Q4 & Full Year 2021 results

January 28, 2022

Important information
Forward-looking statements
This release contains forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Signify, including statements regarding strategy, estimates of sales growth and future operational results.
By their nature, these statements involve risks and uncertainties facing the Company and its Group companies, and a number of important factors could cause actual results or outcomes to differ materially from those expressed inany forward-looking statement as a result of risks and uncertainties. Such risks, uncertainties and other important factors include but are not limited to: adverse economic and political developments, the impacts of COVID-19, supplychain constraints, component shortages, rapid technological change, competition in the general lighting market, development of lighting systems and services, successful implementation of business transformation programs, impactof acquisitions and other transactions, reputational and adverse effects on business due to activities in Environment, Health & Safety, compliance risks, ability to attract and retain talented personnel, adverse currency effects,pension liabilities, and exposure to international tax laws. Please see “Risk Factors and Risk Management” in Chapter 12 of the Annual Report 2020 for discussion of material risks, uncertainties and other important factors which may
have a material adverse effect on the business, results of operations, financial condition and prospects of the Group. Such risks, uncertainties and other important factors should be read in conjunction with the information includedin the Company’s Annual Report 2020 and Semi-Annual Report 2021. Additional risks currently not known to the Group or that the Group has not considered material as of the date of this document could also prove to be importantand may have a material adverse effect on the business, results of operations, financial condition and prospects of the Group or could cause the forward-looking events discussed in this document not to occur. The Group undertakes
no duty to and will not necessarily update any of the forward-looking statements in light of new information or future events, except to the extent required by applicable law.
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or of the Group’s own assessment of its sales and markets. Rankings are based on sales unless otherwise stated.
Non-IFRS Financial Statements
Certain parts of this document contain non-IFRS financial measures and ratios, such as comparable sales growth, adjusted gross margin, EBITA, adjusted EBITA, EBITDA, adjusted EBITDA and free cash flow, and other related ratios,
which are not recognized measures of financial performance or liquidity under IFRS. The non-IFRS financial measures presented are measures used by management to monitor the underlying performance of the Group’s businessand operations and, accordingly, they have not been audited or reviewed. Not all companies calculate non-IFRS financial measures in the same manner or on a consistent basis and these measures and ratios may not be comparable
to measures used by other companies under the same or similar names. A reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures is contained in this document. For further
information on non-IFRS financial measures, see “Chapter 18 Reconciliation of non-IFRS measures” in the Annual Report 2020.
Presentation
All amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up to totals provided. All reported data are unaudited. Unless otherwise indicated, financial information has been prepared inaccordance with the accounting policies as stated in the Annual Report 2020 and Semi-Annual Report 2021.
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2Content2021 Highlights - Eric Rondolat

Q4 21 Performance - Javier van Engelen
Full Year 21 Performance - Eric Rondolat
Outlook & closing remarks - Eric Rondolat
Q&A3

Full Year 2021 Highlights✓4•Connected lighting sales grew by 21% to EUR 1.4 billion•

Our growth platforms grew by 19% to EUR 326 million•

8th consecutive year of adj. EBITA margin progression, improvement of 90 bps in 2021•

Digital Solutions and Digital Products representing more than 80% of sales, profit and cash•

Significant progress in our first year of our Brighter Lives, Better World 2025 sustainability program•

Delivered against commitment for the year and on track to achieve our medium-term target:•

Comparable sales growth of 3.8%

•Adj. EBITA margin to 11.6%•Free Cash Flow at 8.9% of sales•

Debt repayment of EUR 350 million, leverage lowered to 1.4x•

Proposal to pay cash dividend of EUR 1.45 per share over 2021

Content2021 Highlights - Eric Rondolat

Q4 21 Performance - Javier van Engelen
Full Year 21 Performance - Eric Rondolat
Outlook & closing remarks - Eric Rondolat
Q&A5Signify reported a Q4 21 sales of EUR 2.0 billion, an adj. EBITA margin of
13.2% and a free cash flow of EUR 257m
Sales (in EURm) & comparable sales growth (in %)
CSG

-5.9%

4.5%

3.2%

14.1%

-4.8%

1,878

2,008

1,599

1,609

1,643

Q4 20

Q4 21

Q1 21

Q2 21

Q3 21

Key observations for Q4 21•

96 million connected light points (Q3 21: 92 million)•

LED-based sales were 83% of total sales•Nominal sales growth of 6.9% to EUR 2,008m•Comparable sales growth of 4.5%•

Adjusted EBITA margin decline of 20 bps to 13.2%

Adjusted EBITA (in EURm & as % of sales)%

613.4%

13.2%

10.8%

10.9%

11.1%

251

265

172

175

182

Q4 20

Q4 21

Q1 21

Q2 21

Q3 21

•

Lower gross margin, reflecting high comparison base of2020•

Improved operating leverage•

Net income of EUR 170m (Q4 20: EUR 137m)•

Free Cash Flow of EUR 257m (Q4 20: EUR 332m)

Digital Solutions reported a CSG of 11.2% and an adj. EBITA margin of 14.1%
Sales (in EURm) & comparable sales growth (in %)CSG-10.2%

11.2%

-1.8%

12.6%

-7.3%

917

1,045793

837

848

Q4 20

Q4 21

Q1 21

Q2 21

Q3 21

Key observations for Q4 21•

Comparable sales growth of 11.2%•Strong underlying growth•

Solid contribution from Cooper Lighting

Adjusted EBITA (in EURm & as % of sales)%

711.5%

14.1%

9.0%

10.7%

10.5%

105147

71

89

89

Q4 20

Q4 21

Q1 21

Q2 21

Q3 21

•

Adjusted EBITA margin increased by 260 bps to 14.1%•Positive price and sales mix more thancompensating higher COGS•

Improved operating leverageDigital Solutions highlights
Adding layer of protection
to diners in Taiwan withUV-CEntering growing market
with smart solutions for
Equinix datacenters

Helping one of SouthAmerica’s largest airports
generate energy savings

Extending solar & hybrid
street lighting benefits tomunicipalities in Italy

•••

•

•

8Philips UV-C disinfection
upper air luminaires indining area and Philips UVC disinfection battens inkitchens help to disinfect34 restaurants of the TTFB
group
TTFB is looking into
extending UV-C disinfection
to another 100 restaurants••Combines Philips Maxos
fusion luminaires withadvanced presence
detection technology
LED luminaires withextreme long life improvelighting maintenance
High-quality lighting
enables service engineers
to carry out their tasks
more easily•Almost 9,000 3D printed
downlights and 14,000 LED
retrofits help El Dorado
International Airport
reduce electricity use by>50%, significantly reducing
carbon emissions
Outdoor lights wereintegrated with Interact toimprove management &maintenance••Over 100 Philips Sunstay
streetlights provide 10
Italian municipalities withsafe & secure roads afterdarkness
Harnesses power of thesun to reduce electricity
use
Supports Italy in its
transition to using
renewable energy sources

Digital Products reported a CSG of 1.6% and an adj. EBITA margin of 15.5%
Sales (in EURm) & comparable sales growth (in %)
CSG

2.5%

1.6%

15.7%

20.4%

2.5%

711

737

575

553

588

Q4 20

Q4 21

Q1 21

Q2 21

Q3 21

Adjusted EBITA (in EURm & as % of sales)
%

9

18.0%

15.5%

14.2%

12.0%

Key observations for Q4 21
••
13.0%

128

114

8266

76

Q4 20

Q4 21

Q1 21

Q2 21

Q3 21

Comparable sales growth of 1.6%•

Particularly strong performance of LED Electronics
and Klite•

Connected Home category impacted by highcomparison base and supply chain constraints

Adjusted EBITA margin declined by 250 bps vs 2020
record of 18.0%•Pricing and mix compensated higher COGS•

Negative impact from stronger Chinese RMB•

Increased investments in future growth not fully
diluted due to supply shortages

Digital Products highlights
Expanding options to
disinfect the air in homes
with UV-C air cleaner

Accelerating fluorescentlighting replacement withnew North American TLEDs

Offering unlimited ceilinglight patterns withHexaStyle Downlight

Enhancing convenience
with new reading/desklights••••••

10UV-C disinfection aircleaner makes it easierthan ever to disinfect the
air at home
Deactivates >99% of viruses
and bacteria in an average
sized room in ~3 hours
Introduced in the
Netherlands, Korea,Australia, Indonesia,Thailand, Vietnam & Japan••

New type B Corepro TLEDs
deliver up to 55% energy
savings, making it thenatural replacement forfluorescent tubes
Double-end connection
makes it easy to rewire andinstall
Most affordable Type B(mains) LED tube in therange••

Mix & match option
provides customers
unlimited possibilities tocreate ceiling lightingpatterns
Easy to install as it fits inexisting cut outs
Launched India andexploring opportunities toroll out in ASEAN andIndonesia••

New desk lights areportable and rechargeable,increasing the levels ofconvenience that
consumers get toexperience
Available in Korea, Japanand ASEAN, both via online
and offline sales channels
Also exploring launch on
Amazon in Europe

Conventional Products reported a CSG of -11.4% and an adj. EBITA of 16.9%
Sales (in EURm) & comparable sales growth (in %)CSG-11.6%-11.4%

-6.1%

4.7%

-13.2%Key observations for Q4 21•

Comparable sales growth of -11.4%
•242

219

227

213202

Q4 20

Q4 21

Q1 21

Q2 21

Q3 21

Continued to outperform in declining market

Adjusted EBITA (in EURm & as % of sales)
%

18.9%

16.9%

20.6%

18.6%

18.8%

•

Adjusted EBITA margin decreased by 200 bps to 16.9%•114637

47

4038

Q4 20

Q4 21

Q1 21

Q2 21

Q3 21

Negative operating leverageAdjusted EBITA margin of 13.2% as positive price and sales mix fullycompensate higher COGS
In EURm / as % of sales

13.2%-20 bps

13.4%

31-35-1527

12251

22

Q4 20

Volume-14265

Currency

Q4 21

EUR +23m

Mix

Price

Positive mix
mainly driven by
new productlaunches

Price increase,net of underlying
price erosion

COGS

Indirect Costs

Continued improvement of working capital as higher payables compensate
higher inventory levels
In EURm / as % of sales

3.6%-110 bps

4.7%1
43-603525

313
250-27

Q4 20

13Inventories

1Includes sales of Cooper Lighting on a 12-month pro-forma basis.

Trade & otherreceivables

Trade & other payables

Other working
capital items

Q4 21

Leverage ratio improved from 1.8x in Q3 21 to 1.4x in Q4 21;
repaid EUR 350m of debt
In EURm
1,411

1,275-282
1,156-37

35

13-16

3

Change inprovisions

Interest & Tax

Other
FCF items

Other129

FCF: EUR +257m

Net debt
end of Q4 20

Net
leverage: 1.7x
14Net debt
end of Q3 21

EBITDA

Change inworking capital

Net capex

1.8x

1Other includes cash used for new lease liabilities, acquisitions, the purchase of treasury shares, derivatives, repayment of debt, and FX effect on cash, cash equivalents and debt.

Net debt
end of Q4 21
1.4x

Content
2021 Highlights - Eric Rondolat

Q4 21 Performance - Javier van Engelen
Full Year 21 Performance - Eric Rondolat
Outlook & closing remarks - Eric Rondolat
Q&A

15

Digital Solutions and Digital Products further increased their contribution
to sales, Adj. EBITA and Free Cash FlowSales contribution (in EUR m)
2,452

2,288

Free Cash Flow contribution (in EUR m)

339
295

87%185%13,252

3,524943

861

2020

2021

Conventional Products
Digital Products

Adj. EBITA contribution (in EUR m)

Digital Solutions

82%179%1330
170

2020
Conventional Products
Digital Products

406

82%1397
436
161

2021
Digital Solutions

1 Excludes ‘Other’.

85%1364

188

136

2020
Conventional Products
Digital Products

2021
Digital Solutions• Driven by innovation in energy-efficient and digital lighting technologies

16383

Connected lighting and Growth platforms strongly contributed to Signify’s
overall growth
Sales contribution (in EUR m)•1,701
1,413
1,138

171,375

Connected lighting and growth platform sales increased toEUR 1.7 billion in 2021•

Connected lighting grew by 21%, driven by strong consumer
and professional demand for our global connected brands•

The growth platforms grew by 19%•

Acquisition of Fluence will further strengthen Signify’s growth
platforms

+21%

+19%

275

326

2020

2021

Growth Platforms

Connected Lighting

2021 component and logistics crisis brought an unexpected challenge to
Signify’s operational performance
Supplier Lead-Time by commodity
Average number of weeks

E-Components Scarcity
Number of top escalations

AllPassives
ActiveQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q420 20 20 20 21 21 21 2118

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q420 20 20 20 21 21 21 21

DC replenishment lead-time
Average days

Goods In Transit
In value

Backorders
In value

Q220Avg Avg Q1 Q2 Q3 Oct Nov Dec
19 20 21 21 21 21 21 21

Avg Q1 Q2 Q3 Oct Nov Dec
20 21 21 21 21 21 21

Q320Q420

Q121Q221Q321Q421

Continued Adjusted EBITA margin expansion despite supply chain constraints
and component shortages
Digital Products CSG& Adj. EBITA margin (%)

Digital Solutions CSG& Adj. EBITA margin (%)
CSG%

12.6%

Conventional Products CSG & Adj.
EBITA margin (%)

20.4%

11.2%

4.7%

15.7%
3.4%

8.8%
2.5% 1.6%

-1.8%

-6.1%

-6.9%

-7.3%
-14.4%
FY20 Q1Adj.
EBITA%

Q2

Q3-13.2%

Q4

FY21

Q1

Q2

Q3

Q4

10.2%

11.3%

12.9%

13.8%

2020

2021

20202021• Continued expansion of the
Adjusted EBITA margin to 11.3%• Operating leverage• Indirect cost savings
19-8.3%FY20FY21• Strong Adjusted EBITA margin of13.8%• Operating leverage• Positive price/mix• Higher input costs• Investments in future growth-16.5%
FY20 Q1

Q2Q3-11.4%

Q4

18.0%

18.7%

2020

2021

FY21

• Strong Adjusted EBITA margin of
18.7%• Positive price/mix• Indirect cost savings

Brighter Lives, Better World 2025 results

Brighter Lives

Better World

Doubling our positive impact on the environment and society

2019
Baseline

2021
Result2025
TargetClimate action

Carbon reduction over value chain
against Paris Agreement

060 MT

3241 MT

Circular economy

Circular revenues

16%

25%

32%

Food availability
Safety & security
Health & well-beingBrighter lives revenues

16%

27%

32%

Great place to work

Women in leadership positions

17%

25%

34%

A list for climate andsupply chain

DJSI World Index andtop 1% in our industry

1The 2025 target for carbon reduction over the value chain was adapted to reflect the integration of Cooper Lighting.

EcoVadis Platinum
Medal and top 1%

On track
Off trackAgreement to acquire Fluence to strengthen Agriculture growth platform
Signify to acquire Fluence for USD 272 million in cash
•Strengthens Signify’s Agriculture lighting growth platform inNorth America•

Enables Signify to capture full potential of US market for biobased and non-bio-based crops, building on our strong existing
European footprint•

Global market for agricultural lighting expected to grow by morethan 20% per year to EUR 1.6 billion in 2024•

Adds Fluence’s complementary technology & market segments
to our existing horticultural lighting operations

21

Signify proposes a cash dividend of EUR 1.45 per share for 2021
Key observations•Dividend per share since IPO (in EUR)

The proposed dividend1 of EUR 1.45 per share (EUR 181m)
represents a dividend yield of 3.6% over the year-end shareprice of EUR 40.78

1.45
1.40
1.35
1.30
1.25

Capital allocation policy
1.10•

Pay an increasing annual cash dividend per share year on year•

Expectation to achieve a leverage ratio of reported net
debt/EBITDA of 1x by the end of 2022, including

•

22

•

The cash outflow from the intended Fluence acquisition•

Cash inflow from operations and the continued
rationalization of the company’s real estate portfolio

FY16

FY17FY18Ext Div.
FY19 2FY20

Continue to invest in organic and inorganic growthopportunities in line with our strategic priorities.

1 Subject to approval at the AGM to be held on May 17, 2022
2The extraordinary dividend of EUR 1.35 per share was related to the 2019 dividend proposal, which was withdrawn due to COVID-19 uncertainty

FY21

Content2021 Highlights - Eric Rondolat

Q4 21 Performance - Javier van Engelen
Full Year 21 Performance - Eric Rondolat
Outlook & closing remarks - Eric Rondolat
Q&A

23

Outlook 2022%

24• Comparable sales growth in the range of 3-6%
• Continued Adjusted EBITA margin improvement of up to 50 bps• Free cash flow in excess of 8% of sales

Q&ACurrency movements had a positive impact on sales and a negative impact
on Adjusted EBITA
Q4 21 Sales FX Footprint (% of total)

Other Currencies,
30%

EUR, 28%

CNY, 8%

USD, 34%
EUR

26

USD

CNY

Other Currencies

Key observations•

Currency movements negatively impacted Adjusted
EBITA and positively impacted Sales•

Sales impact of +2.2%, mainly from US dollar
appreciation.

•Adjusted EBITA impact of EUR -14m, and -100 bps on
the Adjusted EBITA margin, mainly coming from CNY
appreciation.

•Our policy is to hedge 100% of committed FXtransactions and anticipated transactions up to 80% inlayers over the next 15 months

Net income increased to EUR 170m, benefiting from a higher EBIT andlower net financial expenses
Key observations

From Adjusted EBITA to net income (in EURm)
Adjusted EBITA- Restructuring
1 - Acquisition-related charges
2 - Other incidental items
EBITA
Amortization
EBIT
Net financial income / expenses
3 Income tax expense
Results from investments in associates
Net income27

Q4 20251-43-16-6185-30
155-12-6

Q4 21265-11-13-5237-32
205
-4-31

137

170

1

Mainly related to Cooper Lighting

2Non-recurring by nature and mainly related toenvironmental provisions for inactive sites andtransformation costs

32020 income tax expenses benefited from therevaluation of deferred tax assets

Free Cash Flow of EUR 257m
Key observations

Free cash flow (in EURm)
Income from operations
Depreciation and amortization
Additions to (releases of) provisions
Utilizations of provisions
Change in working capital
Net interest and financing costs received(paid)
Income taxes paid
Net capex
Other
Free cash flow
As % of sales

28Q4 201558675-59119

Q4 21
205
7730-65
37-61-23-27
13332
17.7%-14-2916257
12.8%

••

Free cash flow of EUR 257m•

Higher profitability•

Yet, lower release of working capital

Restructuring pay-out of EUR 26m (Q4 20: EUR 10m)