Press Release
February 1, 2019

Signify reports full year sales of EUR 6.4 billion, improvement in operational profitability by
50 bps to 10.1% and free cash flow of EUR 306 million
Full year 20181
 Signify’s installed base of connected light points increased from 30 million at YE 17 to 44 million at YE 18
 LED-based sales grew by 2.5% on a comparable basis to 71% of sales (FY 17: 65%); CSG total Signify -4.4%
 Adj. indirect costs down EUR 224 million on a currency comparable basis, a reduction of 10%, or 180 bps of sales Adj. EBITA margin improved by 50 bps to 10.1%, despite a negative currency impact of -50 bps
 Net income of EUR 261 million (FY 17: EUR 281 million including net real estate gains of EUR 52 million)
 Working capital improved by 20 bps to 8.4% of sales Free cash flow of EUR 306 million (FY 17: EUR 403 million, which included EUR 56 million real estate proceeds
and EUR 40 million lower restructuring cash-out)
Fourth quarter 20181
 LED-based sales grew by 0.2% on a comparable basis; CSG total Signify -7.3% (Q4 17: 3.0%)
 Adj. indirect costs down EUR 83 million on a currency comparable basis, a reduction of 15%, or 250 bps of sales Adj. EBITA margin improved by 150 bps to 12.4%, despite a negative currency impact of -50 bps
 Net income improved to EUR 119 million compared with EUR 38 million last year
 Free cash flow of EUR 279 million (Q4 17: EUR 434 million)
Shareholder returns
 In 2018, EUR 462 million of capital was returned through share repurchases and ordinary dividends
 Propose to pay a cash dividend of EUR 1.30 per share over 2018, an increase of 4% and a pay-out ratio of 46%
 Signify will have returned EUR 1.1 billion to shareholders since IPO, including 2018 dividend
Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced the company’s
fourth quarter and full-year results 2018. “We continued to make solid progress with our simplification and cost
reduction actions in 2018, resulting in a substantial increase in profitability and strong free cash flow delivery. In linewith our strategy, our growing profit engines – LED, Professional and Home - have strongly contributed to these
improvements and our LED-based sales have grown by 2.5%, now representing 71% of total revenues,” said CEO Eric
Rondolat. “While market conditions are challenging, we continue to focus on new growth platforms to strengthen
our market leadership and progressively improve our growth profile. With our proposal to increase our dividend to
EUR 1.30 per share, we will have returned more than EUR 1 billion to shareholders over the last three years. Looking
forward, I’m confident we have built a solid foundation to deliver in 2019 on the mid-term targets set at the time of
the IPO.”¹This press release 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. For a reconciliation of these
non-IFRS financial measures to the most directly comparable IFRS financial measures, see appendix B, Reconciliation of non-IFRS financial
measures, of this press release.

Page 2

OutlookIn 2019, our growing profit engines (LED, Professional and Home combined) are expected to deliver a comparable
sales growth in the range of 2 to 5%. Our cash engine, Lamps, is expected to decline at a slower pace than the market,
in the range of -21 to -24% on a comparable basis. For total Signify, we aim to reach an Adjusted EBITA margin in 2019within the range of 11 to 13% set at the time of the IPO in May 2016. We expect free cash flow in 2019 to be above
5% of sales.

Capital allocation
Capital allocation
Signify continues to exercise strict financial discipline in the generation and use of cash and remains committed to
managing its financial ratios to maintain a financing structure compatible with an investment-grade profile, including
disciplined management of its balance sheet. Furthermore, the company continues to consider non-organic
opportunities primarily through small- to medium-sized acquisitions to accelerate growth.
Dividend
In 2018, Signify paid a dividend of EUR 171 million over full-year 2017. The company proposes a dividend of EUR 1.30
per share in cash related to full year 2018, which represents an increase of 4% compared with last year, and a payout ratio of 46%. The dividend payment is subject to approval by the Annual General Meeting of Shareholders (AGM)
to be held on May 14, 2019. Further details will be provided in the agenda for the AGM.
Share repurchases
In 2018, the company repurchased shares for an amount of EUR 291 million by repurchasing in the open market andby participating in share disposals by its main shareholder. Furthermore, the company repurchased shares for a total
consideration of EUR 33 million to cover obligations arising from its long-term incentive performance share plan andother employee share plans.
In line with its capital allocation policy, Signify will continue to look for non-organic growth opportunities primarily
through small- to medium-sized acquisitions. If, in the course of the year, the funds needed for non-organic growth
opportunities are substantially less than the capital available, the company will consider other use of its capital, which
includes returning excess cash to shareholders through share repurchases.

Page 3Financial review
Changes to financial reporting
Since the first quarter of 2018, Signify reports and discusses its financial performance based on the portfoliochanges that were announced in the first quarter of 2018. In March 2018, the company provided an update to show
the effect of changes to the business portfolio as well as changes to the allocation methods of centrally-managed
costs and to the threshold for other incidental items as adjusting items when presenting certain non-IFRS measures
such as Adjusted EBITA. More details can be found on page 12.

2017

Fourth quarter
2018

2017

Twelve months
2018changein € million, unless otherwise indicated

-7.3%
-1.7%
0.1%
-8.8%
-11.6%

Comparable sales growth
Effects of currency movements
Consolidation and other changes
Sales
Adjusted gross margin
Adj. gross margin (as % of sales)

6,965
2,755
39.6%

6,358
2,433
38.3%

Adj. SG&A expenses
Adj. R&D expenses-1,852-342-1,609-288

change
-4.4%
-4.0%
-0.3%
-8.7%
-11.7%

1,892
732
38.7%

1,726
647
37.5%

-470
-82

-398
-64

-552
29.2%

-463
26.8%

16.2%

Adj. indirect costs
Adj. indirect costs (as % of sales)-2,19431.5%-1,896
29.8%

13.6%

207
10.9%
-88
119

214
12.4%
-17
197

3.2%

Adjusted EBITA
Adjusted EBITA margin
Adjusted items
EBITA

669
9.6%
-98
571

640
10.1%
-136
504

-4.4%

75
-12
-25
38

173
-7
-47
119

Income from operations (EBIT)Net financial income/expense
Income tax expense
Net income

441
-43
-117
281

410
-41
-106
261

434
0.30
32,130279
0.90
29,237

Free cash flow
Basic EPS (€)
Employees (FTE)

403
2.04
32,130306
1.95
29,23765.0%
131.8%

215.6%-11.9%
-7.2%

-7.2%

Fourth quarter
Sales amounted to EUR 1,726 million. Adjusted for -1.7% currency effects, comparable sales decreased by 7.3%. LEDbased sales grew by 0.2% on a comparable basis and were impacted by a high comparison base and challenging
market conditions, most notably in China and Europe. The adjusted gross margin declined by 120 bps to 37.5%,
including a currency effect of -50 bps. Adjusted indirect costs decreased by EUR 89 million, or 240 bps as a percentage
of sales, as a result of our ongoing cost reduction initiatives. Adjusted EBITA amounted to EUR 214 million, comparedwith EUR 207 million in the same period last year, and was negatively impacted by EUR 12 million of currency effects.
The Adjusted EBITA margin improved by 150 bps to 12.4%, despite a currency effect of -50 bps. Total restructuringcosts were EUR 27 million and other incidentals reflect a gain of EUR 11 million. Net income improved to EUR 119
million in Q4 2018 from EUR 38 million last year, mainly as a result of improved operational profitability, lower
restructuring & other incidentals, and lower net financial expenses. Free cash flow amounted to EUR 279 million.

Page 4

Full year
Sales amounted to EUR 6,358 million. Adjusted for -4.0% currency effects, comparable sales decreased by 4.4%. LEDbased sales grew by 2.5% on a comparable basis and now represent 71% of total sales compared with 65% in FY 17.
The adjusted gross margin declined by 130 bps to 38.3%. This decline includes a currency effect of -40 bps. Adjusted
indirect costs decreased by EUR 298 million, or 170 bps as a percentage of sales, as a result of rigorous implementationof cost reduction initiatives. Adjusted EBITA amounted to EUR 640 million compared with EUR 669 million last year,
and was negatively impacted by EUR 61 million of currency effects. The Adjusted EBITA margin improved by 50 bps
to 10.1%, including a currency effect of -50 bps. This improvement was driven by Lamps, LED and Professional. Total
restructuring costs were EUR 118 million and incidental charges were EUR 17 million. Net income was EUR 261 million
this year compared with EUR 281 million last year, which included real estate gains of EUR 52 million. Free cash flow
amounted to EUR 306 million compared with EUR 403 million last year, reflecting EUR 40 million higher restructuring
cash-out in 2018 and real estate proceeds of EUR 56 million in 2017, which was partly offset by a EUR 16 million lower
contribution to the US pension fund in 2018.

Update on transformation initiatives
Signify continued to make solid progress on its simplification and cost reduction initiatives in 2018. These initiatives
are centered around simplification of the organization and processes, optimization of the manufacturing footprint aswell as cost savings in procurement and the indirect cost base. This has, among others, reduced the adjusted indirect
cost base by EUR 224 million, or 10%, on a currency comparable basis in 2018. As a result, the adjusted indirect costbase decreased by 170 bps to 29.8% of sales, keeping the company well on track to further improve the adjusted
indirect cost base.
In 2019, Signify will continue its journey to operational excellence. This will enhance growth, productivity and cash
generation. Our initiatives for 2019 include accelerating our new growth platforms, driving sales excellence, andincreasing efficiency of our manufacturing, supply chain, procurement and support functions.

Growing profit enginesin € million, except percentages
LED
ProfessionalHome
LED, Professional and Home combined

CSG
FY 17
12.8%
4.1%
41.1%
10.1%

Adj. EBITA margin
FY 18
0.4%
-0.4%
-3.8%
-0.4%

FY 17
9.9%
8.3%
2.3%
8.3%

FY 18
11.7%
9.5%
-8.1%
8.6%

Free cash flow*
FY 17

FY 18

353

370

* Excluding non-allocated free cash flow items (e.g. tax, interest) that are accounted for in Other

Full year
Our growing profit engines, LED, Professional and Home, represent the foundations we are building and investing in,in line with our strategy to move to LED and connectivity, unleashing new growth platforms. These include connected
systems, IoT platform services, horticulture, solar, and LiFi. Comparable sales growth of the three businesses
combined was -0.4%, on the back of a high comparison base and an unanticipated temporary decline in Home, while
the Adjusted EBITA margin improved by 30 bps to 8.6%. The free cash flow profile of the three businesses combined
also improved by EUR 17 million to EUR 370 million, despite a substantial negative contribution from Home.

Page 5

Operational performance by business group
LED
2017

Fourth quarter
2018

changein € million, unless otherwise indicated2017

Twelve months
2018change0.2%Comparable sales growth

492

481

-2.2%

Sales

1,902

1,812

-4.7%

0.4%

48
9.8%
47
46

69
14.4%
68
67

44.2%

Adjusted EBITA
Adjusted EBITA margin
EBITA
Income from operations (EBIT)

188
9.9%
187
183

212
11.7%
204
200

12.7%

Fourth quarter
Sales amounted to EUR 481 million, a 0.2% increase on a comparable basis, which is an improvement on a sequential
basis due to LED lamps. Adjusted EBITA increased from EUR 48 million to EUR 69 million, improving the Adjusted
EBITA margin by 460 bps to 14.4%. The significant improvement mainly resulted from indirect cost savings.
Full year
Sales amounted to EUR 1,812 million, an increase of 0.4% on a comparable basis. LED Electronics continued to show
an improving top-line trend. While volumes in LED lamps continued to grow, the business faced more challenging
market conditions in some geographies, most notably China, and continued price erosion although at a slower pace.
Adjusted EBITA increased by 12.7% to EUR 212 million, driven by ongoing procurement savings and solid progress inindirect cost savings. This resulted in an Adjusted EBITA margin improvement of 180 bps to 11.7%.
Our focus on innovation and indirect cost savings enabled us to reach the high end of our 2019 Adjusted EBITA marginobjective of 10-12% for BG LED already in 2018.

Professional
Fourth quarter
2017
2018
775
94
12.1%
86
43

715
85
12.0%
79
56

changein € million, unless otherwise indicated

-6.9%
-7.7%
-8.8%

Comparable sales growth
Sales
Adjusted EBITA
Adjusted EBITA margin
EBITA
Income from operations (EBIT)

Twelve months
2017
2018
2,750
229
8.3%
186
67

2,635
251
9.5%
208
121

change
-0.4%
-4.2%
9.2%

Fourth quarter
On a comparable basis, sales decreased by 6.9% to EUR 715 million, on the back of a high comparison base (Q4 17:
CSG of 10.4%), which reflected strong market activity in various regions and a large-scale project in the US. In Q4 18,
market conditions deteriorated, most notably in China and Europe. Adjusted EBITA amounted to EUR 85 million,
which resulted in an Adjusted EBITA margin of 12.0%, as continued indirect cost savings largely offset the impact oflower sales volumes.

Page 6

Full year
After a strong CSG performance in 2017 of 4.1%, sales decreased by 0.4% to EUR 2,635 million in 2018, on the backof deteriorating market conditions in various regions, most notably in China and Europe. Adjusted EBITA increased by
9.2% to EUR 251 million, improving the Adjusted EBITA margin by 120 bps to 9.5%, mainly driven by lower indirect
costs.
Professional continues to implement its strategy focused on Systems & Services, LED luminaire sales and thecontinued rationalization of its cost structure, supporting the objective to increase the Adjusted EBITA margin to 1114% in 2019.

Home
Fourth quarter
2017
2018

changein € million, unless otherwise indicatedTwelve months
2017
2018

186
18

176
16

-2.6%
-5.8%
-11.3%

Comparable sales growth
Sales
Adjusted EBITA

508
12

467
-38

9.5%

8.9%

Adjusted EBITA margin

2.3%

-8.1%

16

16

EBITA

22

-43

16

15

Income from operations (EBIT)

18

-44

change-3.8%-8.0%

Fourth quarter
Sales amounted to EUR 176 million, a decrease of 2.6% on a comparable basis, reflecting a high comparison base as
US retail partners built up inventories in H2 17. As indicated last quarter, activity has returned to more normalized
levels, which has resulted in a significant sequential improvement in profitability to 8.9%, driven by higher sales levels
and ongoing cost optimization.
Full year
Sales amounted to EUR 467 million, a decrease of 3.8% on a comparable basis. The decline mainly reflects highdemand from trade partners in the US in H2 17 which led to lower sales levels in H1 18, to allow for inventory
reductions at these trade partners, and a high comparison base in H2 18. Adjusted EBITA amounted to EUR -38 million.
The Adjusted EBITA margin of -8.1% mainly reflects the unanticipated temporary decline in sales which consequently
led to under absorption of the fixed cost base. In the course of 2018, a set of actions have been taken to improve
performance, including optimization of the cost base, which started to deliver results in H2 18.
Home’s strategic focus is to realize profitable growth by driving the transition to connected lighting for consumers inand around the house. Its strategic priorities include strengthening the Philips Hue offering, expanding in growthmarkets, and broadening the lower cost portfolio to drive volumes. As operational performance in Home has now
returned to more normalized levels, these priorities are expected to enable Home to be within the Adjusted EBITA
margin range of 5-8% for 2019, as indicated earlier.

Page 7

Lamps
2017

Fourth quarter
2018

433
71
16.3%
27
27

345
60
17.5%
50
50

changein € million, unless otherwise indicated2017

Twelve months
2018-19.3%-20.5%-14.8%

Comparable sales growth
Sales
Adjusted EBITA
Adjusted EBITA margin
EBITA
Income from operations (EBIT)

1,788
345
19.3%
335
334

1,428
302
21.1%
270
269

Free cash flow

438

308

change-16.2%-20.1%-12.6%

This business, being the world leader in conventional lighting, enables Signify to leverage strong commercial synergies
in brand coverage and customer reach. As a cash engine, Lamps continues to deliver on its ‘last man standing’strategy, which resulted in further market share gains and strong free cash flow generation of EUR 308 million in
2018.

Other
Fourth quarter
Adjusted EBITA amounted to EUR -17 million (Q4 17: EUR -23 million). It represents amounts not allocated to theoperating segments and includes certain costs related to central R&D activities to drive innovation as well as groupenabling functions. EBITA amounted to EUR -15 million (Q4 17: EUR -57 million), including restructuring costs of EUR
9 million (Q4 17: EUR 21 million). Other incidental items not part of the Adjusted EBITA included a gain of EUR 16
million associated with tax related reliefs linked to the separation, which was partly offset by EUR 5 million of company
name change costs (Q4 17: EUR 8 million of separation costs).
Full year
Adjusted EBITA amounted to EUR -87 million in 2018 (2017: EUR -106 million). The improvement is mainly the resultof the focus on indirect cost savings. EBITA amounted to EUR -135 million (2017: EUR -159 million), including EUR 39
million restructuring costs (2017: EUR 29 million).

Sales by market
2017

Fourth quarter
2018
ChangeCSG*in € million, except percentages

2017

Twelve months
2018change

CSG*

683
564
525
121

655
479
482
109

-4.0%
-15.0%
-8.1%
-9.9%

-3.3%
-13.0%-6.7%-5.3%

Europe**AmericasRest of the World
Global businesses

2,359
2,151
2,000
456

2,297
1,803
1,837
421

-2.6%
-16.2%
-8.1%
-7.6%

-1.9%
-9.6%
-2.2%
-3.6%

1,892

1,726

-8.8%

-7.3%

Total

6,965

6,358

-8.7%

-4.4%

CSG: Comparable sales growth**
Russia & Central Asia is included in Market Group Europe (was previously part of Rest of the World)*

Page 8Fourth quarter
Comparable sales in Europe decreased by 3.3%, mainly reflecting the very challenging market conditions in the UK
and deteriorating market conditions in a number of other countries in Europe, most notably Germany and France. In
the Americas, comparable sales declined by 13.0%, mainly reflecting the ongoing decline in Lamps and a highcomparison base in Professional and Home, partly offset by a solid performance in Latin America.
Comparable sales for the Rest of the World decreased by 6.7%, with a solid performance in India and Indonesia, offset
by more challenging market conditions in China.
Full year
Comparable sales in Europe decreased by 1.9% which was mostly due to the UK, and deteriorating market conditions
across various European countries since the summer. In the Americas, comparable sales declined by 9.6%, mainly due
to the ongoing decline in Lamps and the challenging situation for Home in the US as explained in the Home section
on page 6. Comparable sales for the Rest of the World decreased by 2.2%, with a solid performance in India andSoutheast Asia offset by more challenging market conditions in China.

Working capital
31 Dec '17

30 Sep '18

31 Dec '18

Inventories
Receivables
Accounts and notes payable
Accrued liabilities
Other working capital items
Working capital
As % of LTM* sales

924
1,373
-1,001
-475
-224
597
8.6%

994
1,259
-957
-431
-206
659
10.1%

878
1,231
-953
-444
-176
536
8.4%

LTM: Last Twelve Months

6,965

6,525

6,358

in € million, unless otherwise indicated*Fourth quarterIn the fourth quarter, working capital decreased by EUR 123 million to EUR 536 million, representing 8.4% of sales,
mainly driven by lower inventories and receivables compared with last quarter.
Full year
Working capital decreased year-on-year by EUR 61 million to EUR 536 million. As a percentage of sales, working capital
improved by 20 bps to 8.4% of sales, driven by lower inventories and receivables.

Cash flow analysis
Fourth quarter
2017
2018
75
88
99
-61
259
-5
-18
-22
18
434

173
58
28
-73
147
-7
-22
-14
-11
279

in € million

Income from operations (EBIT)
Depreciation and amortization
Additions to (releases of) provisions
Utilizations of provisions
Change in working capitalInterest received (paid)
Income taxes paid
Net capex
Other
Free cash flow

Twelve months
2017
2018
441
286
201
-282
-33
-15
-101
-31
-61
403

410
231
170
-286
8
-23
-123
-75
-6
306

Page 9Fourth quarter
Free cash flow amounted to EUR 279 million compared with EUR 434 million last year. The delta is largely explainedby better management of working capital throughout 2018, compared with 2017 when the company started thefourth quarter with a high level of working capital, most notably in inventories. In addition, free cash flow in the fourth
quarter included higher restructuring cash-out of EUR 36 million (Q4 17: EUR 25 million) and an outflow of EUR 5
million related to the company name change.
Full year
Free cash flow amounted to EUR 306 million, or 4.8% of sales, compared with EUR 403 million last year. The deltalargely reflects EUR 40 million higher restructuring cash-out in 2018 and EUR 56 million real estate proceeds in 2017,
which were partly offset by a EUR 16 million lower contribution to the US pension fund.
in € million
LED, Professional and Home
Lamps
Other*
Signify total

Free cash flow
FY 17
FY 18
353
370
438
308
(388)
(372)
403
306

*Non-allocated free cash flow items (e.g. tax, interest)

In 2018, the free cash flow of the growing profit engines LED, Professional and Home combined increased by EUR 17
million to EUR 370 million. The free cash flow of Lamps amounted to EUR 308 million, or 22% of sales, which isapproximately the same level as in 2017, when excluding the real estate proceeds in 2017.

Net debt
in € million

Short-term debt
Long-term debt
Gross debt
Cash and cash equivalents
Net debt
Total equity

31 Dec '17

30 Sep '18

31 Dec '18

140
1,170
1,309
942
367
2,321

92
1,179
1,271
534
737
2,067

78
1,187
1,265
676
589
2,119

Fourth quarter
Net debt amounted to EUR 589 million, a decrease of EUR 148 million compared with the end of the third quarter,
which was mainly driven by free cash flow, partly offset by the repurchase of shares of EUR 125 million. The cash
position increased to EUR 676 million. Total equity increased to EUR 2,119 million at the end of the fourth quarter(Q3 18: EUR 2,067 million), primarily due to net income and currency effects, partly offset by share repurchases.
Full year
Net debt increased by EUR 222 million to EUR 589 million compared with the end of 2017, driven by a reduction in
cash which was partly offset by a reduction in gross debt. The net leverage ratio was 0.9x. The decrease in the cash
position and subsequent increase in net debt mainly reflect the cash used to return EUR 462 million to shareholders
through share repurchases and dividend. Total equity decreased by EUR 202 million to EUR 2,119 million due to therepurchase of shares and dividend distribution, partly offset by net income and currency effects.

Page 10

Other information
Appendix A – Selection of financial statements
Appendix B – Reconciliation of non-IFRS financial measures
Appendix C – Financial Glossary
Conference call and audio webcast
Eric Rondolat (CEO) and Stéphane Rougeot (CFO) will host a conference call for analysts and institutional investors at
9:00 a.m. CET to discuss fourth quarter and full year results. A live audio webcast of the conference call will beavailable via the Signify Investor Relations website.
Financial calendar
26 February 201926 April 201914 May 201926 July 201925 October 2019

Annual report 2018
First quarter results 2019
Annual General Meeting of Shareholders
Second quarter and half year results 2019
Third quarter results 2019

For further information, please contact:
Signify Investor Relations
Robin Jansen
Tel: +31 6 1594 4569
E-mail: robin.j.jansen@signify.com
Signify Corporate Communications
Elco van GroningenTel: +31 6 1086 5519
E-mail: elco.van.groningen@signify.com

About Signify
Signify (Euronext: LIGHT) is the world leader in lighting for professionals and consumers and lighting for the Internetof Things. Our Philips products, Interact connected lighting systems and data-enabled services, deliver business value
and transform life in homes, buildings and public spaces. With 2018 sales of EUR 6.4 billion, we have approximately
29,000 employees and are present in over 70 countries. We unlock the extraordinary potential of light for brighter
lives and a better world. We have been named Industry Leader in the Dow Jones Sustainability Index for two years ina row. News from Signify is located at the Newsroom, Twitter, LinkedIn and Instagram. Information for investors canbe found on the Investor Relations page.

Page 11

Important Information
Forward-Looking Statements and Risks & Uncertainties

This document and the related oral presentation contain, and responses to questions following the presentation may contain,
forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Signify N.V. (the“Company”, and together with its subsidiaries, the “Group”), including statements regarding strategy, estimates of sales growthand future operational results.
By their nature, these statements involve risks and uncertainties facing the Company and its Group Companies and a number ofimportant factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking
statement as a result of risks and uncertainties. Such risks, uncertainties and other important factors include but are not limited
to: adverse economic and political developments, the impacts of rapid technological change, competition in the general lighting
market, development of lighting systems and services, successful implementation of business transformation programs, impact ofacquisitions and other transactions, impact of the Group’s operation as a separate publicly listed company, pension liabilities andcosts, establishment of corporate and brand identity, adverse tax consequences from the separation from Royal Philips andexposure to international tax laws. Please see “Risk Factors and Risk Management” in Chapter 12 of the Annual Report 2017 fordiscussion 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 included in the Company’s Annual Report 2017 and the semi-annual report for 2018.
Looking ahead, the Group is primarily concerned about the challenging economic conditions, currency headwinds and politicaluncertainties in the global and domestic markets in which it operates. Additional risks currently not known to the Group or that
the Group has not considered material as of the date of this document could also prove to be important and may have a material
adverse effect on the business, results of operations, financial condition and prospects of the Group or could cause the forwardlooking events discussed in this document not to occur. The Group undertakes no duty to and will not necessarily update any of
the forward-looking statements in light of new information or future events, except to the extent required by applicable law.

Market and Industry Information

All references to market share, market data, industry statistics and industry forecasts in this document consist of estimatescompiled by industry professionals, competitors, organizations or analysts, of publicly available information or of the Group’s own
assessment of its sales and markets. Rankings are based on sales unless otherwise stated.

Non-IFRS Financial Measures

Certain parts of this document contain non-IFRS financial measures and ratios, such as comparable sales growth, adjusted grossmargin, EBITA, adjusted EBITA, and free cash flow, and other related ratios, which are not recognized measures of financial
performance or liquidity under IFRS. The non-IFRS financial measures presented are measures used by management to monitor
the underlying performance of the Group’s business and operations and, accordingly, they have not been audited or reviewed.
Not all companies calculate non-IFRS financial measures in the same manner or on a consistent basis and these measures andratios 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 2017.

Presentation

All amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up to totals provided. All
reported data are unaudited. Unless otherwise indicated, financial information has been prepared in accordance with theaccounting policies as stated in the Annual Report 2017 and semi-annual report 2018.

Page 12

Changes to financial reporting following organizational changes to further align the organizational structure withthe strategy

As the market trend of both professionals and consumers switching from buying lamps and luminaires to integrated LED luminaires
is accelerating, the company has decided to modify the current portfolios of its business groups. As of January 1, 2018, Signify has
implemented the following changes to the following portfolios:
 Consumer and professional trade downlights, the recessed spots portfolio and the LED Light strips moved from Home andProfessional to LED;
 Consumer LED functional ceiling products moved from Home to LED;
 LED battens moved from Home to Professional; and Consumer and professional trade LED panels moved from Home and LED to Professional.
 Next to this, the financial performance of the Ventures activities is reported in Other instead of in Professional and in Home,as these activities are managed outside of the aforementioned business groups. In addition, the switches business within Lamps
has been moved to LED.
Therefore, with effect from the first quarter of 2018, Signify reports and discusses its financial performance based on the above
portfolio changes. In March 2018, the company provided an update to show the effect of changes to the business portfolio as well
as changes to the allocation methods of centrally-managed costs and expenses and threshold for other incidental items as
adjusting items when presenting certain non-IFRS measures such as Adjusted EBITA.
In addition, the cash flow presentation has been amended to better correspond to the balance sheet and to further improvetransparency on cash flow movements.

Market Abuse Regulation

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

Page 13

Appendix A – Financial statement information
A. CONDENSED CONSOLIDATED STATEMENTS OF INCOME
in € million, unless otherwise indicated

Q4
Sales
Cost of sales
Gross margin
Selling, general and administrative expenses
Research and development expenses
Impairment of goodwill
Other business income
Other business expenses
Income from operations
Financial income
Financial expenses
Results relating to investments in associates
Income before taxes
Income tax expense
Net income
Attribution of net income for the period:
Net income (loss) attributable toshareholders of Signify N.V.
Net income (loss) attributable to noncontrolling interests

January to December
2017
2018

2017

2018

1,892
(1,201)
691
(523)
(92)
7
(9)
75
2
(14)
0
63
(25)
38

1,726
(1,092)
634
(415)
(67)
23
(2)
173
5
(11)
(1)
165
(47)
119

6,965
(4,262)
2,704(1,954)
(362)
(1)
72
(18)
441
8
(51)
0
398
(117)
281

6,358
(3,976)
2,382(1,675)
(312)
32
(17)
410
20
(61)
(2)
367
(106)
261

42

115

294

263

(5)

4

(12)

(2)

141,025
141,559

128,163
128,482

143,778
144,202134,306
134,672

0.30
0.30

0.90
0.90

2.04
2.04

1.95
1.95

Earnings per ordinary share attributable toshareholders
Weighted average number of ordinary shares
outstanding used for calculation (inthousands):
Basic
Diluted
Net income attributable to shareholders per
ordinary share in EUR:
Basic
DilutedAmounts may not add up due to rounding

Page 14

B. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

in € million

Q4

January to December

2017
38

2018
119

2017
281

2018
261

4
(2)
2

(4)
1
(4)

3
(2)
1

(10)
1
(9)

(49)
-

53
-

(289)
-

61
-

13
(3)
(39)

18
(4)
67

(3)
(292)

(11)
1
51

Other comprehensive income (loss)
Total comprehensive income (loss)

(37)
1

64
182

(291)
(10)

42
303

Total comprehensive income (loss) attributable to:Shareholders of Signify N.V.
Non-controlling interests

7
(6)

177
5

14
(24)

301
2

Net income for the period
Pensions and other post-employment plans:Remeasurements
Income tax effect on remeasurements
Total of items that will not be reclassified to profit or loss
Currency translation differences:
Net current period change, before tax
Income tax effectCash flow hedges:
Net current period change, before tax
Income tax effectTotal of items that are/may be reclassified to profit or loss

Amounts may not add up due to rounding

Page 15

C. CONDENSED CONSOLIDATED BALANCE SHEETin € million
December 31, 2017
Non-current assets
Property, plant and equipment· At cost· Less accumulated depreciation
Property, plant and equipment
Goodwill
Intangible assets, excluding goodwill· At cost· Less accumulated amortization
Intangible assets, excluding goodwill
Non-current receivables
Investments in associates
Other non-current financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
Current assets
Inventories
Current financial assets
Other current assets
Derivative financial assets
Income tax receivable
Receivables:· Accounts receivable· Other current receivables
Receivables
Assets classified as held for sale
Cash and cash equivalents
Total current assets
Total assets

December 31, 2018

2,333
(1,841)

2,230(1,798)
492
1,694

2,018
(1,455)

431
1,771
2,065
(1,572)

562
49
21
12
440
35
3,306

493
38
11
20
399
49
3,211

924
0
77
16
39

878
4
107
28
35

1,311
62

1,167
64
1,373
1
942
3,372
6,678

1,231
9
676
2,969
6,181

EquityShareholders’ equity
Non-controlling interests
Total equity

2,242
79
2,321

2,041
78
2,119

Non-current liabilities
Long-term debt
Long-term provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities

1,170
777
27
167
2,140

1,187
712
19
173
2,091

Current liabilities
Short-term debt
Derivative financial liabilities
Income tax payable
Account and notes payable
Accrued liabilities
Short-term provisions
Liabilities assoc. with assets held for sale
Other current liabilities
Total current liabilities
Total liabilities and total equity

140
8
79
1,001
475
204
0
309
2,216
6,678

78
22
15
953
444
168
0
288
1,970
6,181

Amounts may not add up due to rounding

Page 16

D. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSin € million

January to
December

Q4
2017

2018

2017

2018

Cash flows from operating activities
Net income
Adj. to reconcile net income to net cash provided by operating activities:• Depreciation, amortization and impairment of non-financial assets• Impairment of goodwill, other non-current fin. assets & investments in assoc.
• Net gain on sale of assets• Interest income• Interest expense on debt, borrowings and other liabilities• Income tax expense• Additions to (releases of) provisions• Other items
Decrease (increase) in working capital:• Decrease (increase) in receivables• Decrease (increase) in inventories• Increase (decrease) in accounts payable• Increase (decrease) in other current assets, accrued & other current liabilities
Increase (decrease) in non-current receivables, other assets & liabilities
Utilization of provisions
Interest received (paid)
Income taxes paid
Net cash provided by (used for) operating activities

38
242
88
(0)
(2)
8
25
99
22
259
55
201
(11)
14
2
(61)
(5)
(18)
456

119
140
58
1
(5)
(2)
7
47
28
6
147
47
136
(22)
(14)
(11)
(73)
(7)
(22)
294

281
578
286
0
(53)
(7)
24
117
201
10
(33)
97
(124)
55
(61)
7
(282)
(15)
(101)
435

261
547
231
2
(8)
(16)
31
106
170
31
8
113
43
(54)
(95)
(3)
(286)
(23)
(123)
381

Cash flows from investing activities
Net capital expenditures:• Additions of intangible assets• Capital expenditures on property, plant and equipment• Proceeds from disposal of property, plant and equipment
Net proceeds from (cash used for) derivatives and current fin. assets
Proceeds from other non-current financial assets
Purchases of other non-current financial assets
Purchases of businesses, net of cash acquired
Proceeds from sale of interests in businesses, net of cash disposed of
Net cash used for investing activities

(22)
(5)
(22)
4
2
1
(1)
(2)
6
(15)

(14)
(7)
(13)
6
(4)
0
0
(2)
4
(16)

(31)
(20)
(76)
64
7
3
(5)
(3)
4
(26)

(75)
(26)
(57)
8
(4)
2
(11)
(7)
5
(90)

Cash flows from financing activities
Funding by (distribution to) Royal Philips
Dividends paid
Proceeds from issuance (payments) of debt
Purchases of treasury shares
Net cash provided by (used for) financing activities
Net cash provided by (used for) operations

(0)
(1)
(16)
(90)
(106)
335

0
(1)
(27)
(125)
(152)
126

3
(158)
(22)
(307)
(484)
(75)

(0)
(171)
(59)
(324)
(554)
(263)

Effect of changes in exch. rates on cash, cash equivalents & bank overdrafts
Cash and cash equivalents and bank overdrafts at the beginning of the period 1)
Cash and cash equivalents and bank overdrafts at the end of the period 2)

(15)
605
925

9
529
664

(39)
1,040
925

2
925
664

1) For Q4 2018 and 2017, included bank overdrafts of EUR 5 million and EUR nil million, respectively. For January to December 2018 and2017, included bank overdrafts of EUR 17 million and EUR nil million, respectively.
2) Included bank overdrafts of EUR 12 million and EUR 17 million as of December 31, 2018 and 2017, respectively.
Amounts may not add up due to rounding

Page 17

Appendix B – Reconciliation of non-IFRS Financial Measures
Sales growth composition in %comparable
growth2018 vs 2017
Lamps
LED
Professional
Home
Other
Total

-19.3
0.2
-6.9
-2.6
72.1
-7.3

comparable
growth2018 vs 2017
Lamps
LED
Professional
Home
Other
Total

-16.2
0.4
-0.4
-3.8
-6.1
-4.4

Fourth quarter
currency
consolidation andeffectsother changes
-1.2
-2.4
-1.8
-0.2
-2.3
-1.7

nominalgrowth

0.0
0.0
1.0
-2.9
0.0
0.1

-20.5
-2.2
-7.7
-5.8
69.8
-8.8

January to December
currency
consolidation andeffectsother changes

nominalgrowth

-3.8
-4.9
-3.9
-1.9
-3.0
-4.0

-0.2
-0.3
0.1
-2.4
0.0
-0.3

-20.1
-4.7
-4.2
-8.0
-9.1
-8.7

Fourth quarter
currency
consolidation &effectsother changes

nominalgrowthSales growth composition in %comparable
growth2018 vs 2017
EuropeAmericasRest of the World
Global businesses
Total

-3.3
-13.0
-6.7
-5.3
-7.3

comparable
growth2018 vs 2017
Europe-1.9
Americas-9.6
Rest of the World-2.2
Global businesses
-3.6
Total
-4.4
Amounts may not add up due to rounding

-0.7
-1.7
-3.2
-0.1
-1.7

0.0
-0.3
1.8
-4.4
0.1

January to December
currency
consolidation andeffectsother changes
-0.7
-6.2
-6.0
-1.4
-4.0

0.0
-0.4
0.1
-2.6
-0.3

-4.0
-15.0
-8.1
-9.9
-8.8

nominalgrowth
-2.6
-16.2
-8.1
-7.6
-8.7

Page 18

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

Signify

Lamps

LED

Professional

Home

Other

October to December 2018
Adjusted EBITA
Restructuring
Acquisition-related charges
Incidental items
EBITA
Amortization 1)
Income from operations (or EBIT)

214
(27)
(1)
11
197
(24)
173

60
(10)
(0)
50
(0)
50

69
(2)
(0)
68
(1)
67

85
(6)
(1)
79
(22)
56

16
(0)
(0)
16
(0)
15

(17)
(9)
(0)
11
(15)
(0)
(15)

October to December 2017
Adjusted EBITA
Restructuring
Acquisition-related charges
Incidental items
EBITA
Amortization 1)

207
(75)
(12)
119
(45)

71
(43)
27
(0)

48
(1)
47
(1)

94
(8)
86
(43)

18
(1)
0
16
(0)

(23)
(21)
(12)
(57)
(1)

Income from operations (or EBIT)

75

27

46

43

16

(57)

Signify

Lamps

LED

Professional

Home

Other

January to December 2018
Adjusted EBITA
Restructuring
Acquisition-related charges
Incidental items
EBITA
Amortization 1)

640
(118)
(1)
(17)
504
(94)

302
(32)
(0)
(0)
270
(1)

212
(8)
(0)
204
(4)

251
(34)
(1)
(8)
208
(86)

(38)
(5)
(0)
(43)
(1)

(87)
(39)
(0)
(9)
(135)
(2)

Income from operations (or EBIT)

410

269

200

121

(44)

(137)

January to December 2017
Adjusted EBITA
Restructuring
Acquisition-related charges
Incidental items
EBITA
Amortization 1)
Income from operations (or EBIT)

669
(125)
(0)
27
571
(130)
441

345
(41)
31
335
(1)
334

229
(45)
(0)
2
186
(119)
67

12
(4)
15
22
(5)
18

(106)
(29)
(24)
(159)
(2)
(161)

1) Amortization and impairments of acquisition related intangibles and goodwill

Amounts may not add up due to rounding

188
(5)
3
187
(4)
183

Page 19

Income from operations to Adjusted EBITA (in millions of EUR)

Reported

Restructuring

Acquisition
relatedcharges

1,726(1,092)
634

-

-

-

13
13

-

-

1,726
(1,079)647

Selling, general and administrative expenses
Research and development expenses
Indirect costs

(415)
(67)
(482)

11
3
14

1
1

5
5

(398)
(64)
(463)

Impairment of goodwill
Other business income
Other business expenses
Income from operations
Amortization
Income from operations excl. amortization (EBITA)

23
(2)
173
(24)
197

27
27

1
1

(17)
1
(11)
(11)

6
(1)
189
(24)
214

1,892
(1,201)
691

40
40

-

1
1

1,892
(1,161)
732

Selling, general and administrative expenses
Research and development expenses
Indirect costs

(523)
(92)
(615)

25
10
36

-

28
28

(470)
(82)
(552)

Impairment of goodwill
Other business income
Other business expenses
Income from operations
Amortization
Income from operations excl. amortization (EBITA)

7
(9)
75
(45)
119

75
75

-

(1)
5
32
20
12

6
(3)
182
(25)
207

October to December 2018
Sales
Cost of sales
Gross margin

October to December 2017
Sales
Cost of sales
Gross margin

Incidental
items

Adjusted

Page 20

Reported
6,358(3,976)
2,382

Restructuring
50
50

Acquisition
relatedcharges00(1,675)(312)(1,988)

43
25
68

1
1

23
23

(1,609)(288)(1,896)

32
(17)
410
(94)

118
-

1
-

(17)
11
17
-

14
(5)
545
(94)

504

118

1

17

640

Sales
Cost of sales

6,965(4,262)

-

-

-

51

-

1

6,965
(4,210)Gross margin

2,704

51

-

1

2,755

Selling, general and administrative expenses(1,954)58

044(1,852)

(362)

20

-

-

(342)

(2,316)78

0

44(2,194)

Impairment of goodwill

(1)

-

-

-

(1)

Other business income

72

-

-

(57)

15

Other business expenses

(18)

-

-

6

(13)

Income from operations

441

128

0

(7)

562

Amortization
Income from operations excluding amortization(EBITA)

(130)

4

-

20

(107)

571

125

0

(27)

669

January to December 2018
Sales
Cost of sales
Gross margin
Selling, general and administrative expenses
Research and development expenses
Indirect costs
Impairment of goodwill
Other business income
Other business expenses
Income from operations
Amortization
Income from operations excluding amortization(EBITA)

Incidental
items
0
0

Adjusted
6,358(3,926)2,433January to December 2017

Research and development expenses
Indirect costs

Amounts may not add up due to rounding

Page 21

Appendix C – Financial glossary
Acquisition-related charges

Adjusted EBITA
Adjusted EBITA margin
Adjusted gross margin
Adjusted indirect costs
Adjusted R&D expenses

Adjusted SG&A expenses

Comparable sales growth
EBIT
EBITA

Costs that are directly triggered by theacquisition of a company, such as transaction costs,
purchase accounting related costs and integrationrelated expenses
EBITA excluding restructuring costs, acquisitionrelated charges and other incidental charges
Adjusted EBITA divided by sales to third parties(excluding intersegment)
Gross margin, excluding restructuring costs,
acquisition-related charges and other incidental
items attributable to cost of sales
Indirect costs, excluding restructuring costs,
acquisition-related charges and other incidental
items attributable to indirect costs
Research and development expenses, excluding
restructuring costs, acquisition-related charges andother incidental items attributable to research anddevelopment expenses
Selling, general and administrative expenses,
excluding restructuring costs, acquisition-related
charges and other incidental items attributable toselling, general and administrative expenses
The period-on-period growth in sales excluding theeffects of currency movements and changes in
consolidation and other changes
Income from operations

Income from operations excluding amortization andimpairment of acquisition related intangible assets
and goodwill
EBITDA
Income from operations excluding depreciation,amortization and impairment of non-financial assets
Effects of changes in consolidation and other In the event a business is acquired (or divested), thechanges
impact of the consolidation (or de-consolidation) on
the Group’s figures is included (or excluded) in thecalculation of the comparable sales growth figures.
Other changes include regulatory changes andchanges originating from new accounting standards
Effects of currency movements
Calculated by translating the foreign currency
financials of the previous period and the current
period into euros at the same average exchange
rates.
Employees
Employees of Signify at period end expressed on afull-time equivalent (FTE) basis
Free cash flow
Net cash provided by operating activities minus net
capital expenditures. Free cash flow includes interest
paid and income taxes paid
Gross margin
Sales minus cost of sales

Page 22

Indirect costs
Net capital expenditures

Incidental charges

Net debt
R&D expenses
Restructuring costs

SG&A expenses
Working capital

The sum of selling, general and administrative
expenses and R&D expenses
Additions of intangible assets, capital expenditureson property, plant and equipment and proceedsfrom disposal of property, plant and equipment, andintangible assets
Any item with an income statement impact (loss orgain) that is deemed to be both significant and notpart of normal business activity. Other incidental
items may extend over several quarters within thesame financial year
Short-term debt, long-term debt minus cash andcash equivalents
Research and development expenses
The estimated costs of initiated reorganizations, themost significant of which have been approved by theGroup, and which generally involve the realignmentof certain parts of the industrial and commercialorganization
Selling, general and administrative expenses
The sum of Inventories, Receivables, Other current
assets, Derivative financial assets, minus the sum of
Accounts and notes payable, Accrued liabilities,
Derivative financial liabilities, and Other current
liabilities.