywithin Signify to administer the organization’s
Integrity Code Legal Compliance Program. It
does so by maintaining oversight of thedevelopment and implementation of theIntegrity code, including the monitoring of its
effectiveness. The Integrity Committee ischaired by the Chief Legal Officer. Its
members include the Chief Executive Officer,
Chief Financial Officer, Chief HR Officer, Headof Internal Audit and Head of Legal
Compliance.
With an annual Integrity code selfassessment process forming part of theinternal controls over financial reporting(ICS), compliance to the Integrity code forms
part of management’s ICS monitoringprocess. Management of each business unit
signs off on controls relating to compliancewith the Integrity code, with this confirmation
forming part of the annual certification
statement on Business Controls. Noncompliance issues are highlighted and, if
significant, they are reported to the Board of

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Management through the Certification
Statement process.

internal controls is with the (global) businessprocess owners and the dedicated ICS team.

Employees are requested to state theircommitment to the Integrity code after
having completed e-learnings. In 2023,
employees were required to complete one ormore e-learnings on the Integrity code andrelated legal compliance domains. Specifictarget groups were required to participate inrecurring (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 toconfirm their awareness of and compliance

An ICS monitoring process exists for allmaterial reporting units, whereby businessprocess 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 ofassessment and monitoring of the control
environment.

with the code. Violations of the Integrity code
will result in disciplinary action, up to andincluding dismissal.

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 andoperating effectiveness of controls overfinancial reporting, which were not

Financial risk
The company has implemented a global
standard for ICS. ICS, together with theestablished accounting procedures, aredesigned 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 arecarried out by qualified personnel, and thatpublished financial statements are properly
prepared and do not contain any material
misstatements.
Internal controls are an inherent part of theprocesses in our company, where theresponsibility for executing these internal
controls is with the persons that carry out
these processes. The design andmaintenance of the global standard for

On an annual basis, management’s
accountability for business controls isrecorded through the formal issuance of acompletely remediated, are evaluated at year
end by the Board of Management. The Boardof Management’s statement, including its
conclusions regarding the effectiveness ofinternal controls over financial reporting, canbe found in chapter 14, Statement of theBoard of Management.
The global tax strategy and policy are alignedwith 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 theneeds of the business and of the tax function
are balanced. The company also participatesin national and international forums of

Signify Annual Report 2023

experts to represent its interests. In addition,
the company has corporate requirements forthe management of the company’s legal
entities in line with tax legislation. Also referto chapter 4.3.5, Responsible tax policy.
For further details on financial risks refer tochapter 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 deployedin 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 riskscan, 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 smallpart of the worldwide installed base of light points is connected.

Signify is actively developing and investing in technology platforms and software
applications to bring (more advanced) connected lighting systems to themarket. 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.

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 andHue, WiZ smart lighting offerings for the consumer market. Signify also aims todevelop new business models, in particular through value-added service
offerings.

Competition

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.

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.

Finally, in order to capture this new value opportunity, Signify’s systems andproduct teams are developing innovative services and flexible offers meeting
differentiated customer needs from basic to advanced and responding todifferent regional requirements around connected lighting. The market
adoption of connected technologies is captured through quarterly market
analysis.

The LED lighting market has attracted many new competitors (particularly fromAsia) 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.

To counter full category commoditization, Signify's strategy includes thecreation 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 isrunning saving initiatives to keep its cost base competitive. Also, Signify canmake use of the Philips brand, which has a strong global reputation and brandpreference to drive sales. Finally, in the connected lighting segment, thecompany manages to maintain a leadership position by providing a continuous
stream of innovations to the market, both in hardware and software.

In the area of connected lighting, the risk is that non-lighting players withbroad technology platforms might enter and disrupt the lighting market.

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 rollout innovative products and services on a global scale.

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Risk

Risk description

Mitigation actions

Global politicalandeconomic instability

There continues to be significant instability in both the global economical andpolitical landscape.

At the macro level, Signify actively engages in global forums focused on thebenefits of globalization. Signify is also committed to highly credible industry
organizations globally to support the stabilization of global trade.

Polarization and trade protectionism as well as political changes might disrupt
our operations and, ultimately, our sales, profit and cash flow, as Signify hascommercial 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 thecompany’s sales and profitability in 2023. Looking forward, uncertainty andvolatility remain regarding adverse economic conditions and can impact the

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 arisingfrom geopolitical tensions and trade protectionism, Signify leverages its global(manufacturing) footprint and makes adjustments to its sourcing base whenneeded. Inflation in Commodity and Energy prices is offset through a
combination of cost savings and price increases.

general lighting market.

Supply disruption

Signify depends on external suppliers and, to a large extent, on the productionof components and LED products in Asian countries. The risk of this highdependency 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. Thismight limit the company’s ability to leverage and draw efficiencies from its
global (manufacturing) footprint. Specifically for conventional lighting, due tothe 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 inlogistic costs, which in turn need to be offset through additional cost savingsor 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 thetechnologies 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 therisks 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 forany large-scale events that can severely impact the business. These plansinclude 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 ofpricing 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 digitaltechnology 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 ofcompetition.

Signify invests significantly in its R&D activities. It has dedicated R&D activities tosupport 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.

Failure to bring new products and solutions to the markets in a timely fashionand 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.

Cyber-attacks
andsecurity 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 andsystems that allow the organization to continue to operate could be impacted
resulting in operational disruption, with or without ransom demands. Further, acyber-attack could cause a data breach where sensitive, protected, personalor 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.

Signify adapted its business structure to enable a stronger customer focus andenhanced specialization to further increase execution speed. Finally, dedicatedgo-to-market channels and tailored marketing approaches are in place with theaim 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 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 beencreated 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 ofthem causing damage to systems and gaining access to critical data, systems
and services. Business continuity plans are in place in the event of nonavailability of IT systems and manufacturing sites. These business continuity
plans are tested periodically. Additionally, there is a security operations teamthat is supported by a managed security service provider for 24x7 vigilance of
security events. This team is focused on security incident management andsupports security incident monitoring and response within specified SLAs.
Specifically to its products and software applications, Signify develops them inhouse and secures the ecosystem in conformity to security standards and bestpractices (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 tocontinue 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 Digitaland 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

Signify invests in the professional development of its employees throughbusiness 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.

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 toattract 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 thecompany, with retention programs being part of the due diligence andacquisition approval process.

New capabilities are particularly relevant in the areas of digital, softwaredevelopment, 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 asignificant impact on the company achieving its long-term strategic goals.

Acquisitions
andintegrations

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 fromboth 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, witha 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. Thisattention 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 part of its Brighter Lives, Better World 2025 sustainability program, Signify istaking measures to manage climate risks and adapt its businesses.

As lighting represents around 12% of global electricity consumption, thelighting 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 therisks posed by climate change, and how to improve business resilience throughclimate change mitigation and adaptation accordingly, is imperative to secure
the company’s longer-term success.

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 thefluctuation 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 inenergy-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 mostefficient energy saving LED Lighting, thereby helping to reduce energy
expenditure. Signify's lighting for circularity initiative is driving the developmentof 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 Climaterelated 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.

The increased importance of the US is recognized and taken into considerationin the annual strategic planning process and risk assessment. Resources areallocated in line with both the size of the business and the future growthpotential.

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 tohave 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 andmarkets in which it is active.

Not only is the company focused on getting the right talent to drive the successof the US business, but also the Divisions and Functions are expected to spend asignificant amount of time and energy on ensuring a successful US business.
Finally, in order to address both the importance of the US business and thehigher risk of global disruption, dedicated support plans have been and arebeing worked out for the US.

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14 Statement of theBoard of Management
The Board of Management has prepared thisAnnual 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.

• The management report included in thisAnnual 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 dateof publication of this Annual Report.

To the best of our knowledge:• The Consolidated financial statements andSignify N.V. financial statements includedin this Annual Report give a true and fairview of the assets, liabilities, financial
position and profit or loss of Signify N.V.

The Board of Management is responsible forthe establishment and adequate functioningof 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 theand its consolidated undertakings;• Based on the current state of affairs andthe company's strategic plan, which
forecasts among others the company's
future cash flows, it is justified that thefinancial reporting has been prepared on agoing concern basis;• The management report included in thisAnnual Report gives a true and fair viewconcerning the position on the balance
sheet date and the development andperformance of the business of Signify
N.V. and the undertakings included in the
consolidation taken as a whole during thefinancial year;

Supervisory Board and its Audit Committee.
The company has implemented a risk
management and internal control systemdesigned to provide reasonable assurance
that strategic objectives are met by creating
focus, integrating management control overthe company’s operations, ensuring
compliance with applicable laws andregulations and by safeguarding its assets
and the reliability of its financial reporting andits disclosures.
The company has designed its internal control
system based on the Internal ControlIntegrated Framework (2013) established by
the Committee of Sponsoring Organizationsof the Treadway Commission (COSO).

The company’s risk management approach isembedded in its periodic business planningand review cycle and forms an integral part ofbusiness management. On the basis of risk
assessments, management determines therisks and appropriate responses related tothe achievement of business objectives andcritical business processes. Risk factors andthe risk management approach are describedin more detail in chapter 13, Risk factors andrisk management. Audit results, relevant
investigative activities as well as significant
changes and improvements in the company’srisk management and internal control system

On the basis of the above, we confirm that:• The management report provides
sufficient insights into failings, if any, in theeffectiveness of the internal risk
management and control systems; and• The internal risk management and control
systems provide a reasonable level ofassurance that the financial reporting andtax included in this Annual Report does notcontain any errors of material importance.

are discussed with the Audit Committee andthe Supervisory Board.

operational and financial business objectives,
nor can they prevent all misstatements,
inaccuracies, errors, fraud and noncompliance with rules and regulations.

With respect to financial reporting, astructured self-assessment and monitoringprocess is used company-wide to assess,document, review and monitor compliancewith internal control over financial reporting.
Internal representations received frommanagement, regular management reviews,
reviews of the design and effectiveness ofinternal controls and reviews in company andDivision, Market and Function Audit
Committees, are integral parts of thecompany’s risk management approach.

It should be noted that the above does not
imply that these systems and procedures
provide certainty as to the realization of

February 27, 2024
Board of Management
Eric Rondolat
Javier van Engelen
Maria Letizia Mariani
Harshavardhan Chitale

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Table of contents
Corporate statements
15

Consolidated financial statements

117

22 Equity

147

15.1

118

23 Debt

148
150

Consolidated statement of income

15.2

Consolidated statement of comprehensive income

119

24 Provisions

15.3

Consolidated statement of financial position120

25 Post-employment benefits

151

15.4

Consolidated statement of cash flows

122

26 Share-based compensation

154

15.5

Consolidated statement of changes in equity

124

27 Information on remuneration

155

15.6

Notes to the Consolidated financial statements

125

28 Financial risk management

156

1

125

29 Events after the balance sheet date

160

Basis of preparation

2

Material accounting policies

127

Signify N.V. financial statements

161

3

Information by segment and main country

135

16.1

Statement of income

162

4

Income from operations

136

16.2

Statement of financial position before appropriation of results

163

5

Employee benefit expenses

137

16.3

Statement of changes in equity

164

6

Depreciation, amortization and impairment

137

16.4

Notes to the Company financial statements

165

7

Other business income and expenses

137

A

Statement of income

165

8

Financial income and expenses

137

B

Audit fees

165

9Income taxes

138

C

Financial assets

165

10

Earnings per share

141

D

Shareholders’ equity

166

11

Acquisitions and divestments

141

E

Debt

167

12

Interests in entities

142

F

Employees

167

13

Property, plant and equipment

143

G

Contingent liabilities not appearing in the balance sheet

167

14

Leases144

H

Events after the balance sheet date

168

15

Intangible assets

144

CSRD Disclosures

169

16

Objectives, policies and processes for managing capital

146

17.1

ESRS

169

17

Inventories

146

17.2 EU Taxonomy

175

18

Trade and other receivables

146

18

Combined independent auditor’s report

182

19

Trade and other payables

147

19

Reconciliation of non-IFRS financial measures

20 Other assets

147

20 Definitions and abbreviations

202

21

147

21

206

Other liabilities

16

17

Forward-looking statements and other information

197

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15 Consolidated
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Introduction
The audited Consolidated financial statements including the notes thereon have been preparedin accordance with International Financial Reporting Standards (IFRS) as endorsed by theEuropean 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, referto 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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statement ofincomeCorporate performance

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Consolidated financial statements

Sales

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Note

2022

2023

3

7,514

6,704

(4,781)(4,146)

Cost of sales
Gross margin

2,732

2,558

Selling, general and administrative expenses(1,927)(1,882)

(295)

(308)

Research and development expenses
Impairment of goodwill

15

–

–
24

Other business income

7227

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

(145)

(53)

532

215

Net income (loss) attributable to shareholders of Signify N.V.

523

203

Net income (loss) attributable to non-controlling interests

912

Income tax expense

9

Net income
Attribution of net income for the period:

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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statement ofcomprehensive
incomeCorporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

2022

2023

532

215

• Remeasurements

15

(14)

• Income tax effect on remeasurements(5)2

Total of items that will not be reclassified to the Income statement

11

(12)

159

(143)

–

–

(10)

(3)

–

1

(24)

25

Net income
Pensions and other post-employment plans:

Consolidated statement ofCurrency translation differences:comprehensive income in millions of EUR• Net current period change, before tax

For the years ended December 31• Income tax effect
Net investment hedge:• Net current period change, before tax• Income tax effectCash flow hedges:• Net current period change, before tax• Income tax effect

6

(6)

132

(126)

Other comprehensive income

143

(138)

Total comprehensive income

675

77

• Shareholders of Signify N.V.

663

71

• Non-controlling interests

126Total of items that are or may be reclassified to the Income statement

Total comprehensive income attributable to:

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

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statement offinancial
position

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Note

Signify Annual Report 2023

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

20

40

32

4,895

4,566

1,050

Consolidated statement of

Other assets

financial position in millions of EUR

Total non-current assets

As at December 31
Current assets
Inventories

17

1,361

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 sale1–

Total current assets

3,391

3,438

Total assets

8,286

8,004

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statement offinancial
position(continued)

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

2022

2023

2,920

2,817

EquityShareholders’ equity

22

Non-controlling interests

12

Total equity

145

129

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

21

160

154

2,855

2,030

23

83

1,038
17

Other liabilities
Total non-current liabilities
Current liabilities
Debt, including bank overdrafts
Derivative financial liabilities

28

42

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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statement ofcash flows

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Note

Signify Annual Report 2023

2022

2023

532

215

Cash flows from operating activities
Net income

451

705

6

318

274

–

–

• 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

25

10

23

9

64

Adjustments to reconcile net income to net cash provided by operating activities:• Depreciation, amortization and impairment of non-financial assets• Impairment (reversal) of goodwill, other non-current financial assets and investments inassociates• Additions to (releases of) post-employment benefits• Other items

(248)

87

130

50

Decrease (increase) in working capital:• Decrease (increase) in trade and other receivables

18• Decrease (increase) in inventories

17

126

267

19

(555)

(272)

52

42

• Increase (decrease) in trade and other payables• Increase (decrease) in other current assets and liabilities
Increase (decrease) in other non-current assets and liabilities
Utilizations of provisions

24

Utilizations of post-employment benefits

25

(24)

3

(157)

(153)

(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
69

(110)

15

(62)

(67)

13

(70)

(51)

• Proceeds from disposal of property, plant and equipment

201

8Net proceeds from (cash used for) derivatives and other financial assets

(29)

7

(297)

(13)

Net capital expenditures:• Additions of intangible assets• Capital expenditures on property, plant and equipment

Purchases of businesses, net of cash acquired
Proceeds from sale of businesses, net of cash disposed of
Net cash provided by (used for) investing activities

11

–

–

(256)

(115)

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statement ofcash flows(continued)

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Note

Signify Annual Report 2023

2022

2023

Cash flows from financing activities
(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
Cash and cash equivalents and bank overdrafts at the beginning of the period

3

(31)

847

676

676

1,158

Dividend paid

Cash and cash equivalents and bank overdrafts at the end of the period
The accompanying notes are an integral part of these consolidated financial statements.

28

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statement ofchanges inequityCorporate performance

GovernanceCorporate statements

Consolidated financial statements

Currency
Share
Share Retained translation
capital premium earnings differences(80)

Signify Annual Report 2023

Total
share-

Cashflow Treasury
hedgessharesNon-holders' controlling
equity interests

EquityBalance as at January 1, 2022

1

2,174

491

(2)

(126)

2,459

138

2,597

Net Income

–

–

523

Other comprehensive income (loss)

–

–

11

–

–

–

523

9

532

147

(18)

–

140

3

Total comprehensive income (loss)

–

–

534

143

147

(18)

–

663

12

675

Consolidated statement of changes in equity

Dividend distributed––

in millions of EUR

Purchase of treasury shares

–

–

(182)

–

–

–

(182)

(6)

(188)

–

–

–

(48)

(48)

–

(48)

Delivery of treasury shares–

Share-based compensation plans

–

(59)

16

–

–

42

–

–

–

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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Corporate performance

Notes to the Consolidated
financial statements

In millions of EUR unless otherwise stated

Governance1

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Basis of preparation

Signify N.V. is a public company with limited liability incorporated under the laws of theNetherlands 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 inaccordance with the International Financial Reporting Standards (IFRS) as endorsed by theEuropean 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 theCompany 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 definedbenefit 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 andpresentation currency of Signify N.V. All amounts are presented in EUR million and have beenrounded 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 makejudgments, estimates and assumptions that affect the application of accounting policies and thereported amounts of assets, liabilities, income and expenses. These estimates inherently containa degree of uncertainty. Actual results may differ from these estimates.
These estimates and judgments are evaluated on an ongoing basis and are based on historicalexperience, current and expected future outcomes, third-party evaluations and various otherassumptions that are considered reasonable under the circumstances. The results of theseestimates 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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Governancecontingencies. 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.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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.

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 thesesignificant judgments and estimates, reference is made to the respective accounting policies
and notes within these Consolidated financial statements that relate to the above topics.

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 notlimited to: adverse economic and political developments, in particular the impacts of the RussiaUkraine conflict, the conflict in the Middle East, the energy crisis in Europe, the recovery
trajectory of the Chinese economy, component availability and cost inflation.

Climate-related matters

Goodwill

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 byfocusing on sustainable growth areas, based on low-carbon technological innovation: Climate

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 toaction, Circular economy, Food availability, Safety & security, and Health & well-being. Throughits global leadership in energy-efficient lighting, Signify's portfolio is uniquely positioned tomitigate risks and capture opportunities related to climate change.

note 15, Intangible assets.

Digital Solutions and Digital Products
Digital Solutions and Digital Products benefit from the phasing out of conventional lighting andthe 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 wellpositioned 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 tothe 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 amuch 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 theConsolidated 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 ofConventional Products exceeded its carrying value, therefore no impairment loss wasrecognized. For further details, refer to note 15, Intangible assets. In addition, Property, Plant

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 mostrecent assumptions. Details of the underlying assumptions used can be found in note 25, Postemployment 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 andrevised segments are expected to be effective in the course of 2024 and are therefore notreflected in the Consolidated financial statements as at December 31, 2023.

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Governance

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. Thechanges did not have any significant impact on the amounts recognized in the prior period andcurrent 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 havenot been adopted early by Signify. The new standards or amendments are not expected to havea material impact on Signify in the current or future reporting periods and on foreseeable futuretransactions.

2Material accounting policies

GeneralThe 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 overthe 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 datethat control commences until the date that control ceases. All intercompany balances andtransactions 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

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

the acquiree are recognized at the acquisition date, which is the date on which control istransferred 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 interestin the acquiree; less
• The net recognized amount (generally fair value) of the identifiable assets acquired andliabilities 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 thecurrency 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 fromthe translation at year-end exchange rates of monetary assets and liabilities denominated inforeign currencies are recognized in the Consolidated statement of income, except whendeferred 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 fairvalue 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 therates which are approximating the rates at the dates of transactions. The resulting translationdifferences 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 thecustomer when the product is delivered and accepted, depending on the delivery conditions andincoterms. For products for which a right to return exists during a defined period, revenue is

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Governancerecognized 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 andrevenue 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 inexchange for transferring promised goods or services to a customer. The transaction priceexcludes amounts collected on behalf of third parties, such as sales taxes.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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 undereither 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 isbilled.
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 (partof) 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
For contracts with multiple performance obligations, the total consideration of the contract isallocated 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 areavailable, 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 asignificant reversal in the amount of cumulative revenue recognized will not occur. Judgment isrequired 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 thetransfer 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 dependon winning the contract. Signify applies the practical expedient from IFRS 15, allowing theincremental 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.

Signify applies accrual accounting. This means that expenses are recognized when incurred andIncome 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 theinventories to their present location and condition. The costs of conversion of inventories
include direct labor and fixed and variable production overheads, considering the stage ofcompletion 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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Governance

Financial instruments
Recognition
A financial asset or liability is recognized when Signify becomes a party to a contract that is afinancial instrument. Regular way purchases and sales of financial instruments are accounted forat 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 certainthat reimbursement will be received if Signify settles the obligation. Signify recognizes thereimbursement 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 ofthe cash flows and the solely payments of principal and interest (SPPI) test. Signify performs theanalysis 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 themto collect contractual cash flows. This financial asset category mainly consists of Trade andother receivables. After initial recognition these financial assets are measured at amortizedcost 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 businessmodel for these instruments is to hold them to collect contractual cash flows and to sellthem. 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 areclassified 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 abusiness 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.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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 orbankruptcy.

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 ofthe asset, nor transferred control of the asset, Signify continues to recognize the transferredasset to the extent of its continuing involvement. In that case, Signify also recognizes anassociated liability. The transferred asset and the associated liability are measured on a basisthat 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 groupedbased on shared credit risk characteristics and the days past due whereby the lifetime expectedcredit 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 ofbusiness 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 suchtrade receivable and the difference is taken as a loss accounted for within Selling, general andadministrative 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.

hedged item. Changes in the fair value of hedges related to intercompany loans and deposits arerecognized within Financial income and expenses in the Consolidated statement of income.

For foreign currency forwards, Signify designates the spot component of the change in fairvalue in cash flow hedge relationships. The spot component is determined with reference to therelevant spot market exchange rates. The differential between the contracted forward rate andthe 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 statementof profit or loss.

The derivatives used by Signify can be subject to master netting and set-off agreements withfinancial 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.

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 thetranslation risk, using net investment hedges is recognized in the Currency translationdifferences 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 thevaluation 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 thehedge relationship by adjusting either the volume of the hedging instrument or the volume ofthe 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 ofhedge, 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 orlosses arising from changes in fair value of derivatives are recognized within Cost of sales in theConsolidated 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

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 withinequity 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 forthe following temporary differences: the initial recognition of goodwill, the initial recognition ofassets 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 theextent 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 substantiallyenacted 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 earningsof unconsolidated companies to the extent that these withholding taxes are not expected to berefundable 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 carryforward. 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 theperiods when the deferred tax assets become deductible. Management considers thescheduled 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 thelevel 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 fromestimates.
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 theincome 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 orconstructive obligation, it is probable that an outflow of economic benefits will be required tosettle 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 tosettle the obligation using a pre-tax discount rate that reflects current market assessments oftime value of money. The increase in the provision due to passage of time is recognized asinterest expense. Significant judgment is required in determining the amount and probability ofresources 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.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

The accounting and presentation for some of Signify’s provisions is as follows:• Restructuring related provisions - The provision for restructuring relates to the estimatedcosts of programs that are planned and controlled by management that materially change thescope of Signify's business or the manner in which it is conducted. A provision is recognizedwhen Signify has a detailed formal plan for the restructuring and has raised a valid expectationthat it will carry out the restructuring by starting to implement the plan, or by announcing theplan'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 associatedprobabilities;• 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 andaccumulated 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 thecost 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 thestraight-line method taking into account the residual values and estimated useful lives and isprimarily included in Cost of sales. Freehold land is not depreciated. Gains and losses on the saleof 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
Machinery and installations
Other equipment
Right-of-use assets

from 5 to 50
from 3 to 20
from 2 to 10
from 2 to 20

LeasesSignify 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 datethe underlying asset is available for use). Right-of-use assets are initially measured at cost, lessany accumulated depreciation and impairment losses, and adjusted for any remeasurement oflease 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 thecommencement 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 andthe 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 thepresent 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 dependon 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 amountof 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

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

modification, a change in the lease term, a change in the in-substance fixed lease payments or achange 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 realestate (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 andcircumstances that create an economic incentive to exercise an extension option, or not toexercise a termination option. These circumstances include Signify’s strategic plans, theindustrial 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 isallocated to the investment as a whole.

Intangible assets other than goodwill
The fair value of other intangible assets, which mainly consist of customer relations, brandnames and technology based intangibles acquired through business combinations is determinedusing 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 usefullife. Acquired finite-lived intangible assets are amortized using the straight-line method overtheir 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 businesscombination that are capitalized at their acquisition-date fair values.
Expenditure on development activities, whereby research findings are applied to a plan or designfor the production of new or substantially improved products and processes, is capitalized as anintangible 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 andthe intention to complete the development.

Impairment of property, plant and equipment and finite-lived intangible
assetsThe development expenditure capitalized comprises all directly attributable costs (including thecost 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.

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 acomparison of the carrying amount of an asset with the greater of its value in use and fair valueless 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 notrecoverable, 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.

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 technologybased and other intangible assets.
The expected useful lives in years of intangible assets excluding goodwill are as follows:
Product developmentfrom 2 to 5

Softwarefrom 3 to 10

Technology

from 2 to 20

Customer relations

from 5 to 20

Brand names

from 5 to 20

Otherfrom 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 andcompleted 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 foruse. 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 othercash flows.
An impairment loss is recognized in the Consolidated statement of income whenever and to theextent 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 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 andto 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 notexceed the carrying amount that would have been determined, net of depreciation oramortization, if no impairment loss had been recognized. Reversals of impairment are recognizedin 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 arelatively low defined-benefit obligation, Signify may decide to calculate the defined-benefit
obligation with a lower frequency. The liability recognized in the Consolidated statement offinancial 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 isdetermined by discounting the estimated future cash flows using a discount yield curve of highquality corporate bonds with durations matching the terms of the benefits.
Pension costs in respect of defined benefit post employment plans primarily represent theincrease 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 thepassage of time and the expected return on plan assets, using the same interest rate as for thedefined-benefit obligation, are included in the pension costs. Interest on the net definedbenefit obligation is recognized in Financing income and expenses in the Consolidated statementof 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 andAssets held for salechanges in actuarial assumptions are charged or credited to equity via other comprehensive
income in the period in which they arise.

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 thesale should be highly probable, evidenced by Signify's commitment to sell the asset or disposalgroup 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 salecriteria 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 anon-current asset is classified as held-for-sale.

When a plan is changed, settled or when a plan is curtailed, the resulting change in the definedbenefit 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 thesettlement of a defined-benefit plan when the settlement occurs.
Signify presents all net defined-benefit post-employment obligations on one line within noncurrent 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 thesebenefits. Signify recognizes termination benefits when they are demonstrably committed to atermination 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 investmentswith an original maturity of three months or less that are readily convertible into known amountsof cash. Bank overdrafts form an integral part of Signify’s cash management and often fluctuatefrom being positive to overdrawn and are included as a component of cash and cash equivalents
for the purpose of the statement of cash flows.

Signify classifies a non-current asset (or disposal group) as held for sale if the carrying amount

Hyperinflationary economies
When the economy of a country in which Signify operates is deemed hyperinflationary and thefunctional currency of a Signify entity is the currency of that hyperinflationary economy, thefinancial statements of such entity are adjusted so that they are stated in terms of themeasuring unit current at the end of the reporting period. This involves adjustment of historicalcost 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.

EquityOrdinary shares are classified as equity. Incremental costs directly attributable to the issuanceof 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 recognizedwhen 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. Whenreissued, shares are removed from treasury shares on a first-in, first-out (FIFO) basis. Whentreasury 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 isrecorded in share premium. Upon cancellation, treasury shares are deducted from the sharecapital 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 sharesfor 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 anappropriate 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

Earnings per shareperiod of the award. The cumulative expense recognized for equity-settled transactions at eachreporting 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.

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 forown shares held. Diluted EPS is determined by adjusting the Net income (loss) attributable toshareholders and the weighted average number of ordinary shares outstanding during theperiod, 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.

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 partof 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 themarket or non-vesting condition is satisfied, provided that all other performance and/or service

Signify presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic

Government grants
Grants from the government are recognized at their fair value where there is a reasonableassurance 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 areintended to compensate.

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 thesame 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.

3

Information 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 groupenabling functions.

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The following is an overview of Signify revenues and results by segment:Inter-

Sales, tangible and intangible assets by main countries:

Sales to external customers
Sales includingintersegment
Depreciation and1amortization
2

EBITA as a % of sales
Amortization

3,937

2,117

627

23

6,704
Sales

3,942

2,315

631

24

(82)

(29)

(21)

(62)
(147)

358

176

62

9.1%

8.3%

9.9%

(210)

6,704

449
6.7%
(80)

285

170

62

(147)

369

expenses
Results from investments inassociates(102)

Income before taxes

268

–

2

EBITA as a % of sales
Amortization

4,231

2,469

793

22

4,236

2,691

796

23

(80)

(31)

(22)

(59)
138

374

272

60

8.8%

11.0%

7.6%

(232)

256

265

60

3
4
5

2022

2023

Netherlands

655

524

604

596

United States

2,522

2,212

2,639

2,490
274

China

517

450

299

Germany

421

386

9

9

Other countries

3,398

3,132

709

660

Total countries

7,514

6,704

4,261

4,029

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

Disaggregated revenue information

7,514

Sales by market:(192)

Europe844

Americas

1

2022

2023

2,230

2,023

2,978

2,633

11.2%

Rest of the world

2

1,709

1,522

(126)

Global businesses

3

597

526

7,514

6,704

137

Income before taxes
2

2

2023

7,514

3

Income from operations
Financial income andexpenses
Results from investments inassociates

1

Tangible and intangible
1, 2
assets1

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).

2022
Sales to external customers
Sales includingintersegment
Depreciation and1amortization

2022

(193)

3

Income from operations
Financial income and1

Signify Annual Report 2023

Signify has no external customer that represents 10% or more of total sales.

2023

EBITA

Consolidated financial statements

Sales between the segments mainly relate to the supply of goods. The pricing of suchtransactions is determined on an "arm’s length basis".

DigitalDigital Conventional
segment
5
4
Solutions Products
Products Other elimination Signify

EBITA

Corporate statements

Excluding amortization and impairments of acquisition-related intangible assets and goodwill.
Income from operations excluding amortization and impairments of acquisition-related intangible assets and goodwill(“EBITA”).
Amortization and impairments of acquisition-related intangible assets and goodwill.
Considering the nature of Other, EBITA as a % of sales for Other is not meaningful.
Includes Intelligent Lighting Controls since March 1, 2023, Fluence since May 2, 2022 and Pierlite since April 29, 2022.

718
(41)

Total
1

Includes Intelligent Lighting Controls since March 1, 2023.

2

Includes Pierlite since April 29, 2022.
Includes Fluence since May 2, 2022.

3

–
678

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Corporate performance

Governance

Sales
Cost of materials used

Note

2022

2023

3

7,514

6,704

(3,410)(2,816)(1,790)(1,961)

1

Employee benefit expenses

5

Depreciation and amortization

6

(318)

(274)

Shipping and handling

(460)

(369)

Advertising and promotion

(135)

(122)

Lease related expenses

(29)

(32)

(861)

(763)

Other operational costs
Other business income, net

7

Income from operations
1

208

1

718

369

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 andmaintenance for fixed assets.

Employees
Third party workers
Total
1

1

Personnel expenses by nature as included in the Consolidated statement of income:
2022

2023

Salaries and wages

Note(1,216)(1,213)Social securities

(202)

(217)

Defined contribution plans

(75)

(76)

Cost of termination plans

(30)

(154)

(86)

(77)

(24)

(18)

Temporary personnel
26

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.

2022

2023

31,69329,612

3,619

3,478

35,31233,0902,082 FTEs work in the Netherlands (2022: 2,117); the remaining FTEs work abroad.

6

Depreciation, 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)

(318)

(274)

2022

2023

Total

Other business income and expenses

Employee benefit expenses

Share-based compensation

Signify Annual Report 2023

In FTEs

7
5

Consolidated financial statements

The average number of full-time equivalent (FTE) employees is summarized as follows:

Income from operations

4

Corporate statements

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 asheld 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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Corporate performance

Governance

NoteInterest income
Change in fair value of financial assets at fairvalue through profit or loss

28

Other financial income
Financial income

2022

2023

10

24

36

4

1

4

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 fairvalue through profit or loss

28

(9)

(26)

(5)

(5)

(5)

(6)

Net foreign exchange gains (losses)
1

Other financial expenses

(9)

(15)

Financial expenses

(88)

(134)

Financial income and expenses

(41)

(102)

1

Consolidated financial statements

Signify Annual Report 2023

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

Financial income and expenses

Monetary gains (losses)

Corporate statements

23

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

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 ofdeferred 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

–

–%

–

–%

(9)

(1)%

(11)

(4)%

(145)

(21)%

(53)

(20)%

Other
Income tax expense recognized in Consolidated
statements of income

268

The monetary loss relates to hyperinflation in Turkey.

The weighted average statutory income tax rate increased by 2% in 2023 compared to 2022.

9

Income taxes

The effective tax rate was 20% in 2023 (2022: 21%), which is lower than the statutory income

The components of income tax expense were as follows:

Current tax expense
Prior year benefit (expense)
Current tax expense

Origination and reversal of tax losses, tax credits andtemporary differences

2022
(76)
3
(73)

2023
(51)
(2)
(53)

2022

2023

(76)

(2)

Change in tax losses, tax credits and temporary differences
recognized3(3)

Tax rate changes––

Prior year benefit (expense)–

5

Deferred tax benefit (expense)

(72)

–

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
AssetsLiabilities

Net

163
10
51
28
49
48
80
85
514
(112)

(57)
(40)
(1)
(12)
–
–
(22)
–
(132)
112

106
(30)
50
16
49
48
58
85
382
–

Net deferred tax assets

402

(20)

382

205
8
52
26
51
51
94
66
554
(136)

(75)
(46)
(1)
(14)
–
(1)
(24)
–
(161)
136

131
(38)
51
12
51
51
70
66
393
–

418

(25)

393

2022

Net deferred tax assets
1

Consolidated financial statements

Signify Annual Report 2023

Movement in deferred tax balances during 2023 and 2022 were as follows:2023
Intangible assets
Property, plant and equipment
Inventories
Other receivables and assets
Post-employment benefits
Provisions
Other liabilities
1
Deferred tax assets on tax attributes
Total allocations
Set-off of deferred tax

Intangible assets
Property, plant and equipment
Inventories
Other receivables and assets
Post-employment benefits
Provisions
Other liabilities
1
Deferred tax assets on tax attributes
Total allocations
Set-off of deferred tax

Corporate statements

Balance Recognized
as atin incomeJanuary 1
2023
Intangible assets
Property, plant and equipment
Inventories
Other receivables and assets
Post-employment benefits
Provisions
Other liabilities
Tax loss carryforwards (including tax credit
carryforwards)
Net deferred tax assets
2022
Intangible assets
Property, plant and equipment
Inventories
Other receivables and assets
Post-employment benefits
Provisions
Other liabilities
Tax loss carryforwards (including tax credit
carryforwards)
Net deferred tax assets

Other

Balance
as atDecember 31

131
(38)
51
12
51
51
70

(27)
6
1
5
(4)
(2)
(1)

1
2
(2)
(1)
2
(1)
(10)

106
(30)
50
16
49
48
58

66
393

22
–

(3)
(11)

85
382

169
(32)
48
15
58
47
75

(31)
(11)
(1)
(3)
(6)
–
(13)

(7)
5
4
1
(2)
3
8

131
(38)
51
12
51
51
70

73
454

(7)
(72)

–
12

66
393

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 toseveral 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.

“Other” includes foreign currency translation differences, acquisitions and the impact of theremeasurement 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 arerecognized, aggregate to EUR 270 million (2022: EUR 271 million).

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At December 31, 2023, net operating loss carryforwards expire as follows:

Total

2024

2025

2026

2027

2028

After 2028
but not
unlimited

667

1

–

13

1

10

30

Signify Annual Report 2023

liabilities related to the OECD/G20 BEPS Pillar Two model rules at 31 December 2023.

Unlimited
612

Unrecognized tax losses and tax credits
At December 31, 2023, the amount of operating loss and tax credit carryforwards for which nodeferred 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

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 theconstituent entities included in the IFRS financial statements of Signify. Based on theassessment, 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 futureyears based on the assessment performed.

Tax risksSignify 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 todeferred tax assets, these are offset against each other. These uncertainties include, among
others, the following: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).

Transfer pricing uncertainties
Signify has issued transfer pricing directives, which are in accordance with internationalguidelines, such as those of the OECD. As transfer pricing has a cross-border effect, potential

Classification of the income tax payable and receivable is as follows:

Income tax receivable under other non-current assets

Consolidated financial statements

rules. Signify applied the mandatory temporary exception to the requirements of IAS 12, underwhich a company does not recognize or disclose information about deferred tax assets andExpiry year operating loss carryforwards

Income tax receivable under other current assets

Corporate statements

2022

2023

56

54

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 toaddress 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 oftax 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 fromtax law enacted or substantively enacted to implement the OECD/G20 BEPS Pillar Two model

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 tosafeguard 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 researchand 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. thevarious 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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Corporate performance

GovernanceTax uncertainties due to permanent establishments

11

Signify may encounter tax uncertainties because of potential permanent establishments incountries 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 thetiming 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 ofoperations.
Tax uncertainties also include exposures with a risk assessment which are deemed lower thanprobable, 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 isprobable that no additional taxes will be due. Therefore, no income tax payable is recognized.

10

Earnings per share

Net income attributable to shareholders of Signify N.V.
Weighted average number of ordinary shares outstanding(after deduction of treasury shares) during the year

2022
523

Corporate statements

2023
203

Consolidated financial statements

Signify Annual Report 2023

Acquisitions 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 acquisitiondate, the final purchase price adjustments and closing settlement accounting were finalized.
The opening balance adjustments were mainly related to an indemnification asset booked as partof the closing settlement accounting, the valuation of certain liabilities and goodwill. Thechanges 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

12Inventories

30

32
11

125,004,312

125,950,998

Other assets

3• Performance shares

1,904,807

791,331

Cash

3

3

• Conditional shares

599,885

545,112Trade and other payables

(20)

(20)

• Restricted shares
Diluted weighted average number of ordinary shares
outstanding (after deduction of treasury shares) during theyear

87,96650,288Other liabilities

(64)

(59)

Net assets acquired

257

254

Plus incremental shares assumed from conversions of:

127,596,971

127,337,729

in EUR• Basic

4.18

1.61

• Diluted

4.10

1.59

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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12Creating value

Brighter Lives, Better World

Corporate performance

GovernanceInterests 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
Cooper Lighting Netherlands B.V.
Cooper Lighting, LLC

Principal country of business
Netherlands
United States of America

Signify (China) Investment Co., Ltd.

China

Signify France

FranceSignify GmbH
Signify Holding B.V.
Signify Netherlands B.V.
Signify North America Corporation
Signify Poland Sp. z.o.o.

Germany
Netherlands
Netherlands
United States of America
PolandSignify 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 theassociates are shown in the Consolidated statement of financial position, Consolidated
statement of income and Consolidated statement of comprehensive income.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Property, plant and equipment
Prepayments
Machinery
andLand andand
Other constructionbuildings installations equipmentin progress

Prepayments
Machinery
andLand andand
Other constructionbuildings installations equipmentin progress

Total

Total

Book value as at January 1, 2022

450

167

59

49

724

Book value as at January 1, 2023

446

139

64

50

699

Of which right-of-use assets

212

–

18

–

229

Of which right-of-use assets

211

–

19

–

230

Change in book value:
Capital expenditure

Change in book value:
61

2

15

58

136

55

–

10

–

65

Assets available for use

19

24

14

(57)

–

Acquisitions

6

1

1

1

9

5

–

–

–

5

–

–

–

–

–

86

27

30

1

145

Additions

45

29

41

(9)

106

Of which right-of-use assets

Of which right-of-use assets
Additions
Sales and disposals

Capital expenditure

34

2

22

48

106

33

–

18

–

51

Assets available for use

11

26

19

(56)

–

Acquisitions

–

–

–

–

–

Of which right-of-use assets

Of which right-of-use assets

(12)

(2)

(1)

–

(15)

Sales and disposals

(4)

–

(1)

–

(5)

Of which right-of-use assets

(10)

–

–

–

(10)

(4)

–

(1)

–

(4)

Divestments and transfers toassets classified as held for sale

(4)

–

–

–

(4)

Of which right-of-use assets
Divestments and transfers toassets classified as held for sale

–

–

–

–

–

Of which right-of-use assets
Depreciation

–
(83)

–
(38)

–
(33)

–
–

–
(155)

Of which right-of-use assets
Impairment
Of which right-of-use assets
Reversal of impairment
Of which right-of-use assets
Translation differences and othermovements

(58)
(5)
(2)
1
1

–
(8)
–
1
–

(9)
(1)
–
–
–

–
–
–
–
–

(67)
(14)
(2)
2
1

13

(7)

10

1

Of which right-of-use assets

8

–

–

(3)

(28)

Cost
Accumulated depreciation /impairment

1,019

Book value

Total changes

–

–

–

–

–

(82)

(35)

(32)

–

(148)

(56)

–

(10)

–

(66)

(3)

(6)

(1)

(1)

(12)

(1)

–

–

–

(1)

Reversal of impairment

–

–

–

–

–

–

–

–

–

–

16

Of which right-of-use assets
Translation differences and othermovements

(2)

(4)

(1)

(1)

(8)

–

8

Of which right-of-use assets

5

2

(25)

3
(45)

–
(17)

–
7

–
(11)

3
(66)

1,100

472

50

2,641

1,020

1,041

486

39

2,586

(573)

(961)

(408)

–

(1,942)

(619)

(919)

(415)

–

(1,953)

446

139

64

50

699

401

122

71

39

633

211

–

19

–

230

186

–

26

–

212

Balance as at December 31, 2022

Of which right-of-use assets

Of which right-of-use assets
Depreciation
Of which right-of-use assets
Impairment
Of which right-of-use assets

Total changes
Balance as at December 31, 2023
Cost
Accumulated depreciation /impairment
Book value
Of which right-of-use assets

The impairment losses were mainly driven by manufacturing footprint rationalization. Additions ofright-of-use assets include new and renewed lease contracts.

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Brighter Lives, Better World

Corporate performance

GovernanceConsolidated financial statements

Signify Annual Report 2023

The following are the amounts recognized in profit or loss and cash flow:

Leases

The carrying amounts, depreciation and additions to right-of-use assets recognized aredisclosed in note 13, Property, plant and equipment. The movements of the related Lease liability
are disclosed in note 23, Debt.

15

Corporate statements

Note
Interest expense on lease liability
Total cash outflow for leases

2022

2023

8

(7)

(9)

4, 8, 23

(107)

(112)

Intangible assets

Balance as at January 1, 2022
Cost
Accumulated amortization / impairment
Book value
Change in book value:
Additions
Amortization
Acquisitions
Impairment
Translation differences and other movements
Total changes
Balance as at December 31, 2022
Cost
Accumulated depreciation / impairment
Book value
Change in book value:
Additions
Amortization
Acquisitions
Impairment
Translation differences and other movements
Total changes
Balance as at December 31, 2023
Cost
Accumulated amortization / impairment
Book value

Goodwill

Customer
relationships

Technology
based

Brand names

Product
development

Software

Other

Total

3,167
(703)
2,464

1,522
(1,107)
415

413
(308)
105

440
(298)
142

163
(129)
34

75
(45)
30

10
(6)
4

5,790
(2,597)
3,193

–
–
280
–
117
398

–
(88)
15
–
21
(53)

–
(23)
–
–
(15)
(38)

–
(12)
22
–
8
18

37
(17)
–
–
–
20

17
(9)
–
–
–
8

3
(3)
–
–
15
15

57
(152)
317
–
146
368

3,589
(728)
2,861

1,604
(1,242)
362

387
(320)
67

481
(322)
160

160
(106)
54

89
(51)
38

38
(19)
19

6,348
(2,787)
3,562

–
–
(6)
–
(100)
(107)

–
(48)
1
–
(11)
(58)

–
(17)
4
–
–
(13)

–
(12)
1
–
(5)
(16)

49
(20)
–
(1)
(2)
27

15
(12)
–
–
–
3

2
(4)
–
–
–
(1)

67
(113)
–
(1)
(119)
(166)

3,466
(711)
2,755

1,034
(730)
304

354
(300)
54

393
(249)
144

205
(124)
81

103
(62)
41

38
(21)
17

5,594
(2,199)
3,396

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Corporate performance

Governance

Goodwill
Goodwill as of December 31, 2023, was EUR 2,755 million. During the year ended December 31,

Compound sales growth rate

1Digital Solutions
Digital Products
Conventional ProductsBook value

2023

2,482
317

2,387
307

63

61

2,861

2,755

The basis of the recoverable amount used of the cash-generating units is the value in use. In theannual 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 andthe 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 withdeclining 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, andindustry long-term growth averages. The applied discount rates are determined based on theweighted average cost of capital which reflects the risks relevant to the cash-generating units.

Signify Annual Report 2023

Key assumptions in %For impairment testing, goodwill is allocated to cash-generating units, which represent thelowest level at which the goodwill is monitored internally for management purposes. The cashgenerating units correspond to the operating segments.

2022

Consolidated financial statements

Cash flow projections for the impairment tests in 2023 and 2022 were based on the key
assumptions included in the table below:

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 theIntelligent Lighting Controls, Inc. (ILC) acquisition, recognized in Digital Solutions, and the final
purchase price adjustments for Fluence. Refer to note 11, Acquisitions for details.

Goodwill allocated to the cash-generating unit Digital Solutions is considered to be significant incomparison 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.

Corporate statements

1

Extra polation
periodUsed tocalculateterminal value

Pre-tax
discount rates

Digital Solutions 2023

2.4%

0.5%

11.8%

Digital Solutions 2022

2.8%

0.3%

11.6%

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 alower growth expectation in the 2023 impairment test. In addition, Signify performed asensitivity 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 productdevelopment and EUR 15 million for software. In 2023, acquired other intangible assets areTechnology 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 fromthe 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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16

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Corporate performance

GovernanceObjectives, policies and processes for managing capital

Corporate statements

17

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.

Consolidated financial statements

Inventories
2022

2022

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.

18

Trade and other receivables
2023

1,037

967

Other receivables

66

46

1,102

1,012

2023

376

696

Cash flows from investing activities

(256)

(115)

Cash flows before financing activities

119

581

376

2022
Trade receivables
Total receivables, net of value allowance

Cash flows from operating activities

Cash flows from operating activities

2023

Raw materials and components

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 arepresented below:

Signify Annual Report 2023

696

Net capital expenditures:

The aging of trade receivables, representing current and overdue, net of loss allowance, is asfollows:
2022

2023

Current982

925

Overdue 1-30 days

23

20
22

• Additions of intangible assets

(62)

(67)

Overdue 31-180 days

31

• Capital expenditures on property, plant and equipment

(70)

(51)

Overdue >180 days––

• Proceeds from disposal of property, plant and equipment

201

8

1,037

967

Free cash flows

445

586

Trade receivables, net
The changes in loss allowance for accounts receivable are as follows:

Working capital position as at December 31, 2023, and comparative information are presented
below:
Inventories
Trade and other receivables
Trade and other payables
Other working capital items
Working capital

2022
1,361
1,102
(1,859)
(41)
564

2023
1,050
1,012
(1,539)
(62)
461

2022

2023

Balance as at January 1

(76)

(94)

Additions charged to expense

(11)

(4)

Utilizations–

12

Translation differences and other movements

(7)

4

(94)

(83)

Balance as at December 31

As per December 31, 2023, the loss allowance for accounts receivable included allowances forindividually impaired receivables of EUR 75 million (2022: EUR 85 million).

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Governance

2022

2023

1,242

950

Amounts payable to employees

151

198

Customer rebates and refunds related

220

188

Marketing and sales related

9067

Materials and fixed assets related

47

50

Other payables

108

87

1,859

1,539

Trade and other payables

Certain Signify suppliers factor their trade receivables from Signify with third parties throughsupplier 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 undersuch arrangement whereby Signify confirms invoices. Signify continues to recognize theseliabilities as trade payables and will settle the liabilities in line with the original payment terms of
the related invoices.

20

Other 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

21

Consolidated financial statements

Signify Annual Report 2023

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

Trade and other payables

Payables to suppliers

Corporate statements

Other liabilities

December 31, 2023 (2022: EUR 68 million). The non-current portion of contract liabilities isrecognized over time over the duration of the contract, generally beyond 1 and up to 15 years.

22

EquityShare 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 anominal 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 havebeen 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

124,902,004

125,241,160(1,174,595)(289,353)

2022

2023

Balance as at January 1

Contract liability

215

226

Purchase of treasury shares

Other tax liabilities

78

88

Delivery of treasury shares

1,513,751

1,363,294

Other liabilities

61

47

Balance as at December 31

125,241,160

126,315,101

Total

353

360

From which current

194

206

From which non-current

160

154

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Governance

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):

23

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Debt
2022

Shares acquired2022
1,174,595

2023
289,353

Term loan (EUR)

280

2023
501

Average market priceEUR 40.89

EUR 25.59

Term loan (USD)

211

203

1,268

1,271

254

237

Amount paid

Eurobonds

EUR 48 million

EUR 7 million

Shares delivered

1,513,751

1,363,294

Lease liabilities

Average price (FIFO)

EUR 28.02

EUR 41.75

Other debt
Subtotal

Cost of delivered shares
Total shares in treasury at year-end
Total cost

EUR 42 million

EUR 57 million

3,103,078

2,029,137

EUR 131 million

EUR 82 million

Legal reserves
In accordance with the Dutch Civil Code and statutory requirements in other countries, incertain 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-distributableamounts. If any reserve has a negative balance, distributions to shareholders are restricted tothe 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.

Bank overdrafts

19

18

2,032

2,229

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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GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Movements of debt were as follows:
Term loans

Eurobonds

479

1,265

Lease
liabilities
249

–

–

–

• Repayment
Translation difference

Other debt

Bank
overdrafts

Total

11

4

2,007

5

–

–

5

–

–

217

–

217

–

–

(68)

(208)

–

(276)

12

–

2

–

–

14

–

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

–

–

–

–

–

–

222

–

–

12

–

233

–

–

(70)

(13)

–

(82)

(8)

–

(2)

–

–

(11)

(1)

3

55

–

(1)

56

704

1,271

237

18

–

2,230

Balance as at January 1, 2022
Acquisitions
Financing cash flows:• New borrowings

Other movements

1

Acquisitions
Financing cash flows:• New borrowings• Repayment
Translation difference
Other movements

1

Balance as at December 31, 2023
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 therelevant 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 byrating 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 to4.0x 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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Corporate performance

Governance

Provisions

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Restructuring
During the year ended December 31, 2023, additions to restructuring provision included bothRestructuring

Environmental

Product
warranty

programs in Conventional Products (mainly in Belgium), and the structural cost reduction
program.
Legal

Other

Total

Environmental provision

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

Signify is exposed to environment risks, mainly because it has been in the business ofmanufacturing 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 thesepremises may have environmental conditions that require corrective actions as a result of suchuse. The environmental provisions include accrued costs recorded with respect toenvironmental remediation in various countries. Provisions for environmental remediation canchange 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

–

3

–

–

(17)

(14)

(13)

(6)

(1)

(2)

(7)

(28)

Changes in discount rate

–

4

–

–

(7)

(4)

Accretion
Translation differences andother movements
Balance as at December 31,
2022

–

–

–

1

–

1

–

1

(1)

(6)

–

(6)

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

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 (forexample, 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

36

92

115

103

105

451

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 theprovision will be mainly utilized within the next two years.

ReleasesAcquisitions

–

–

(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
Translation differences andother movements
Balance as at December 31,
2023

–

2

–

1

1

4

–

(1)

(3)

(3)

(1)

(8)

121

99

103

50

95

470

Short-term

114

26

40

2

24

206

Long-term

7

74

64

48

71

263

expected to be utilized mainly within the next five years.

Product warranty

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 beencaused by failure or malfunction of Signify products. The outcome of asserted claims andproceedings, 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 matteris 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 thelegal case as described below.

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GovernanceOn 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 awarehouse leased and operated by a Signify customer, where the customer's employee wasinjured when struck by a pallet of Signify products that was pushed off a storage rack by atemporary 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 isfully 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, selfinsurance, decommissioning and provision for employee jubilee funds. Other provisions are
expected to be utilized mainly within the next five years.

25

Post-employment benefits

Post-employment benefits covered in this note relate to defined-benefit pension and otherpost-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 inaccordance with the legal requirements, customs and local practice.

2022

Unites States
Germany
Other countries
Total countries

Plan
assets
(351)
(15)
(48)
(414)

Consolidated financial statements

Signify Annual Report 2023

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 andcontributions 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 forhigher salaried employees with a net liability of EUR 15 million and a post-retirement welfare planwith a net liability of EUR 38 million.
Signify reviewed the funding level of the Hourly & Salaried Pension Plan and decided to make acontribution in 2023 of EUR 5 million. Signify decided to initiate a plan termination with theintention 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 theminimum 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

Net defined-benefit liabilities per country

Obligation
459
170
112
741

Corporate statements

2023
Net
Liability Obligation
108
420
155
169
64
116
327
705

Plan
Net
assets Liability
(323)
97
(15)
154
(45)
71
(383)
322

United States
The defined-benefit Hourly & Salaried Pension Plan in the US covers certain hourly workers andsalaried workers hired before January 1, 2005 and has a net liability of EUR 43 million. The plan is

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 havea 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 theinvestment 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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Consolidated financial statements

Signify Annual Report 2023

Movements of net defined-benefit liability
2022
Obligation
Balance as at January 1

2023

Plan assets

Net Liability

Obligation

Plan assets

Net Liability

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)

1

2

2

5

1

6

23

(15)

8

33

(18)

15

Recognized in employee benefit expenses
Interest (cost) / income

–

24

–

(13)

–

11

–

38

–

(18)

–

(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

Included in Statements of Income
Actuarial gains / (losses)• Demographic assumptions

21

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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GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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

The average duration of the defined-benefit obligation of the defined-benefit plans is 7.7 years.

than the year before. As such, the unfunded defined benefit plans in the US and the Germanplans experienced the losses on the financial assumptions. For the funded plan in the US, thiswas offset by the effect of the interest rate hedge gains.

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%.

Plan assets allocation

Sensitivity analysis

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 awell-diversified portfolio. In anticipation of the earlier mentioned intended settlement of thepension 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’spension 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 asof December 31, 2023, were as follows:
Discount ratePension cost increases
Healthcare cost increases
Wage increases

2022
4.8%
0.5%
0.5%
1.1%

2023
4.7%
0.5%
0.5%
1.1%

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 achange 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 fundedplans normally accompanied by offsetting movements in plan assets, especially when using
matching strategies.
2022

2023

Discount rate (1% movement)

(52)

(51)

Wage change (1% movement)

52

Pension indexation change (1% movement)

109Longevity (see explanation)

20

23

Healthcare cost change (1% movement)

55Discount 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)

Increase

Decrease

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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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.

Share-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).

Historic volatility was measured over the same timeframe as the simulation period (weighted
average 2.6 years).

Long-term Incentive Plan

The amount calculated as an expense for TSR shares is not adjusted for actual performance.

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 onfour 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 consistsof 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 topurchase 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 ismeasured based on Monte Carlo simulation. The closing share price at grant date is adjusted forthe present value of expected dividends during the vesting period, as participants are notcompensated 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
Expected share price volatility

2.5%
37%

FCF, Sustainability, and ROCE related measurements are non-market performance conditions.
Fair value of shares granted under FCF, Sustainability, and ROCE objective conditions equals theclosing 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

EUR-denominatedBalance as at January 1
Granted
VestedForfeited
Performance adjustment
Balance as at December 31

2023

Shares
3,085,771
657,031Weighted
averagegrant-datefair value
24.51
35.24

Shares1,525,305
829,170

Weighted
averagegrant-datefair value
24.83
20.94

(1,188,103)(112,046)(917,348)
1,525,305

24.14
32.10
31.22
24.83

(995,035)(206,024)(479,314)
674,102

15.97
35.56
25.06
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 weightedaverage 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 compensatedfor Signify dividend payouts.

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A summary of Signify conditional shares movements and outstanding balance is presented below.

Remuneration of the Board of Management

Signify conditional shares

In 2023, the total remuneration costs relating to the members of the Board of Management
2022

EUR-denominatedBalance as at January 1
Granted
VestedForfeited
Balance as at December 31

amounted to EUR 6,156,545 (2022: EUR 4,379,057).

2023

Shares811,664
260,205

Weighted
averagegrant-datefair value
25.96
32.97

Shares
777,109
341,060

Weighted
averagegrant-datefair value
29.41
21.70

(251,437)(43,323)
777,109

21.87
29.90
29.41

(320,774)(72,851)
724,544

16.52
32.64
31.16

On December 31, 2023, estimated unrecognized costs related to non-vested conditional sharesamounted to EUR 8 million. These costs are expected to be recognized over a weighted-average
period of 1.8 years.

Remuneration costs of Key Management - the Board of Management, in EUR
2022
Salary/Base compensation
Annual Incentive

2

3

4

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 sharesamounted to EUR 0.5 million. These costs are expected to be recognized over a weightedaverage period of 0.9 years.

27

Information on remuneration

2,678,188
1,018,899

1,331,037

1,001,646

Pension allowances

492,986

552,755

Pension scheme costs

84,399115,456

Other compensation

3

103,391

144,952

Termination benefits

4

2

Total costs
1

2,187,040
180,204

Long Term Incentive

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 compensatedfor Signify dividend payouts.

1

2023

–

644,649

4,379,057

6,156,545

Related to the performance in the year reported which are paid out in the subsequent year.
Costs of performance shares and restricted shares are based on accounting standards (IFRS) and do not reflect the value ofthe 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 adisagreement between the company and Ms. Mariani about the treatment of these LTI grants.
Mainly concern (part of) allowances to members of the Board of Management that can be considered as remuneration. In asituation where such a part of an allowance can be considered as (indirect) remuneration (for example, private use of thecompany 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.
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 theannual 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

Signify considers the Board of Management and the Supervisory Board to be key management
personnel as defined in IAS 24 "Related parties".

Membership1

Committees
In 2023, the total remuneration costs relating to the members of Key Management amounted to
EUR 6,953,570 (2022: EUR 5,113,707).

Other compensation
Total costs
1

2

2

2022

2023

495,100

541,875

162,050

170,150

77,50085,000734,650

797,025Comparatives for 2022 were revised to exclude the fees and allowances paid during the observer period of Mr. Schot for theamount of EUR 28,125.
Relates to the allowance for (inter-)continental travel.

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Financial 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:
Amounts not offset
on the balance
sheet, but are
Gross amountsubject to masterrecognized on the
netting
Carried atbalance sheet
arrangements

Net amount

Fair value
hierarchy level

Estimated fair
1
value
117

Balance as at December 31, 2022
1

Non-current financial assets

amortized cost

117

–

117

–

fair value (FVOCI)

3

–

3

3

3

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

677

–

677

–

677

amortized cost

(1,268)–(1,268)1(1,220)amortized cost

(765)

2

(765)

Unquoted equity shares
1

Trade and other receivables

Cash and cash equivalents
Debt (Eurobonds)
Debt (excluding Eurobonds)

1

(765)

–

fair value (FVTPL)

1

(43)

21

(22)

2

(43)

amortized cost

(1,856)–(1,856)–(1,856)

Contingent considerations

fair value (FVTPL)

(3)

–

(3)

3

(3)
65

Derivative financial liabilities designated as hedging instruments
Trade and other payables

Balance as at December 31, 2023
1, 2

Non-current financial assets

amortized cost

65

–

65

–

fair value (FVOCI)

4

–

4

3

4

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
Non-current derivative financial assets not designated as hedging
instruments

fair value (FVTPL)

2

–

2

1

2

fair value (FVTPL)

22

–

22

3

27

1,158

–

1,158

–

1,158

amortized cost

(1,271)–(1,271)1(1,250)(959)

Unquoted equity shares
Trade and other receivables

1

Cash and cash equivalents
Debt (Eurobonds)
Debt (excluding Eurobonds)

1

amortized cost

(959)

–

(959)

2

fair value (FVTPL)

(17)

12

(5)

2

(17)

1

amortized cost

(1,537)–(1,537)–(1,537)

Contingent considerations

fair value (FVTPL)

(3)

–

(3)

3

(3)

Derivative financial liabilities designated as hedging instruments
Trade and other payables
1

2

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 theircarrying value.
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

Interest rate risk

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 effecton the estimated fair value amounts.

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.

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 isbased 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

Interest rate risk is the risk of the fair value or future cash flows of a financial instrument

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 fixedrate 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.

The fair value of financial instruments that are not traded in an active market (for example, overthe-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 aspossible 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.

Liquidity risk

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.

to forecast the overall liquidity position.

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 areaccounted for as financial instruments (FVTPL) under IFRS 9 and valued by an external valuatoron 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 thevolume of generated wind power and the price curves of the respective electricity market.

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associatedwith financial liabilities.
Liquidity risk for Signify is monitored through the Treasury Risk Committee which tracks thedevelopment of the actual cash flow position and uses input from a number of sources in order

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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

Currency risk

undiscounted cash flows. Balances due within 12 months equal their carrying balances as theimpact of discounting is not significant. Interest on long-term debt is based on floating rateadjustments according to market expectations.

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-sheetreceivables/payables resulting from such transactions;• Financing exposure arising from foreign currency intercompany and external debt anddeposits;• 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.

Total

Payments due by period
BetweenLess than
1 and 5Over
1 yearyears
5 years

Debt, including bank overdrafts
Interest on debt

1,993

972

1,021

–

108

52

56

–

Trade and other payables

1,539

1,539

–

–

237

66

145

26

17

17

–

–

164

31

93

40

414

162

252

–

Contractual cash obligations

4,472

2,839

1,567

66

Revolving credit facility (RCF)

500

–

–

–

Lease liability
Derivative liabilities
Off-balance sheet commitments
Purchase obligations

1

Currency risk is the risk that reported financial performance, or the fair value or future cash

1

Signify has commitments related to the ordinary course of business which in general relate to contracts and purchase ordercommitments for less than 12 months. In the table, only the commitments for multiple years are presented, including theirshort-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 tomeet liabilities when due.
Signify has various sources to mitigate liquidity risk. Signify pools cash from subsidiaries to theextent legally and economically feasible; cash not pooled remains available for operational orinvestment needs. The table below shows details of cash and cash equivalents and bankoverdrafts as of the reporting date:Cash at banks and in hand
Short-term deposits
Other cash equivalents
Cash and cash equivalents
Bank overdrafts
Cash and cash equivalents and bank overdrafts

2022
425
216
35
677
(1)
676

2023
358
768
33
1,158
–
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.

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 periodof 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 thesubsidiaries may also have external foreign currency debt or liquid assets, these exposures arealso hedged using foreign exchange derivatives. As of December 31, 2023, the fair value ofhedging policy horizon:

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.

Receivables / Sales
Exposure

HedgesPayables / Purchases
Exposure

HedgesBalance as at December 31
Exposure currency
CNY

27

(21)

(584)

380

PLN

47

(47)

(146)

104

USD

170

(170)

(79)

79
31

EUR

1

51

(51)

(31)

CAD

74

(45)

–

–

MXN

7

(7)

(24)

24

GBP

11

(11)

–

–

Others

57

(57)

(6)

6

Total 2023

444

(409)

(871)

625

1,621

(1,164)(1,560)1,098

Total 2022
1
2

2

EUR exposures in non-EUR denominated functional currencies.
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 thesehedges (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 costof 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, wasan 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, andthe 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 ofthe subsidiary. The currency of Signify’s external funding and liquid assets is matched with therequired financing of subsidiaries either directly through external foreign currency loans anddeposits or synthetically by using foreign exchange derivatives. In certain cases, where Signify

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 withnominal amount of USD 250 million matured. These hedges partially mitigated foreign currencytranslation 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, unanticipatedearnings 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 thecredit exposures, Signify performs ongoing evaluations of the financial and non-financial
condition of its customers and adjusts credit limits when appropriate. In instances where thecreditworthiness 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 thesecounterparties. 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 theequity of all subsidiaries and associated companies in country cross-border transactions, suchas 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 Statesand EUR 1.3 billion in the Netherlands. Countries where the risk exceeds EUR 200 million but wasless 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 describedin the currency risk.

29

Corporate statements

Consolidated financial statements

Events after the balance sheet date

No subsequent events occurred that are material to Signify.

Signify Annual Report 2023

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Signify Annual Report 2023

Introduction
Statutory financial statements
The sections Consolidated financial statements and Signify N.V. financial statements contain thestatutory financial statements of Signify N.V. (the "Company").
A description of the activities of the Company, its subsidiaries and Company structure areincluded 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 therelevant legal requirements (Dutch Civil Code, Book 2, Sections 379 and 414), forms part of thenotes 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 accordancewith 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 theEuropean 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 theequity method.
The Statement of financial position included in these Company financial statements has been
prepared before the appropriation of result.

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Statement ofincomeStatement of income in millions of EUR
For the years ended December 31

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Note
Other income

Signify Annual Report 2023

2022

2023

3

–

Financial income

14

28

Financial expenses

(44)

(60)

Share in results of subsidiaries

551

234

523

203

Net income

A

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16.2 Statement offinancial
position
beforeappropriationof results

Corporate performance

GovernanceConsolidated financial statements

Signify Annual Report 2023

Note

2022

2023

C

4,823

4,580

4,823

4,580

16

11

Non-current assets
Financial assets
Total non-current assets
Current assets
Derivative financial assets
Amounts due from subsidiaries

5

228

Total current assets

21

239

4,844

4,819

1

1

2,139

2,120

67

(72)

Total assets
Shareholders’ equity

Statement of financial position before
appropriation of results in millions of EUR
As at December 31

Corporate statements

D

Share Capital
Share premium
Legal reserve: currency translation differences
Legal reserve: cash flow hedges

(20)

(1)

Legal reserve: other

263

266

Other reserve: treasury shares

(131)

(82)

Other reserve: retained earnings
Net income
Total shareholders' equity

79

382

523
2,920

203
2,817

1,759

1,020

1,759

1,020

–

954

Non-current liabilities
Debt

E

Total non-current liabilities
Current liabilities
Debt

E

Provisions

1

1

Other liabilities

1–

Amounts owed to subsidiaries

142–

Trade and other payables
Total current liabilities

22
165

26
981

4,844

4,819

Total liabilities and shareholders' equity

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16.3 Statement ofchanges inequityStatement of changes in equity
in millions of EUR

GovernanceCorporate statements

Consolidated financial statements

Legal reserves

SharecapitalCurrency
Share translation Cash flow
premium differences
hedgesSignify Annual Report 2023

Other reserves

Other

TreasurysharesRetainedearnings

Net
incomeTotal
shareholders'equity2,459

Balance as at January 1, 2022

1

2,174

(80)

(2)

213

(126)

(119)

397

Appropriation of prior year result

–

–

–

–

–

–

397

(397)

–

Net income

–

–

–

–

–

–

–

523

523

Net current period change

–

–

147

(18)

–

–

11

–

140

Legal reserves reclassifications

–

–

–

–

50

–

(50)

–

–

Dividend distributed

–

–

–

–

–

–

(182)

–

(182)

Purchase of Treasury shares

–

–

–

–

–

(48)

–

–

(48)

Delivery of Treasury shares

–

(59)

–

–

–

42

16

–

–

Share-based compensation plans

–

23

–

–

–

–

–

–

23

Hyperinflation adjustment

–

–

–

–

–

–

5

–

5

Balance as at December 31, 2022

1

2,139

67

(20)

263

(131)

79

523

2,920

Balance as at January 1, 2023

1

2,139

67

(20)

263

(131)

79

523

2,920

Appropriation of prior year result

–

–

–

–

–

–

523

(523)

–

Net income

–

–

–

–

–

–

–

203

203

Net current period change

–

–

(139)

19

–

–

(12)

–

(132)

Legal reserves reclassifications

–

–

–

–

3

–

(3)

–

–

Dividend distributed

–

–

–

–

–

–

(189)

–

(189)

Purchase of Treasury shares

–

–

–

–

–

(7)

–

–

(7)

Delivery of Treasury shares

–

(35)

–

–

–

57

(22)

–

–

Share-based compensation plans

–

17

–

–

–

–

–

–

17

Hyperinflation adjustment

–

–

–

–

–

–

6

–

6

Balance as at December 31, 2023

1

2,120

(72)

(1)

266

(82)

382

203

2,817

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Corporate performance

GovernanceNotes to the Company financial
statements

C

Statement of income

Other income consists of remuneration costs of the directors of the Company and theSupervisory 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 aloan 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.

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 uponrevaluation to EUR for this inter-company loan are partly hedged and partly mitigated by therevaluation 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.

Investments

Loans

Total

3,779

442

4,221

Dividends received

(96)

–

(96)

Share in results of subsidiaries

551

–

551

2022

2023

Translation differences

147

27

174

6.5

6.4

Other movements

(26)

–

(26)

• consolidated financial statements

3.7

3.6

Balance as at December 31, 2022

4,353

470

4,823

• statutory financial statements

2.8

2.8

Dividends received

(322)

–

(322)

234

–

234

(140)

(18)

(158)

3

–

3

4,128

452

4,580

Audit fees

1

Audit-related fees

0.4

0.5

Share in results of subsidiaries• sustainability assurance

0.3

0.4

Translation differences• other

0.1

0.1

Other movements

6.9

Balance as at December 31, 2023

Total
2

Financial assets

Balance as at January 1, 2022

A summary of Audit fees from Ernst & Young Accountants LLP is shown below.

1

Signify Annual Report 2023

The following table shows the movements in Financial assets.

Audit fees

B

Consolidated financial statements

The Company has one directly-owned subsidiary, Signify Holding B.V. This investment ispresented 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 ofthe investment and is not shown separately on the face of the Statement of financial position.

In millions of EUR unless otherwise statedA

Corporate statements

2

6.9

The audit fees included in 2023 represent the fees in relation to the audit of the 2023 financial statements.
Fees charged by the Dutch organization of EY were EUR 3.0 million (2022:EUR 3.1 million).

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Corporate performance

Governance

Shareholders’ equity

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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,

Share capitalnote 26, Share-based compensation).

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 anominal value of EUR 0.01 per share.

2022

2023

Shares acquired

1,174,595

289,353

Average market priceEUR 40.89

EUR 25.59

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 havebeen issued.

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

EUR 42 million

EUR 57 million

3,103,078

2,029,137

EUR 131 million

EUR 82 million

Cost of delivered shares
Total shares in treasury at year-end
Total cost

Dividend distribution

Legal reserves

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 accordance with the Dutch Civil Code and statutory requirements in other countries, incertain 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 anegative balance, distributions to shareholders are restricted to the extent of the negative
amount.

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
Balance as at January 1

2022

2023

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 limitations in the distribution of Shareholders' equity and the total
distributable reserves:

Shareholders' equity per December 31
Issued share capital

2022

2023

2,920

2,817

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
Limitations in the distribution of shareholders' equity
Distributable reserves of December 31

3

3

331

267

2,589

2,550

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E

Creating value

Brighter Lives, Better World

Corporate performance

Governance

Debt

Corporate statements

Consolidated financial statements

For the movements in debt refer to the table below.

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 therelevant 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.

Term loans
Balance as at January 1, 2022

Eurobonds Other debt
–

Total

479

1,265

New borrowings

–

–

189

189

Repayments

–

–

(189)

(189)

Translation differences

12

–

–

12

Other movements
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 byrating agencies.

Signify Annual Report 2023

1,743

–

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

704

1,271

–

1,975

Balance as at December 31, 2023

As of December 31, 2023 the Company had an undrawn revolving credit facility (RCF) of EUR 500
million which is maturing in January 2027.

F

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 to4.0x 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

The number of persons employed by the Company at year-end 2023 was four (2022: three); allwere employed in the Netherlands. For the remuneration of past and present members of boththe Board of Management and the Supervisory Board, refer to chapter 15, Consolidated financial
statements, note 27, Information on remuneration, which is deemed incorporated and repeatedherein by reference.

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.

G

Employees

Contingent 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 ofthese 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 ofunconsolidated companies and third-parties.
For corporate income tax purposes, the Company is the parent of a fiscal unity that contains themost significant Dutch wholly-owned group companies. The Company is therefore jointly andseverally liable for the corporate income tax liabilities of the tax unity.

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Corporate performance

Governance

Events 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 isdeemed 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 theadoption 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

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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Corporate performance

Governance17 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 bymapping 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 reporton for our material topics and are indicated in brackets using the ESRS paragraphreferences. 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 areincluded 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

Corporate statements

Consolidated financial statements

European
Sustainability
ReportingStandards

General disclosures (ESRS2)
Signify’s sustainability statements consist ofchapter 4, Brighter Lives, Better World;
chapter 17 and the Sustainability Supplements
2023. The information compiled in thosesections were based on specific scopes andboundaries defined in 4.1 Approach tosustainability reporting and 4.1.3 Reporting
standards as well as the standards andframeworks 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 onmaterial topics are included in each specifictopical section of chapter 4, Brighter Lives,
Better World [BP-2(17b)].
All information regarding the governancerelated disclosures , is included in 7 Board ofManagement, 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 anddiversity data, relevant expertise, and theiroversight and management role on Signify’s
sustainability program and targets as well as
the process. Details on the incentives andremunerations are included in 10
Remuneration [GOV-3(29, 29a, 29b, 29d)].
The approach towards the integration of oursustainability objectives and Signify’s strategy

Signify Annual Report 2023

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 climaterelated financial risks and opportunities canbe 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 andresilience analysis, the description of thetypes 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 andopportunities covers the description of theprocess for identifying and managing thephysical and transitional risks according todifferent 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 levertypes, and achieved and expected GHG
emissions reductions [E1.3 (29a, 29b), E1.4
(AR30c)]. Signify’s climate-related targets

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Brighter Lives, Better Worldare 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 ourapproach 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 tomanage climate-related impact, risks andopportunities are mentioned in 4.4.1 Climate
action [E1.2 (24, 25)].
In terms of specific sub-topics of climatechange, we included information regarding
the remuneration and leadership incentives
linked to climate in 10 Remuneration report[GOV-3(13)]. Energy consumption, data andspecific 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 forreported 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 havebeen working on expanding our current
scope of reporting for the financial effectdisclosures and will report on additional

Corporate performance

Governanceelements 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 ourtransition to a circular economy, as well as
the application of circular design rules [E5.1(15a, 20c)]. Signify has set a Circularrevenues target which is explained in thesame section [E5.2 (AR12a), E5.3 (24a)]. We
also disclose data on weight and percentageof 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.

Corporate statements

Consolidated financial statements

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 needsfrom our own workforce in 4.3.5 Businessethics and refer to Signify’s Integrity Code[S1.3 (32b, 32c, 32e, 38a, 38b, 38c), S1.17(103b)].
Regarding quantitative metrics, we report ona number of data breakdowns regarding ourworkforce 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 Humanrights [S1.10 (69,70)]. For metrics on healthand safety, we provide relevant data in 4.3.4
Safety at work [S1.14 (88b-d)].

Workers in the value chain (S2)
Own workforce (S1)Signify’s priority topics regarding its
workforce were defined based on the double
materiality assessment and outcomes areillustrated in 4.1.4 Double materiality [ESRS 2
SBM-3, IRO-1]. The list of policies related toour material impacts, risks and opportunities
are listed in 4.3.2 Diversity, equity andinclusion, 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, werefer to our policy and management approachin 4.3.4 Safety at work [S1.1 (23)]. Signify’s

Our engagement with the workers in ourvalue chain as well as our approach regarding
our material impacts is described in 4.3.3
Human rights. It includes references to ourhuman rights policy commitments relevant tovalue chain workers, specific activities we are
running to manage actual and potential
impact as well as our general approach tonegative impact and remedies [S2.1 (17, 17a),S2.2 (22, 22a-b), S2.3 (27a, 27c, 27d, 28)].
We have tailored channels and programs inplace and monitor their effectiveness [S2.4(32c)].
Based on the impact assessed, we havedefined actions and programs, including the
Tritium and Audit Programs, training and

Signify Annual Report 2023

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 Guidancefor Responsible Supply Chains of Minerals
from Conflict-Affected and High-Risk Areas.
The full description of our due diligenceprocess and Signify’s position on Conflict
Minerals is available on our website [SBM3(11b)].

Business conduct (G1)
While business conduct is not part of themost 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 ourapproach and commitments to businessethics which includes references to existingmechanisms for identifying, reporting andinvestigating concerns in contradictions to
our Code of Conduct, as well as trainings andprocedures to prevent, detect and addressincidents of corruption and bribery [G1.1 (10a,10e, 10g), G1.3 (18a)].
Regarding our supply-side contractual
partners, we provide details on the social andenvironmental criteria used for selection
processes in 4.3.3 Human Rights [G1.2 (15b)].
Concerning Signify political engagement andcontributions, we provide details in the
Sustainability supplements 2023 [G1.5 (29bd)].

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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 reportingBP2 (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 progressachieved

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 ofimpacts, 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 andoversee impacts, risks and opportunities

4.1.1 Sustainability Governance

GOV1 (23a)Information about sustainability-related expertise that bodies and members either directly possess or canleverage

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 GovernanceGOV3 (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 andsystems 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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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

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

Signify Annual Report 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 leadershipE1 (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 leadershipE1.4 (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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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

ESRS

Description

Signify referenceE5.1 (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 performanceS1.1 (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

Disclosure of whether and how policies are implemented through specific procedures to ensure discrimination isS1.1 (24d)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 CodeS1.3 (32e)Disclosure of how issues raised and addressed are tracked and monitored and how effectiveness of channels is
ensured4.3.5 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 CodeS2.1 (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 4.3.3 Human rights, section Supplier sustainability
potential impacts
performanceS2.3 (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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Corporate performance

GovernanceCorporate statements

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ESRS

Description

S2.3 (27c)Disclosure of processes through which undertaking supports or requires availability of channels

performanceS2.3 (27c)Disclosure of how issues raised and addressed are tracked and monitored and how effectiveness of channels is
ensured4.3.3 Human rights, section Supplier sustainability
performanceS2.3 (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
performanceS2.3 (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
performanceS2.3 (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

Signify reference
4.3.3 Human rights, section Supplier sustainability

Disclosure of geographies or commodities for which there is significant risk of child labor, or of forced or
SBM3 (11b)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 incontradiction of its code of conduct

13.1 Risk factors and risk management, Integrity CodeG1.1 (10e)Undertaking is committed to investigate business conduct incidents promptly, independently and objectively

13.1 Risk factors and risk management, Integrity CodeG1.1 (10g)

Information about policy for training within organization on business conduct

13.1 Risk factors and risk management, Integrity CodeG1.2 (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 andbribery

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 establishedthe EU Taxonomy as an important enabler toscale up sustainable investments and makethe EU carbon neutral by 2050. At Signify, wewant to be a catalyst for change, and arecommitted to doubling our positive impact on
the environment and society. We
continuously seek opportunities to increase
our portfolio of products and solutions tocontribute to a more sustainable future.
Proof of this is the evolution of thepercentage of LED-based revenues over thelast 10 years, from just 29% in 2013 to 85% in
2023. This transition has moved us away frombeing a company based on conventional
lighting ,a low energy-efficient technology, tobecome a LED company. This shift has been
made possible, among other things, bycontinued investment in R&D dedicated tosustainable 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 ofpreserving value and avoiding waste, wedeveloped the circular revenue objective.
The goal is to ensure that 32% of total
revenues by the end of 2025 come fromproducts internally identified as circular (formore information, see section 4.2 Sustainable
innovation). In addition, in 2023, Signify
launched a refurbishment service as part ofthe professional portfolio with the ambitionof expanding it in the coming years.

Corporate performance

Governance

The EU Taxonomy reporting
framework
The European Commission has developed acatalog of economic activities to determine ifthey substantially contribute towards asustainable 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 twoenvironmental 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 andEcosystems).

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 andassumptions based on currently available
information. Future guidance could result in
more accurate definitions and otherreporting 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 thiseconomic activity;

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

• 3.6 Manufacture other low-carbon
technologies that result in substantial GHG

services that are marketed under a “Light
as a service” and other pay-per-use

emission reductions in other sectors of theeconomy. We allocate manufacturing of
LED and Connected technologies for
Outdoor spaces to this economic activity;• 7.3 Installation, maintenance and repair ofenergy efficiency equipment. We allocate
installation, maintenance and repair
activities of lighting products such as
lamps and luminaires, without controls, forindoor 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

business models.

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 cloudconnectivity.

Transition to a Circular Economy• 1.2 Manufacture of electrical andelectronic equipment. We allocate here
manufacturing of electrical and electronicequipment and their related activities,
mostly related to lighting, including LED
technology and also conventional lighting;• 5.1 Repair, refurbishment andremanufacturing. We allocate services
offered to customers to repair, refurbish
or remanufacture lighting products andrelated items;• 5.2 Sale of spare parts. We allocate
manufacturing of components aimed toreplace an existing part of a final products;• 5.5 Product-as-a-service and othercircular use and result-oriented service
models. We allocate products and related

The analysis has not revealed any activities
that contribute to the four otherenvironmental objectives namely; climatechange 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 performanceindicators 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 beenused 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, wehave allocated respectively, the Turnover,
CapEx and Opex that are contributing to bothobjectives to Climate Change Mitigation. By
adopting this approach, we can ensure thatnone 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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TurnoverThe eligible turnover is defined as the part ofCorporate performance

Governanceassociated revenues have not been
considered as aligned.

the net turnover derived from products orservices, including intangibles, associatedwith Taxonomy-eligible economic activities.
The following list sets out Signify’s Taxonomyeligible turnover, contributing to thefollowing environmental objectives:
Climate Change Mitigation:• Turnover of the manufacturing of LED andConnected 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 electricaland 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, seegraph) 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 thehighest two populated classes of energy
efficiency in accordance with Regulation (EU)2017/1369; automation and controls systems
and sensors; outdoor luminaires aimed atdemonstrating substantial life-cycle GHG
emission savings quantified by an external
third party with verification due in 2024; andthe installation, maintenance and repair ofenergy-efficient light sources and lighting
control systems. When data requirements foralignment reporting are not met, theTotal 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 productgroups 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 asfollows:• 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 areassociated with Taxonomy-eligible
economic activities;• Part of a plan to expand Taxonomy-eligible
economic activities or to allow Taxonomy-

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

eligible economic activities to become
Taxonomy-aligned;

Of the Taxonomy-eligible capital
expenditures of EUR 180 million (A.1+A.2),• Related to the purchase of output from
Taxonomy-eligible economic activities andindividual measures.

Signify used the Taxonomy-aligned turnoverproportion per business unit as allocation
formula to calculate the Taxonomy-aligned
CapEx of EUR 15.5 million (A.1).

The following list sets out Signify’s Taxonomyeligible CapEx contributing to theenvironmental objectives:• Climate Change Mitigation: CapEx related
the manufacturing of LED and Connected
technologies, for Indoor spaces (3.5) andOutdoor spaces (3.6), and the annual
turnover of the installation, maintenanceand 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 andelectronic 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 productionlines and extension of production capacityof LED, connected technologies andproduct refurbishment);• CapEx related to the purchase of output
from Taxonomy-eligible economic activities
and individual measures (i.e. freightvehicles 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 dataprocessing, hosting and related activities).

Total Taxonomy-eligible CapEx (A.1+A.2)
Total Taxonomy-eligible CapEx (A.1)

OpEx
The Taxonomy-eligible OpEx is defined as theoperational expenditures:• Related to assets or processes that areassociated with Taxonomy-eligible
economic activities;• Part of a plan to expand Taxonomy-eligible
economic activities or to allow Taxonomyeligible economic activities to become
Taxonomy-aligned;• Related to the purchase of output from
Taxonomy-eligible economic activities andindividual measures.
The following list sets out Signify’s Taxonomyeligible operational expenditures,contributing to the environmental objectives:• Climate Change Mitigation: OpEx related
the manufacturing of LED and Connected
technologies, for Indoor spaces (3.5) andOutdoor spaces (3.6), and the annual
revenue of the installation, maintenance

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Brighter Lives, Better Worldand 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 andelectronic products (1.2 and 5.5),components (5.2), and related activities(5.1);• OpEx related to expand these Taxonomyeligible 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 andequipment).
Of the Taxonomy-eligible operational
expenditures of EUR 497 million (A.1+A.2),
Signify used the Taxonomy-aligned turnoverproportion per business unit as allocation
formula to calculate the Taxonomy-aligned
OpEx of EUR 36 million (A.1)

Corporate performance

GovernanceTotal Taxonomy-eligible OpEx (A.1)

Consolidated financial statements

Signify Annual Report 2023

Eligibility and alignment disclosures for turnover, CapEx and Opex
2021
Turnover

CapEx

2022
OpEx

Turnover

CapEx

2023
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%

–%

–%

–%

6,860

213

456

7,514

238

492

6,704

180

497

Total (EUR million)*

To avoid overlapping in eligibility between Circular Economy and Climate Change Mitigation, we report all shared eligibility between both objectives as Climate Change Mitigation.

Do No Significant Harm criteria
The EU Taxonomy Regulation establishes thatan economic activity must Do No Significant
Harm (DNSH) to any of the otherenvironmental objectives. To conduct thatassessment, we have gathered information
about our measurements, processes andpolicies for each of the DNSH criteria
covering the economic activities 3.5, 3.6, 7.3
and 7.5. The assessment confirmed that wemeet the requirements of the DNSH criteria.

DNSH to Climate Change Adaptation

Total Taxonomy-eligible OpEx (A.1+A.2)

Corporate statements

We performed a climate risk and vulnerability
assessment to identify potential physical andtransition risks in our value chain (upstream
and downstream). Regarding the physicalrisks, we have analyzed all the climaterelated hazards listed in appendix A fromAnnex 1 of the EU Taxonomy and focused on
assessing physical risks relevant to Signify’s

manufacturing sites, warehouses anddistribution centers, namely riverine flooding,and location. We operate in accordance with
the international standards ISO 14001 and ISO

coastal flooding, drought, tropical cyclones,
and heatwave for the short-term (2025) andtwo long-term (2050) scenarios. The twolong-term scenarios cover a below 2°C or
SSP1-2.6 scenario – taking the sustainableroad, 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.

45001, as stipulated in our EHS Policy.

DNSH to Sustainable use and protectionof 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

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 waterpollutants. Regarding marine waters, we havenot identified any significant risks across ouroperations. We identified that 1% of all sites
face potential risks regarding water pollution
and ground water abstraction. These sites
have manufacturing functions and alreadyhave environmental impact management
processes and containment protocols forhazardous materials in place. We plan to work
further on increasing the actions to prevent

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potential future impacts where deemedmaterial.

DNSH to Transition to a Circular
EconomyOur circular economy growth area, which ispart of Signify's 5 Frontiers strategy, isfocused 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 tolandfill since 2020. This achievement isreinforced by our Sustainability Policy, which
is designed to shift towards a more circular
economy, with responsible consumption andproduction in mind, contributing to SDG12.

Corporate performance

GovernanceSignify is committed to using recycled andbio-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, andcurrent activities, Signify mitigates the risk ofharming the objective of transitioning to acircular economy. For more information
about our actions towards a this topic, referto subsection 4.4,2 Circular Economy.

To further improve our sustainability
performance, we have implemented amandatory Sustainable Design Procedure for
all R&D organizations and businesses. ThisDNSH to Pollution Prevention andControl

procedure aims to increase the sustainability
benefits of our portfolio and promoteresponsible practices.

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 theircomponents and to comply with thestipulations that we have listed in our
Regulated Substance List (RSL). For more
information about pollution and prevention
control, refer to the Sustainability
Supplements 2023.

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 andundertake successful remanufacturing
projects, with a new remanufacturingservices offering launched.

Signify has a strict policy regarding pollution
and prevention control. We control the use

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

DNSH to Protection and restoration of
Biodiversity and Ecosystems

Minimum Social Safeguards

Regarding the protection of biodiversity andecosystems, all our sites follow at minimum
the local environmental regulations and allsites located within the EU comply withmandatory 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.

provision of the EU Taxonomy Regulation
requires companies involved inenvironmentally sustainable economic
activities must also meet criteria for
responsible business conduct alreadyoutlined in the OECD Guidelines forMultinational Enterprises, the United Nations
Guiding Principles on Business and Human
Rights, the Fundamental Conventions of theInternational Labour Organisation (ILO) andthe International Bill of Human Rights. We
assessed the coverage of our codes andstandards to the principles and policies under
the MSS of the EU Taxonomy. Based on

We identified that 2% of all sites werelocated within the zone of influence toprotected areas and at risks of potentiallycontributing to soil pollution and wildlife
disturbance. These risks are currently
mitigated by policies in place, such as the
Biodiversity Policy, as well as environmental

Signify's interpretation of the guidance on
MSS, the assessment confirmed that we meetthe requirements of the MSS criteria. In
addition, the company is committed to acontinuous improvement of its human andlabor rights performance.

impact management processes andcontainment 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 aswell as adopting mitigation measures tominimize the risks of impact. We are working
on developing more and better biodiversity
friendly lighting solutions and we are planningto activate awareness of users about lightand its impact on wildlife as well as partnerwith non-profit organizations to fundconservation efforts. For more information
about biodiversity and ecosystems, refer tothe Sustainability Supplements 2023.

Complementary information

The Minimum Social Safeguards (MSS)The detailed results following the format of
the Taxonomy Regulation can be found in thefollowing pages. Signify understands andappreciates the fact that the EU Taxonomy
framework is in constant evolution, and thatthe company’s reporting obligations willcontinue to grow and evolve over the next
years. Assessment of the 2023 results is
pending further EU Taxonomy's market
practice and comparability. Signify iscommitted to increasing its taxonomyeligibility and taxonomy-alignment
percentages independently of regulatory
developments.

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Proportion of turnover from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2023
DNSH criteria('Does Not Significantly Harm')

Substantial contribution criteria

Minimum safeguards

Proportion of Taxonomy
aligned (A.1.) or eligible(A.2.) turnover, year 2022

Category enabling activity

Category transitional
activity

Biodiversity andecosystems

Pollution

Circular economy

Water and marine
resources

Climate change
adaptation

Climate change mitigation

Biodiversity andecosystems

Pollution

Circular economy

Water and marine
resources

Climate change
adaptation

Climate change mitigation

Proportion of turnover,year 2023

Turnover

CODE

Economic activities

Y/N

%

E

T

Y

Y

3.0%

E

Y

Y

Y

7.8%

E

Y

Y

Y

Y

0.1%

E

Y

Y

Y

Y

Y

0.1%

E

Y

Y

Y

Y

Y

Y

11.0%

E

Y

Y

Y

Y

Y

Y

Y

11.0%

E

Y

Y

Y

Y

Y

Y

Y

–%

EUR
million%CCM 3.5

354

5.3%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Y

Y

Y

CCM 3.6

201

3%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Y

Y

CCM 7.3

1

–%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Y

CCM 7.5

15

0.2%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Total Turnover from taxonomy-eligible and aligned activities (A.1)

571

8.5%

8.5%

–%

–%

–%

–%

–%

Y

Of which Enabling

571

8.5%

8.5%

–%

–%

–%

–%

–%

Of which Transitional

–

–%

–%

CCM 3.5

3,646

54.4%

EL

N/EL

N/EL

N/EL N/EL

N/EL

57.10%

CCM 3.6

1,478

22.1%

EL

N/EL

N/EL

N/EL N/EL

N/EL

15.00%

CCM 7.3

–

–%

EL

N/EL

N/EL

N/EL N/EL

N/EL-

CCM 7.5

–

–%

EL

N/EL

N/EL

N/EL N/EL

N/EL-

CE 1.2

1,008

15.0% N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

CE 5.1

–

–%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

CE 5.2

0.3

–%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

CE 5.5

–

–%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

Text

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
Manufacture other low carbon technologies that result in substantial
GHG emission reductions in other sectors of the economy
Installation, maintenance and repair of energy efficiency equipment
Installation, maintenance and repair of instruments and devices formeasuring, regulation and controlling energy performance of buildings

A.2 Taxonomy-eligible but not environmentally sustainable activities(not Taxonomy-aligned activities)*
Manufacture of energy efficiency equipment for buildings
Manufacture other low carbon technologies that result in substantial
GHG emission reductions in other sectors of the economy
Installation, maintenance and repair of energy efficiency equipment
Installation, maintenance and repair of instruments and devices formeasuring, regulation and controlling energy performance of buildings
Manufacture of electrical and electronic equipment
Repair, refurbishment and remanufacturing
Sale of spare parts
Product-as-a-service and other circular use- and result-oriented
service models

EL; N/EL

Turnover of Taxonomy-eligible but not environmentally sustainable activities (notTaxonomy-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.

T

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2023
DNSH criteria('Does Not Significantly Harm')

Substantial contribution criteria

Minimum safeguards

Proportion of Taxonomy
aligned (A.1.) or eligible(A.2.) CapEx, year 2022

Category enabling activity

Category transitional
activity

Biodiversity andecosystems

Pollution

Circular economy

Water and marine
resources

Climate change
adaptation

Climate change mitigation

Biodiversity andecosystems

Pollution

Circular economy

Water and marine
resources

Climate change
adaptation

Climate change mitigation

Proportion of CapEx, year
2023

CapEx

CODE

Economic activities

Y/N

%

E

T

Y

Y

3.4%

E

Y

Y

Y

8.7%

E

Y

Y

Y

Y

0.1%

E

Y

Y

Y

Y

Y

0.1%

E

Y

Y

Y

Y

Y

Y

12.4%

E

Y

Y

Y

Y

Y

Y

Y

12.4%

E

Y

Y

Y

Y

Y

Y

Y

–%

EUR
million%CCM 3.5

9.6

5.3%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Y

Y

Y

CCM 3.6

5.5

3.0%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Y

Y

CCM 7.3

–

–%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Y

CCM 7.5

0.4

0.2%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Total CapEx from taxonomy-eligible and aligned activities (A.1)

15.5

8.6%

8.6%

–%

–%

–%

–%

–%

Y

Of which Enabling

15.5

8.6%

8.6%

–%

–%

–%

–%

–%

Of which Transitional

–

–%

–%

CCM 3.5

99.8

55.4%

EL

N/EL

N/EL

N/EL N/EL

N/EL

56.70%

CCM 3.6

41

22.5%

EL

N/EL

N/EL

N/EL N/EL

N/EL

14.00%

CCM 7.3

–

–%

EL

N/EL

N/EL

N/EL N/EL

N/EL-

CCM 7.5

–

–%

EL

N/EL

N/EL

N/EL N/EL

N/EL-

CE 1.2

25

13.6%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

CE 5.1

–

–%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

CE 5.2

–

–%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

CE 5.5

–

–%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

CapEx of Taxonomy-eligible but not environmentally sustainable activities (notTaxonomy-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%

–%

–%

99.3% –%

–%

83.1%

Text

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
Manufacture other low carbon technologies that result in substantial
GHG emission reductions in other sectors of the economy
Installation, maintenance and repair of energy efficiency equipment
Installation, maintenance and repair of instruments and devices formeasuring, regulation and controlling energy performance of buildings

A.2 Taxonomy-eligible but not environmentally sustainable activities(not Taxonomy-aligned activities)*
Manufacture of energy efficiency equipment for buildings
Manufacture other low carbon technologies that result in substantial
GHG emission reductions in other sectors of the economy
Installation, maintenance and repair of energy efficiency equipment
Installation, maintenance and repair of instruments and devices formeasuring, regulation and controlling energy performance of buildings
Manufacture of electrical and electronic equipment
Repair, refurbishment and remanufacturing
Sale of spare parts
Product-as-a-service and other circular use- and result-oriented
service models

EL; N/EL

86.4%

B. TAXONOMY NON-ELIGIBLE ACTIVITIESCapEx 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.

T

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2023
DNSH criteria('Does Not Significantly Harm')

Substantial contribution criteria

Minimum safeguards

Proportion of Taxonomy
aligned (A.1.) or eligible(A.2.) OpEx, year 2022

Category enabling activity

Category transitional
activity

Biodiversity andecosystems

Pollution

Circular economy

Water and marine
resources

Climate change
adaptation

Climate change mitigation

Biodiversity andecosystems

Pollution

Circular economy

Water and marine
resources

Climate change
adaptation

Climate change mitigation

Proportion of OpEx, year
2023

OpEx

CODE

Economic activities

Y/N

%

E

T

Y

Y

3.1%

E

Y

Y

Y

7.9%

E

Y

Y

Y

Y

0.1%

E

Y

Y

Y

Y

Y

0.1%

E

Y

Y

Y

Y

Y

Y

11.3%

E

Y

Y

Y

Y

Y

Y

Y

11.3%

E

Y

Y

Y

Y

Y

Y

Y

–%

EUR
million%CCM 3.5

22

4.4%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Y

Y

Y

CCM 3.6

13

2.5%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Y

Y

CCM 7.3

0

–%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Y

CCM 7.5

1

0.2%

Y

N/EL

N/EL

N/EL N/EL

N/EL

Y

Y

Total OpEx from taxonomy-eligible and aligned activities (A.1)

36

7.2%

7.2%

–%

–%

–%

–%

–%

Y

Of which Enabling

36

7.25

7.2%

–%

–%

–%

–%

–%

Of which Transitional

–

–%

–%

CCM 3.5

248

49.9%

EL

N/EL

N/EL

N/EL N/EL

N/EL

50.60%

CCM 3.6

101

20.3%

EL

N/EL

N/EL

N/EL N/EL

N/EL

12.30%

CCM 7.3

–%

–%

EL

N/EL

N/EL

N/EL N/EL

N/EL-

CCM 7.5

–%

–%

EL

N/EL

N/EL

N/EL N/EL

N/EL-

CE 1.2

112

22.6%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

CE 5.1

–%

–%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

CE 5.2

–%

–%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

CE 5.5

–%

–%

N/EL

N/EL

N/EL

EL

N/EL

N/EL

n.a.

Text

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
Manufacture other low carbon technologies that result in substantial
GHG emission reductions in other sectors of the economy
Installation, maintenance and repair of energy efficiency equipment
Installation, maintenance and repair of instruments and devices formeasuring, regulation and controlling energy performance of buildings

A.2 Taxonomy-eligible but not environmentally sustainable activities(not Taxonomy-aligned activities)*
Manufacture of energy efficiency equipment for buildings
Manufacture other low carbon technologies that result in substantial
GHG emission reductions in other sectors of the economy
Installation, maintenance and repair of energy efficiency equipment
Installation, maintenance and repair of instruments and devices formeasuring, regulation and controlling energy performance of buildings
Manufacture of electrical and electronic equipment
Repair, refurbishment and remanufacturing
Sale of spare parts
Product-as-a-service and other circular use- and result-oriented
service models

EL; N/ELOpEx of Taxonomy-eligible but not environmentally sustainable activities (notTaxonomy-aligned activities) (A.2)

461

92.8% 70.2%

–%

–%

100%

–%

–%

62.9%

A. OpEx of Taxonomy eligible activities (A.1+A.2)

497

100%

–%

–%

100%

–%

–%

74.1%

77.4%

B. TAXONOMY NON-ELIGIBLE ACTIVITIESOpEx 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.

T

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Corporate performance

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.

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Our opinions• The business operations, events andachievements in that area in 2023

Financial statementsin accordance with the applicable criteria as
included in the section “Criteria”.

We have audited the financial statements
2023 of Signify N.V. (hereafter: theCompany), based in Eindhoven, theNetherlands. 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 thefinancial 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 (EUIFRSs) and with Part 9 of Book 2 of the
Dutch Civil Code;• The accompanying Company financial
statements give a true and fair view of thefinancial position of Signify N.V. as at
December 31, 2023, and of its result for2023 in accordance with Part 9 of Book 2of the Dutch Civil Code.

Sustainability information
We have performed a reasonable assurance
engagement on the sustainability informationin 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 ourreport.
In our opinion, the sustainability information
presents fairly, in all material respects:• The policy with regard to sustainability
matters;

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 “Ourresponsibilities” of our report.
We believe the audit evidence we haveobtained is sufficient and appropriate toprovide a basis for our opinions.

Sustainability information
We have performed our reasonableassurance engagement on the sustainability
information in accordance with Dutch law,
including Dutch Standard 3810N, ‘Assuranceopdrachten 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 thisregard are further described in the section“Our responsibilities” of our report.

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We believe that the assurance evidence wehave obtained is sufficient and appropriate toprovide a basis for our opinion.

Our independence
We are independent of Signify N.V. inaccordance 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, aregulation with respect to independence) andother relevant independence regulations in
the Netherlands. Furthermore, we havecomplied 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: theconsolidated statement of income,comprehensive income, cash flows andchanges 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;

Corporate performance

Governance• The Company statement of income for2023;• The notes comprising a summary of theaccounting 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 andsections 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 thesustainability information

Corporate statements

Consolidated financial statements

Signify’s best estimates available at the timeof 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, thecalculations to determine societal impact as
included in section 3.3 of the Annual Report
are mostly based on assumptions and sourcesfrom third parties. The assumptions andsources 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 wehave not performed procedures on thecontent of these assumptions and externalsources.
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.

The sustainability information includes
prospective information, such as ambitions,strategy, plans, forecasts, expectations andestimates. Prospective information relates toevents and actions that have not yet
occurred and may never occur. We do notprovide assurance on the assumptions andachievability of this prospective information.

these matters.

With regards to the Company’s sustainability
information, the 2019 baseline is based on

The criteria applied for the preparation of thesustainability information are the GRI

Our opinion is not modified in respect ofCriteria

Signify Annual Report 2023

Sustainability Reporting Standards (GRI
Standards) and the criteria supplementally
applied as disclosed in section 4.1 Approachto sustainability reporting of the Annual
Report 2023 of Signify N.V.
The sustainability information is prepared inaccordance 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 beaffected by the absence of a uniform practiceon which to draw, to evaluate and measure
this information. This allows for theapplication of different, but acceptable,measurement techniques.
Consequently, the sustainability informationneeds to be read and understood together
with the reporting criteria applied.

Information in
support of ouropinion on thefinancialstatements
We designed our procedures in the context
of our audit of the financial statements as awhole and in forming our opinion thereon. The
following information in support of ouropinion and any findings were addressed inthis context, and we do not provide aseparate opinion or conclusion on thesematters.

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Our understanding of thebusiness
Signify N.V. is a global provider of lighting
solutions. The group is structured incomponents and we tailored our group audit
approach accordingly. We paid specificattention in our audit to a number of areas
driven by the operations of the group and ourrisk assessment. We determined materiality
and identified and assessed the risks ofmaterial misstatement of the financial
statements, whether due to fraud or error inorder to design audit procedures responsive
to those risks and to obtain audit evidence
that is sufficient and appropriate to provide abasis for our opinion.

Materiality
The scope of our audit procedures isinfluenced 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 bematerial if, individually or in the aggregate,
they could reasonably be expected toinfluence the (economic) decisions of users
taken on the basis of the financial
statements. The materiality affects thenature, timing and extent of our audit
procedures and the evaluation of the effectof identified misstatements on ourconclusions.

Materiality

Corporate performance

Governance

EUR 26 million

Benchmark Approximately 4% of adjusted
appliedearnings before interest, tax
and amortization (Adjusted
EBITA)
Explanation Based on our professional
judgment we consider
earnings-based measures as
the most appropriate basis todetermine materiality.
Adjustments are made toearnings before interest, taxes
and amortization for elementsthat are not directly related tothe operational performanceof the company as disclosed inchapter 19, 19. Reconciliationof non-IFRS financial measures.
We have also taken into accountmisstatements 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 thatmisstatements in excess of EUR 1.3 million,
which are identified during the audit, arereported to them, as well as smaller
misstatements that in our view must bereported on qualitative grounds.

Scope of the group audit of thefinancial statements
Signify N.V. is at the head of a group ofentities. The financial information of thisCorporate statements

Consolidated financial statements

group is included in the Consolidated financial
statements.
Because we are ultimately responsible for theopinion, we are also responsible for directing,supervising and performing the group audit.
In this respect we have determined thenature and extent of the audit procedures tobe carried out for group entities. Decisivewere the size and/or the risk profile of thegroup entities or operations. On this basis,
we selected group entities for which an audit
or review had to be carried out on thecomplete set of financial information or
specific items.

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 ofthese accounts or their risk profile (SpecificScope 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 theNetherlands;• Centrally performed audit procedures on
accounting areas that are managed
centrally such as goodwill, acquisitions,
legal claims and treasury.

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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 besummarized as follows:

Revenues

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

Signify Annual Report 2023

33%

41%

Full scope
Specific
scope
Other
procedures

26%

Total assets

20%

12%
Full scope
Specific
scope
Other
procedures

68%

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

By performing the procedures mentioned
above at components of the group, together

account in estimates and significant
assumptions, as disclosed in note 1, Basis ofprocess for responding to the risks of fraud
and monitoring the system of internal control

We addressed the risks related to
management override of controls. For thesewith additional procedures at group level, we
have been able to obtain sufficient andappropriate audit evidence about the group’s
financial information to provide an opinion
about the Consolidated financial statements.

preparation of the Consolidated financial
statements, as well as in the design ofrelevant internal control measures by Signify
N.V. Furthermore, we read the report of theBoard of Management and considered
whether there is any material inconsistency
between the non-financial information inchapter 4, Brighter Lives, Better World andthe financial statements.

and how the Supervisory Board exercises
oversight, as well as the outcomes.

Our focus on fraud and noncompliance with laws andregulations

We evaluated the design and relevant aspectsof the system of internal control and inparticular the fraud risk assessment, as wellas the code of conduct, whistle blowerprocedures and incident registration.

risks we have performed procedures among
others to evaluate key accounting estimatesfor management bias that may represent arisk of material misstatement due to fraud, inparticular relating to important judgmentareas 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 andaddress high-risk journal entries andevaluated the business rationale (or the lackthereof) of significant extraordinarytransactions, including those with relatedparties.

Teaming and use of specialists
We ensured that the audit teams both atgroup and at component level included theappropriate skills and competences that areneeded for the audit of a listed client in
Signify’s industry. We included specialists inthe areas of IT audit, forensics, treasury andincome tax and have made use of our own
experts in the areas of valuations andactuaries.

Our focus on climate relatedrisks and the energy transition
Climate change and the energy transition arehigh on the public agenda. Issues such as CO2
reduction impact financial reporting, as theseissues entail risks for the business operation,
the valuation of assets (stranded assets) andprovisions or the sustainability of thebusiness model and access to financial
markets of companies with a larger CO2
footprint. The Sustainability statementssummarize, among other topics, Signify’s
commitments and obligations and how thecompany is addressing climate-related andenvironmental risks.
As part of our audit of the financial
statements, we evaluated the extent to whichclimate-related risks and the possible effectsof the energy transition are taken into

Our responsibility

We refer to chapter 13, Risk factors and risk
management, for management’s (fraud) risk
assessment and section 9.2 of theSupervisory Board report in which theSupervisory Board reflects on this (fraud) risk
assessment.

Although we are not responsible forpreventing fraud or non-compliance and wecannot be expected to detect noncompliance with all laws and regulations, it is
our responsibility to obtain reasonableassurance that the financial statements,

We evaluated the design and theimplementation and, where consideredappropriate, tested the operating
effectiveness, of internal controls designed
to mitigate fraud risks.

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, intentionalomissions, misrepresentations, or theoverride of internal control.

As part of our process of identifying fraudrisks, we evaluated fraud risk factors withrespect to financial reporting fraud andmisappropriation of assets. As Signify N.V. is a
global company, operating in multiple
jurisdictions, we also considered the risk ofbribery and corruption. In close co-operation
with our forensic specialists we evaluatedwhether these factors indicate that a risk ofmaterial misstatement due to fraud ispresent.

Our audit response related to fraudrisks
We identified and assessed the risks ofmaterial misstatements of the financial
statements due to fraud. During our audit we
obtained an understanding of the entity andits environment and the components of thesystem of internal control, including the risk
assessment process and management’s

We incorporated elements of unpredictability
in our audit. We also considered the outcomeof our other audit procedures and evaluatedwhether any findings were indicative of fraud
or non-compliance.

The following fraud risk identified did requiresignificant attention during our audit:
Presumed risk of fraud in revenue
recognition
Fraud
risk

We presumed that there arerisks of fraud in revenue
recognition. We evaluated thatrevenue 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 inrevenue recognition in thedescription of the key audit
matter “Improper revenue
recognition”.

We considered available information andmade enquiries of the Board of Management
and other relevant executives, directors(including internal audit, legal, compliance andheads of Divisions) and the Supervisory
Board.

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The fraud risks we identified, enquiries andother available information did not lead to
specific indications for fraud or suspectedfraud potentially materially impacting the viewof the financial statements.

Our audit response related to risks
of non-compliance with laws andregulations
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 anddisclosures in the financial statements.
Furthermore, we assessed factors related to
the risks of non-compliance with laws andregulations, including bribery and corruptionthat could reasonably be expected to have amaterial effect on the financial statementsfrom 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 oftransactions, account balances ordisclosures.
We also inspected lawyers’ letters andcorrespondence with regulatory authorities
and remained alert to any indication of(suspected) non-compliance throughout theaudit. Finally we obtained written
representations from the Board ofManagement and management of operatingcompanies that all known instances of noncompliance with laws and regulations havebeen disclosed to us.

Corporate performance

GovernanceOur audit response related to going
concern
As disclosed in note 1, Basis of preparation, of
the Consolidated financial statements, thefinancial statements have been prepared on agoing concern basis. When preparing thefinancial statements, management made a
specific assessment of the company’s ability
to continue as a going concern and tocontinue its operations for the foreseeable
future. We discussed and evaluated thespecific assessment with management
exercising professional judgment andmaintaining 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 orconditions 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 ourauditor’s report. However, future events orconditions may cause a company to cease tocontinue as a going concern.

Corporate statements

Consolidated financial statements

Our key audit
matters

Signify Annual Report 2023

The key audit matters were addressed in thecontext of our audit procedures for the

Key audit matters are those matters that, in
our professional judgment, were of mostsignificance 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.

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:

Key audit matter

ChangeReason for change

Valuation of inventories andrelated 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 andrelated 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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Corporate performance

We identified the following key audit

Risk

matters.

Improper revenue recognition

GovernanceCorporate statements

Consolidated financial statements

Our audit approach

Revenue from the sale of goods is
Our Our audit procedures included:
recognized at the point in time that the• The assessment of the appropriatenesscustomer obtains control of the goods. Forof the company’s revenue recognition
standard sale of products, control generally
accounting policies;
passes to the customer at the time the• Obtaining an understanding of the design
product is delivered and accepted,
of key controls in the revenue
depending on the delivery conditions.
recognition process;• The use of data analytics to audit key risk
The company focuses on sales as one of theareas and identify exceptional or unusual
key performance measures which could
revenue streams and patterns;
create an incentive to recognize revenues• Detailed testing of significant sales
in the incorrect period due to the pressure
contracts;
employees may feel to achieve desired• Performing cut-off procedures to ensure
results. Further reference is made to noterevenue is recognized in the correct
2, Material accounting policies, of theConsolidated financial statements.
We assessed that improper revenue
recognition for the sale of goods,
specifically relayed to cut-off, represents a
key audit matter.

period.

Signify Annual Report 2023

Key observations

We concur with the revenue recognized in
the financial statements.

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Risk
Our audit approach
Valuationof uncertain tax positions (assets and liabilities)
Valuation of uncertain tax positions (assets and liabilities)

Key observations

At December 31, 2023, uncertain tax
positions are recognized as part of the net
deferred tax assets of EUR 382 million andthe income tax payable under non-current
liabilities of EUR 79 million. Further
reference is made to note 9, Income taxes,of the Consolidated financial statements.

Together with our tax experts we evaluatedthe tax accounting in various jurisdictions
the company operates in, taking into
account the impact of the local
jurisdictions. We specifically focused on the
tax uncertainties as disclosed in note 9 of
the Consolidated financial statements.

We concur with the judgements andestimates made by management relating to
the valuation of uncertain tax positions(assets and liabilities), and conclude therelated disclosures to be sufficient.

The ultimate tax effects of transactions may
be uncertain for a considerable period oftime, requiring management to estimate therelated current and deferred tax
treatments, resulting in uncertain tax
positions.

We evaluated and challenged the company’s
judgments and estimates of uncertain tax
positions resulting from ongoing local tax
audits and legislative developments, andrelevant historical and recent judgments.

The accounting for uncertain tax positions
is a focus area in our audit as the company
has extensive international operations andis required to make judgments andestimates. These judgments and estimates
relate to, among others, the tax risks as
disclosed in note 9 of the Consolidated
financial statements on the valuation ofdeferred tax assets and liabilities for
uncertain tax positions.

Where possible, we compared information
provided by management to corroborative
or contradictory information. We also
assessed the adequacy of the company’s
disclosure included in note 9 of theConsolidated financial statements, inrespect of deferred tax assets and othertax liabilities related to tax uncertainties.

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Corporate performance

Governance

Risk

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Our audit approach

Key observations

At December 31, 2023, the total carrying
value of goodwill Division Digital Solutions
amounted to EUR 2,387 million, representing
30% of total assets. Goodwill is allocated toCash Generating Units (CGUs), whichcorrespond to the operating segments as
disclosed in note 1 of the Consolidated
financial statements. Goodwill is tested for
impairment annually and whenever
impairment indicators are identified. Further
reference is made in note 15, Intangible
assets of the Consolidated financial
statements.

We assessed and tested the assumptions,
methodologies, and data used by thecompany in its impairment test, bycomparing these to external data such as
the Company’s share price, expected
inflation rates, discount rates and implied
growth rates.

We concur with management’s conclusionthat no impairment of goodwill is required as
at December 31, 2023, and conclude therelated disclosures to be sufficient.

The risk of a potential impairment of
goodwill increased, considering the current
business environment and the impact
thereof on the company’s performance. We
specifically identify the impairment risk to
the Division Digital Solutions, as this division
is mostly affected by current businessdevelopments and represent the largest
part of the total amount of goodwill of
Signify.

margins. We performed sensitivity analyses
by stress testing the key assumptions in the
impairment test to determine the degree towhich these assumptions would need tochange before the carrying amountexceeds its recoverable amount. We
included in our team a valuation expert toassist us in these audit activities.

Valuation of goodwill Division Digital Solutions

The determination of the recoverable
amount of goodwill is complex, given thesignificant judgment and estimation
uncertainty related to assumptions in themodel used to determine whether therecoverable amount of goodwill isappropriate. The most significant
assumptions used within the model tosupport the recoverable amount of goodwill
are sales growth rates, EBITA margins andrates used for discounting projected cash
flows. Therefore we consider this a key
audit matter.

We validated that the forecasted cash flows
used in the valuation are consistent with theapproved strategic plans and evaluated thehistorical accuracy of management’s
estimates that drive the assessment, suchas the expected growth rates and EBITA

We assessed the adequacy of thecompany’s disclosure around goodwill as
included in note 15 of the Consolidated
financial statements as well as thecompany’s accounting policies that are
more critical in nature as included in note 2of the Consolidated financial statements.

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Information in
support of ouropinion on thesustainability
information
Materiality
Based on our professional judgment wedetermined materiality levels for eachrelevant sustainability matter. Whenevaluating our materiality levels, we haveconsidered quantitative and qualitative
aspects as well as the relevance of
information for both stakeholders and thecompany.
We have agreed with the Supervisory Board
that misstatements which are identified
during the assurance engagement and whichin our view must be reported on quantitativeor qualitative grounds, would be reported tothem.

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Our key assurance matters

The following key assurance matters are
excluded or new compared to the key

Key assurance matters are those mattersthat, in our professional judgement, were ofmost 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.

assurance matters included in our last year’s
auditor’s report:

These matters were addressed in the context
of our assurance engagement on thesustainability information as a whole and informing our opinion thereon, and we do notprovide a separate opinion on these matters.

Signify Annual Report 2023

Key assurance matter

ChangeReason 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 thecompany. The number of scope 3 CO2e emissions
is included in the Annual Report for the first timein 2023. Due to the complexity of calculating
Scope 3 emissions for Signify’s wide range anddiverse lighting products portfolio (with different
estimated wattage and life time), there is a riskthat the disclosed number of Scope 3 CO2eemissions is incorrect.

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Corporate performance

Climate-related matters, ESG developments

Risk

and the energy transition are high on the

Carbon footprint and Impact revenues

public agenda. Signify’s ambition,commitments, obligations and achievementswith regards to these matters are disclosed
in the Annual report 2023, including the
Sustainability Statements. Further
reference is made to chapter 3 Creating
long-term value. For carbon emissions, aspart of the “Double the pace of the Paris
Agreement” disclosed in as presented insubsection 4.4.1, Climate action, we
identified the following key assurance
matters:

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Our assurance approach

Key observations

In our assurance engagement we haveconsidered the risk of sustainability
information being presented too
optimistically. We specifically considered
this to be applicable for Carbon footprint
and Impact revenues (Circular revenues andBrighter Lives revenues), as these are themost material topics in Signify’s Materiality
Matrix, which concerns the outcome of the
stakeholder dialogue, and Signify’s own
commitments. In addition, certain criteria
are relevant for Signify’s long-term
incentive scheme. Therefore we consider

Our reasonable assurance procedures
included:• Obtain an understanding of the process
in obtaining relevant data for carbon
footprint and Impact revenues andconsolidating in the sustainability
information;• Evaluate whether the self-developed
criteria for Impact revenues are suitable
and consistently applied;• Sampling to obtain suitable assurance
evidence that the products underlying
the Impact revenues are sustainable,

We concur with the carbon footprint andImpact revenues as presented in section 4.1
and subsections 4.3.8 and 4.4.2 of theAnnual Report.

this a key assurance matter. Further
reference is made to Signify’s Brighter
Lives, Better World 2025 program inchapter 3.1 Our strategy of the Annual
Report.

based on the applicable criteria;• Sampling to obtain suitable assurance
evidence (external and internal
documentation such as invoices forcarbon footprint and conversion factors),that reported information reconciles with
underlying records of the company;• Reconcile the presented carbon
footprint and Impact revenues with
underlying records;• Reconcile the relevant financial
information used in calculating Impact
revenues with the financial statements;• Make inquiries of management and assessthat the sustainability information isrelevant, suitable, accurate andpresented in a balanced matter in the
Sustainability statements and in the
Annual Report;• Assess whether the disclosure of thecriteria related to carbon footprint andImpact revenues are sufficient for proper
understanding by the reader.

(Circular revenues and Brighter Lives revenues)

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Corporate performance

Governance

Risk

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Our assurance approach

Key observations

Our reasonable assurance procedures
included:• Obtain an understanding of the process
in obtaining relevant data for CO2
emissions and consolidating in thesustainability information;• Perform an analytical review on the scope
3 CO2e emissions;• Confirm that estimated wattage andlifetime are the key inputs used in thescope 3 CO2e calculation related to theuse phase of lighting products;• Sample on the used estimated wattages
and lifetime in the product dataset to

We concur with the Scope 3 CO2e emissions
as presented in subsection 4.4.1 of theAnnual Report.

Scope 3 CO2e emissions
For Signify, CO2e emissions are the mostmaterial component for the scope 3
determination in the value chain of thecompany. Out of these CO2e emissions, thevast majority lies in the product use phase(as presented in subsection 4.4.1 of theAnnual Report). The scope 3 CO2e emissions
related to this use phase are primarily
based on the estimated wattage andlifetime of Signify’s lighting productportfolio.
While Signify is currently working on acentralized system to maintain and store
this data, the development of products andregistration of (historic) wattage/lifetime
information is decentralized. The lighting
product portfolio exists out of thousands ofproducts globally, with many differences in
estimated wattages and lifetimes.
Furthermore, due to upgrades of existingproducts, the introduction of new products
and acquisitions and divestments, Signify’s
product portfolio changes continuously.
Therefore, we consider the determinationof Scope 3 CO2e emissions a key assurance
matter.

obtain suitable assurance evidence(internal documentation such as productleaflets), that reported information
reconciles with underlying records of thecompany and to confirm the source data
is in line with the reporting criteria;• Assess whether the disclosure of thereporting criteria related to scope 3CO2e emissions are sufficient for proper
understanding by the reader, including
the inherent uncertainties related toestimated wattages and lifetimes.

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Report on otherinformation
included in the
Annual Report

procedures, we comply with therequirements of Part 9 of Book 2 and section

No prohibited non-audit services

Our responsibility is to obtain reasonableassurance for our opinion whether the Annual

2:135b subsection 7 of the Dutch Civil Codeand the Dutch Standard 720. The scope of
the procedures performed is substantiallyless than the scope of those performed in
our audit of the financial statements.

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.

Report in this reporting package complies
with the RTS on ESEF.

The Annual Report contains other informationin addition to the financial statements, thesustainability 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 ofBook 2 of the Dutch Civil Code;• Corporate Sustainability Reporting
Directive in chapter 17;• Corporate Governance report.

Management is responsible for the
preparation of the other information,
including the report of the Board ofManagement in accordance with Part 9 ofBook 2 of the Dutch Civil Code and otherinformation required by Part 9 of Book 2 of
the Dutch Civil Code. Management and theSupervisory Board are responsible for
ensuring that the remuneration report isBased on the following procedures
performed, we conclude that the otherinformation:• Is consistent with the financial statements
and does not contain material
misstatements;• Contains the information as required byPart 9 of Book 2 for the report of theBoard of Management and the otherinformation as required by Part 9 of Book 2of the Dutch Civil Code and as required bysections 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 thesedrawn up and published in accordance withsections 2:135b and 2:145 subsection 2 of the
Dutch Civil Code.

Report on otherlegal 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.

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 withregard 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 theAnnual Report, including the financial
statements, in accordance with the RTS on
ESEF, whereby management combines thevarious components into a single reporting
package.

We performed our examination in accordancewith Dutch law, including Dutch Standard
3950N ‘Assurance-opdrachten inzake het
voldoen aan de criteria voor het opstellen van
een digitaal verantwoordingsdocument'(assurance engagements relating tocompliance 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 theAnnual Report does not comply in allmaterial respects with the RTS on ESEF anddesigning and performing further
assurance procedures responsive to thoserisks to provide a basis for our opinion,
including:– Obtaining the reporting package andperforming validations to determine
whether the reporting package
containing the Inline XBRL instance
document and the XBRL extension
taxonomy files, has been prepared inaccordance with the technicalspecifications as included in the RTS on
ESEF;– Examining the information related to theconsolidated financial statements in thereporting package to determine whether
all required mark-ups have been applied
and whether these are in accordancewith 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 thefinancial statements in accordance with EUIFRSs and Part 9 of Book 2 of the Dutch Civil
Code.
As part of the preparation of the financial
statements, management is responsible forassessing Signify N.V.’s ability to continue asa going concern. Based on the financial
reporting frameworks mentioned,
management should prepare the financial
statements using the going concern basis ofaccounting unless management either intends
to liquidate the company or to cease
operations, or has no realistic alternative but
to do so. Management should disclose eventsand circumstances that may cast significant
doubt on Signify N.V.’s ability to continue as agoing concern in the financial statements.
The Supervisory Board is responsible foroverseeing Signify N.V.’s financial reporting
process.

Corporate performance

Governance

Sustainability information
Management is responsible for the
preparation and fair presentation of thesustainability information in accordance withthe criteria as included in the section“Criteria”, including the identification of the
stakeholders and the definition of material
matters. Management is also responsible forselecting and applying the criteria and for
determining that these criteria are suitable
for the legitimate information needs ofstakeholders, considering applicable law andregulations related to reporting. The choices
made by management with respect to thescope of the sustainability information andthe reporting policy are included in section
4.1 Approach to sustainability reporting of theAnnual Report.
Furthermore, management is responsible forsuch internal control as management
determines is necessary to enable thepreparation of the financial statements andthe sustainability information that is free frommaterial misstatement, whether due to fraud
or error.
The Supervisory Board is responsible foroverseeing the sustainability reporting
process of Signify N.V.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Our responsibilities

We apply the ‘Nadere voorschriften
kwaliteitssystemen’ (NVKS, regulations for

Financial statements

quality management systems) and accordingly
maintain a comprehensive system of quality
management including documented policies
and procedures regarding compliance withethical requirements, professional standards
and other relevant legal and regulatory
requirements.

Our objective is to plan and perform the audit
engagement in a manner that allows us toobtain 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 andfraud during our audit.
Misstatements can arise from fraud or error
and are considered material if, individually orin the aggregate, they could reasonably be
expected to influence the economic
decisions of users taken on the basis of thesefinancial statements. The materiality affects
the nature, timing and extent of our audit
procedures and the evaluation of the effectof identified misstatements on our opinion.

Sustainability information
Our responsibility is to plan and perform theassurance engagement in a manner thatallows us to obtain sufficient and appropriate
assurance evidence for our opinion.
Our assurance engagement has been
performed with a high, but not absolute, levelof assurance, which means we may not havedetected all material fraud and errors during
our assurance engagement.

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 ouropinion on the financial statements” and“Information in support of our opinion on thesustainability information” in the combined
independent auditor’s report should be readin conjunction with the information in thisannex 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 tothe 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 todesign audit procedures that areappropriate in the circumstances, but notfor the purpose of expressing an opinion
on the effectiveness of the company’s
internal control.
• Evaluating the appropriateness ofaccounting policies used and thereasonableness of accounting estimatesand related disclosures made bymanagement.
• Evaluating the overall presentation,
structure and content of the financial
statements, including the disclosures; andCorporate performance

Governance• Evaluating whether the financial
statements represent the underlying
transactions and events in a manner that
achieves fair presentation.

Sustainability information
Our assurance engagement to obtainreasonable 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 characteristicsof the company.
• Evaluating the appropriateness of thecriteria applied, their consistent
application and related disclosures in thesustainability information. This includes theevaluation 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 andconsolidating the sustainability information,
including obtaining an understanding of theinternal control environment relevant toour assurance engagement, but not for the
purpose of expressing an opinion on theeffectiveness of the company’s internal
control.
• Identifying and assessing the risk that thesustainability information is misleading or
unbalanced, or contains material
misstatements, whether due to fraud or
error. Designing and performing further
assurance procedures responsive to thoserisks, and obtaining assurance evidence
that is sufficient and appropriate toprovide a basis for our opinion. These
procedures consisted amongst others of:• Making inquiries of management andrelevant staff at corporate and businessCorporate statements

Consolidated financial statements

Signify Annual Report 2023

level responsible for the sustainability
strategy, policy and results.

• Evaluating the data and trends in theinformation submitted for consolidation• Reading minutes of the meetings ofmanagement, the Supervisory Board andof other meetings that are important forthe content of the sustainability
reporting.
• Interviewing relevant staff responsible
for providing the information for,carrying out internal control procedureson, and consolidating the data in thesustainability information.
• Determining the nature and extent of theprocedures to be performed for thegroup components and locations. For
this, the nature, extent and/or risk
profile of these components areat 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 thesustainability information; and• Evaluating the overall presentation,
structure and content of the sustainability
information; and• Evaluation whether the sustainability
information as a whole, including thesustainability matters and disclosures, isclearly and adequately disclosed indecisive. Based thereon we selected thecomponents 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 ofcontrols.
• Evaluating the suitability of assumptions
and sources from third parties used forthe 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 thesustainability information reconciles with
underlying records of the company.
• Evaluating relevant internal and external
documentation, on a sample basis, todetermine the reliability of theinformation in the sustainability
information.

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 engagementon the sustainability information andsignificant audit or assurance findings,
including any significant findings in internal
control that we identify during our audit andassurance engagement. In this respect wealso report to the audit committee inaccordance with Article 11 of the EU
Regulation on specific requirements
regarding statutory audit of public-interest
entities. The information included in thisadditional report is consistent with our audit
opinion in this combined independent
auditor’s report.
We provide the Supervisory Board with astatement that we have complied with
relevant ethical requirements regarding

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independence, and to communicate withthem all relationships and other matters thatmight reasonably be thought to bear on our
independence, and where applicable, related
safeguards.
From the matters communicated with theSupervisory Board, we determine the key
audit matters and key assurance matters:
those matters that were of most significancein the audit of the financial statements andthe assurance engagement on thesustainability information. We describe thesematters in our auditor’s report unless law or
regulation precludes public disclosure about
the matter or when, in extremely rare
circumstances, not communicating thematter is in the public interest.

Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

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Corporate performance

Governance

19 Reconciliation of
non-IFRS financial
measures

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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 performanceor 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 thecompany’s historical operating results, nor are such measures meant to be predictive of thecompany’s future results. These measures are presented in this Annual Report because thecompany 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 meansof 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 meaningfulmeasure for investors to evaluate the performance of the company’s business activities overtime. 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 thecompany as a key financial measure to assess the operating performance of the Divisions andMarkets.

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Corporate performance

Governance

Sales growth composition per business in %Currency
effects

and otherchanges

Nominalgrowth2023 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)

20.1

2022 versus 2021
Digital Solutions

7.8

7.3

5.0

Digital Products

(3.8)

4.4

0.0

0.7

Conventional Products(12.6)

4.6

0.0

(7.9)

1.2

6.0

2.4

9.5

Signify

Consolidated financial statements

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 thecompany’s business and enhance the ability of investors to compare profitability across theDivisions. In the case of EBITA, the company believes that it makes the underlying performanceof its businesses more transparent by factoring out the amortization and impairment ofacquisition-related intangible assets and goodwill, which arises when acquisitions areconsolidated by the company. In the case of Adjusted EBITA and Adjusted EBITA ratio, thecompany believes that these measures make the underlying performance of its businesses moretransparent by factoring out restructuring costs, acquisition-related charges and otherincidental 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

DigitalSolutions

Adjusted EBITA

670

422

205

129

(86)

Restructuring

(167)

(32)

(25)

(51)

(59)

Acquisition-related charges

(14)

(15)

—

—

1

Sales growth composition per market in %Comparable
growthCurrency
effects

Consolidationand otherchangesSignify Annual Report 2023

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

Consolidation
Comparable
growthCorporate statements

Digital Conventional
Products
Products

SignifyOther

2023
Nominalgrowth2023 versus 2022
Europe

(8.7)

(0.6)

—

(9.3)

Incidental items

(40)

(17)

(4)

(16)

(2)

Americas

(8.9)

(3.2)

0.5

(11.6)

EBITA

449

358

176

62

(147)

Rest of the world

(4.7)

(7.6)

1.3

(11.0)

Amortization

(80)

(74)

(6)

—

(1)

Global businesses(14.4)(1.5)

4.1(11.8)

Income from operations (EBIT)

369

285

170

62

(147)

Signify

(8.3)

(3.3)

0.8

(10.8)

1
2

2022
2022 versus 2021

Adjusted EBITA

762

424

297

116

(75)

Europe

3.9

0.4

0.4

4.7

Restructuring

(64)

(15)

(11)

(34)

(4)

Americas

3.2

12.2

0.0

15.4

Acquisition-related charges

(27)

(27)

—

—

—

Rest of the world

(1.5)

4.1

3.9

6.5

Incidental items

173

(8)

(14)

(22)

217

Global businesses

(9.2)

4.5

14.6

9.9

EBITA

138

Signify

1.2

6.0

2.4

9.5

Amortization

1

Income from operations (EBIT)
1

EBITA and Adjusted EBITA
The company discloses EBITA, Adjusted EBITA and Adjusted EBITA ratio as supplemental nonIFRS financial measures, as the company believes these are meaningful measures to evaluate theperformance of the company’s business activities over time. The company understands that

2

2

844

374

272

60

(126)

(118)

(7)

—

(1)

718

256

265

60

137

Amortization and impairments of acquisition related intangible assets and goodwill.
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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Corporate performance

Governance

Adjusted gross margin and Adjusted indirect costs: adjusted SG&A
costs and adjusted R&D costs

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Income from operations to Adjusted EBITA in millions of EUR
Acquisition-

The company discloses adjusted gross margin, adjusted SG&A costs and adjusted R&D costs as asupplemental 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 acomparable 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 toassess the operating performance of the company.

Reported

Restruc2
turingrelatedcharges

Incidental
3
items

Adjusted

2023
Sales

6,704

—

—

—

6,704

Cost of sales(4,146)62

3

36(4,044)Gross margin
Selling, general and administrative
expenses
Research and development
expenses

2,558

62

3

36

2,660

(1,882)

81

11

(1)

(1,791)

(308)

24

—

—

(284)

Indirect costs
Impairment of goodwill(2,191)
—

105
—

11
—

(1)
—

(2,075)—

Other business income

24

—

(2)

(11)

10

Other business expenses

(23)

—

2

16

(5)

Income from operations
1
Amortization

369

14
—

40
—

590

(80)

167
—

(80)

Income from operations excluding
amortization (EBITA)

449

167

14

40

670

ReportedRestructuring

n related Incidenta
chargesl items

Adjuste
d

2022
Sales

7,514

—

—

—

7,514

Cost of sales(4,781)43

6

25(4,708)Gross margin
Selling, general and administrative
expenses
Research and development
expenses

2,732

43

6

25

2,806

(1,927)

21

18

11

(1,877)

(295)

—

—

—

(294)

(2,222)

21

19

11

(2,171)

—

—

—

—

Other business income

227

—

(1)

—
(218)

Other business expenses

(19)

—

3

10

(6)

Income from operations
1
Amortization

718
(126)

64
—

27
—

(173)
—

(126)

Income from operations excluding
amortization (EBITA)

844

64

27

(173)

762

Indirect costs
Impairment of goodwill

1
2

Amortization and impairments of acquisition-related intangible assets and goodwill.
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.

8
636

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Corporate performance

Governance

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 thecompany believes it is a meaningful measure to evaluate the performance of the company’sbusiness activities over time. The company understands that free cash flow is broadly used byanalysts, 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 andequipment and proceeds from disposal of property, plant and equipment. Therefore, themeasure 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 usedby the company as a key financial measure to assess the operating performance of thecompany.
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

• Additions of intangible assets

(62)

(67)

• Capital expenditures on property, plant and equipment

(70)

(51)

• Proceeds from disposal of property, plant and equipment2018Free cash flows

445

586

Digital Solutions
Digital Products

2022
321
170

2023
458
291

Conventional Products
1
Other
Signify total

56
(101)
445

99
(263)
586

Net capital expenditures:Free cash flows in millions of EUR

1

Non-allocated free cash flow items (e.g. tax, interest and central functions).

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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 ofthe 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
Short-term debt

2022

2023

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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Corporate performance

GovernanceWorking capital
The company discloses working capital as a supplemental non-IFRS financial measure, as thecompany believes it is a meaningful measure to evaluate the company’s ability to maintain a solidbalance between growth, profitability and liquidity. Working capital is broadly analyzed andreviewed by analysts and investors in assessing the company’s performance. This measureserves 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 ordebts.
Working capital to total assets in millions of EUR
2022

2023

564

461

• Trade and other payables

1,859

1,539

• Derivative financial liabilities

42

17• Other current liabilities

194

206

Working capital
Eliminate liabilities comprised in WoCa:

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

1

–

8,286

8,004

• Assets classified as held for sale
Total assets

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

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Corporate performance

20 Definitions andabbreviations

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

Acquisition-related charges
Costs that are directly triggered by theBallasts
Lamp control gear inserted between theacquisition of a company, such as transaction
costs, purchase accounting related costs andintegration-related expenses.

supply and one or more discharge lamps,
which, by means of inductance, capacitanceor a combination of inductance andcapacitance, serves mainly to limit thecurrent of the lamp(s) to the required value.

Adjusted EBITAEBITA excluding restructuring costs,
acquisition-related charges and otherincidental charges.
Adjusted EBITA margin
Adjusted EBITA divided by sales to third
parties (excluding intersegment).
"Operational profitability" also refers to thismetric.

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).

Adjusted gross margin
Gross margin, excluding restructuring costs,
acquisition-related charges and otherincidental items attributable to cost of sales.
Adjusted indirect costs
Indirect costs, excluding restructuring costs,
acquisition-related charges and otherincidental items attributable to indirect costs.
Adjusted research and development (R&D)
expenses
Research and development expenses,
excluding restructuring costs, acquisitionrelated 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, acquisitionrelated charges and other incidental items
attributable to selling, general andadministrative expenses.

Carbon footprint
Carbon footprint is expressed in CO2equivalent or carbon dioxide equivalent,
which is a quantity that describes, for a given
mixture and amount of greenhouse gas, theamount of CO2 that would have the same
global warming potential (GWP), whenmeasured over a specific timescale (generally
100 years). Signify measures its carbon
footprint over its value chain (scope 1, 2 and3), which include emissions from industrialsites, 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 soldproducts. Our carbon neutrality commitment
covers Signify operations, meaning scope 1, 2
and part of scope 3 for Business travel andlogistics. Signify net operational carbon
footprint = Signify gross operational carbon
footprint - Amount of carbon offset throughour carbon offsetting programs.

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Corporate performance

Governance

Circular revenues
Revenues measured as a percentage of total

EBIT
Income from operations.

revenues coming from products, systems andservices designed to preserve value and avoid
waste categorized as Serviceable luminaires(incl. 3D printing), Circular components,
Intelligent systems or Circular services.

EBITA
Income from operations excluding
amortization and impairment of acquisitionrelated intangible assets and goodwill.

Compact fluorescent light (CFL)
CFLs usually combine a fluorescent light withan incandescent fixture.
Comparable sales growth
The period-on-period growth in sales
excluding the effects of currency movements
and changes in consolidation and otherchanges.
Conventional lamps
Non-LED based light-emitting light sources,
including incandescent lamps, halogen lamps,
fluorescent lamps and high-intensity
discharge lamps.

EBITDA
Income from operations excluding
depreciation, amortization and impairment of
non-financial assets.
Effects of changes in consolidation and otherchangesIn the event a business is acquired (ordivested), the impact of the consolidation (orde-consolidation) on the company’s figures
are included (or excluded) in the comparable
figures. Other changes include regulatorychanges and changes originating from new
accounting standards.
Effects of currency movements

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 Statementof Income. Typically, these are reflected incustoms declarations and tend to be payable,
and are paid, regularly (often monthly)
throughout the year, shortly after thesubmission of the declaration. These form
part of operating costs.

Calculated by translating the foreign
currency financials of the previous period andthe current period into euros at the same
average exchange rates.
Electronics
Units that regulate the current going througha light source.
Employees
Employees of Signify at period end expressedon a full-time equivalent (FTE) basis.

Corporate statements

Consolidated financial statements

Signify Annual Report 2023

Employee Net Promoter Score (NPS)The Net Promoter Score methodology is used

Gross debt
The sum of short-term debt and long-term

to measure employee engagement.
Employees are asked to rank how likely it isthat they would recommend our company as agreat place to work. The scoring for thisanswer 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 scoreof 0 to 6 are labeled Detractors. Responsesof 7 and 8 are labeled Passives. The NPS is
calculated by subtracting the percentage of
employees who are Detractors from thepercentage of employees who are
Promoters.

debt.

Fluorescent lamp
A lamp which produces light with an electric
current conducted through an inert gas
producing ultraviolet light that is invisible tothe human eye.
Free cash flow
Net cash provided by operating activities
minus net capital expenditures. For Divisions,
Digital Solutions, Digital Products andConventional 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 networkbased organization that pioneered theworld’s most widely used sustainability
reporting framework. GRI is committed to theframework’s continuous improvement andapplication worldwide. GRI’s core goals
include the mainstreaming of disclosure on
environmental, social and governanceperformance.

Gross margin
Sales minus cost of sales.
Halogen lamp
A type of incandescent lamp with a capsulethat holds a special halogen gas composition
around the heated filament to increase theefficacy of the incandescence.
High-intensity discharge lamp (HID)
A type of conventional lamp that uses
electricity arcs between two electrodes tocreate 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 bothsignificant and not part of normal businessactivity. Other incidental items might extend
over several quarters within the samefinancial 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 administrativeand Research and development expenses.

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Corporate performance

GovernanceCorporate statements

Consolidated financial statements

Signify Annual Report 2023

International Standardization Organization(ISO)

Light-as-a-Service contract
Contracts enabling an integrated solution forfor the term loans and revolving credit
facility. The financial covenant shall remain

2022. Comparing to the 2019 baseline, wehave already achieved 30% emissions

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, thatcoordinates the system. ISO is a nongovernmental organization that forms a
bridge between the public and private
sectors.

customers where customers pay for theprovision of light to their premises, while thecompany plans and builds the lighting
infrastructure and ensures its performance
until the end of the contract.

suspended so long as Signify has either apublic or private investment grade credit
rating.

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 haveachieved 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.

LED
Light-emitting diode.
LED-based sales
Sales provided by products, systems andservices 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 thatconverts electrical energy directly into light.
LED luminaires
Light fixtures where LED modules areintegrated into the luminaire as a light source
and cannot be separated from the luminaireby the user.
LED modules
Light generating units around whichluminaires are built for the purpose ofemitting distributed patterns of light.

Lighting services
Services offered to customers building on alighting system and enabled by data.
Lighting systems
The combination of luminaires, controls andsoftware. The automation and related
controls of lighting within a room, building or
outdoor facilities for end users.
Luminaire
Electrical devices that produce, control anddistribute light. Also called light fixtures. They
consist of one or more light sources, lamps orsockets that connect the lamps to theelectrical power (as well as drivers in someluminaires), and the mechanical components
required to support or attach the housing.
Net capital expenditures
Additions of intangible assets, capital
expenditures on property, plant andequipment and proceeds from disposal ofproperty, 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 covenantNon-governmental organization (NGO)A non-governmental organization is any nonprofit, voluntary citizens’ group which isorganized at a local, national or international
level.
OEM
Original equipment manufacturer.
On track to deliver against our ambitious goalof doubling the pace of the Paris Agreement’s

Other taxes
Other taxes comprise environmental taxes,
property taxes and other contributions togovernments in the form of taxes. This also
includes dividend withholding tax payments onbehalf of our shareholders.

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

Payroll taxes
This comprises all payroll taxes including
social security contributions, both in Signify’s
capacity of employer, which form part ofoperating costs, and in the form ofremittance to government on behalf of
employees. Typically, these taxes areachieve the emission reduction goals laid out
in the Paris Agreement's 1.5°C scenario for2031 by 2025, six years early. With this
scenario, the Paris Agreement suggests thatcompanies must reduce their emissions by
4.2% year on year. In other words, by the endof 2025, we will reduce our scopes 1, 2, and 3
emissions by 40% compared to our baseline
year 2019. To track progress, we arecomparing Signify actual and projectedcarbon footprint every year from 2021 to2025. Based on the 80% coverage of all
Signify data from sold portfolio, we haveestimated our 2022 value chain CO2. By
extrapolating the remaining 20% within eachproduct family, we calculated our 100% value
chain CO2 and concluded that we are 4%
ahead on our projected carbon footprint forreflected in payroll tax returns made togovernments and tend to be payable, and arepaid, 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 fromrenewable 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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the electronics and information andcommunications technology (ICT) industry.

SOFR
Secured overnight financing rate (SOFR)

SwitchWall-mounted devices designed to (i) change

Women in leadership
Percentage of women in relation to the total

The RBA now includes more than 100 global
companies and their suppliers.

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).

the electric connections among its terminalsor (ii) engage with the pins of a plug andhaving terminals for the connection of cables
or cords (i.e. socket contacts).

population in compensation grades H22 andabove. It includes employees with or without
a defined end date, international assignees
and members of the Board of Management.

Total Recordable Case rate
Number of injuries and illnesses sustained atwork that result in medical treatment,
restricted work, lost work-days, or fatality,
divided by 100 FTEs.

Working capital
The sum of Inventories, Trade and otherreceivables, Other current assets, Derivative
financial assets minus the sum of Trade andother payables, Derivative financial liabilities
and Other current liabilities (excluding
dividend related payables).

Restructuring costs
The estimated costs of initiatedreorganizations that have been approved by
the company, and which generally involve therealignment of certain parts of theorganization. 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 yearon-year average capital employed.
SG&A expenses
Selling, general and administrative expenses.
SignifySignify N.V. (the “Company”) and its
subsidiaries, within the meaning of Section
2:24b of the Dutch Civil Code.

Supplier sustainability performance
The supplier sustainability performance rate
represents the percentage of suppliers inrisk countries with an audit score of at least
90 out of 100 points.
Sustainable innovation
All research and development activities

VAT
Value-added tax (VAT) including similar
indirect taxes such as Goods and Service tax(GST) and Sales tax. The VAT contributions incontributing 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 thesustainable focal areas: Energy & solar,
Circularity, Packaging, Substances, Weight &a jurisdiction is the balance between output
VAT and input VAT. These taxes form part of a
VAT tax return made to the government andtend to become payable, and are paid,
regularly (often quarterly) throughout theyear shortly after submission of the VAT tax
returns.

materials, Safety & security, Health & wellbeing or Food availability. Sustainable
innovation spend is the total spending of all
R&D projects contributing to sustainable
innovation.

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 thecompany result before tax.

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 ourcommitment we exclude the following
categories: chemical waste, hazardous waste,
one-time waste and regulated waste. To
achieve “zero (manufacturing) waste tolandfill”, 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 andother information

Corporate statements

Consolidated financial statements

Forward-looking statements andrisks & uncertainties
This document contains forward-looking
statements that reflect the intentions, beliefs
or current expectations and projections ofSignify N.V. together with its subsidiaries,
including statements regarding strategy,
estimates of sales growth and future
operational results.
By their nature, these statements involverisks and uncertainties facing Signify and anumber of important factors could cause
actual results or outcomes to differ materiallyfrom those expressed in any forward-looking
statement as a result of risks anduncertainties. Such risks, uncertainties andother important factors include but are notlimited to: adverse economic and politicaldevelopments, in particular the impacts of
the Russia-Ukraine war, the conflict in the
Middle East, the energy crisis in Europe, theexpected recovery trajectory of China post
COVID, component shortages, cost inflation,
rapid technological change, competition in
the general lighting market, development oflighting systems and services, successful
implementation of business transformation
programs, impact of acquisitions and othertransactions, reputational and adverse
effects on business due to activities inenvironment, health & safety, compliancerisks, ability to attract and retain talented
personnel, adverse currency effects, pension
liabilities, and exposure to international tax
laws. Refer to chapter 13, Risk factors andrisk management, for discussion of material
risks, uncertainties and other importantfactors which might have a material adverse
effect on the business, results of operations,financial condition and prospects of Signify.

Signify Annual Report 2023

Such risks, uncertainties and other importantfactors should be read in conjunction with theinformation included in the Annual Report.
Additional risks currently not known to Signify
or that Signify has not considered material asof the date of this document could also prove
to be important and might have a material
adverse effect on the business, results ofoperations, financial condition and prospectsof 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 requiredby applicable law.

Market and industry information
All references to market share, market data,industry statistics and industry forecasts inthis 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 onsales unless otherwise stated.

Non-IFRS financial measures
Certain parts of this document contain nonIFRS financial measures and ratios, such ascomparable sales growth, adjusted grossmargin, EBITA, Adjusted EBITA, free cash flow,
and other related ratios, that are notrecognized measures of financial
performance or liquidity under IFRS. The nonIFRS financial measures presented aremeasures used by management to monitor
the underlying performance of the Signify

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business and operations and, accordingly,
they have not been audited or reviewed. Not

Fair value information

IFRS basis of presentation

all companies calculate non-IFRS financial
measures in the same manner or on aconsistent basis and these measures andratios might not be comparable to measuresused by other companies under the same orsimilar names. A reconciliation of these nonIFRS financial measures to the most directlycomparable IFRS financial measures iscontained in this document. For further
information on non-IFRS financial measures,
see chapter 19, Reconciliation of non-IFRS
financial measures.

In presenting Signify’s financial position, fairvalues are used for the measurement ofvarious items in accordance with theapplicable accounting standards. These fairvalues are based on market prices, whereavailable, and are obtained from sources thatare deemed to be reliable. Readers are
cautioned that these values are subject tochanges over time and are only valid on thebalance sheet date. When quoted prices orobservable market values do not exist, fairvalues are estimated using valuation models
that we believe are appropriate for their
purpose. They require management to makesignificant assumptions with respect tofuture developments that are inherently
uncertain and might therefore deviate from
actual developments.

The financial information included in thisdocument is based on International Financial
Reporting Standards (IFRS) as endorsed by
the European Union (EU), as explained insignificant accounting policies, unlessotherwise indicated.

Critical assumptions used are disclosed in thefinancial statements. In certain cases,
independent valuations are obtained tosupport management’s determination of fairvalues.

Statutory financial statements
Chapter 15, Consolidated financial
statements and chapter 16, Signify N.V.
financial statements, contain the statutoryfinancial 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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Signify N.V.
High Tech Campus 48
5656 AE Eindhoven
The Netherlands
E-mail: IR@signify.com
www.signify.com
Dutch Chamber of Commerce
registration no. 65220692
VAT NL8560.25.823.B.01