Press Release
July 23, 2021

Signify reports second quarter sales of EUR 1.6 billion, operational profitability of 10.9%
and a free cash flow of EUR 104 million
Second quarter 20211• Signify's installed base of connected light points increased from 83 million in Q1 21 to 862 million in Q2 21• Sales of EUR 1,609 million; 9.6% nominal sales growth and CSG of 14.1%• LED-based sales represented 82% of total sales (Q2 2020: 80%)
• Adj. EBITA margin improved by 190 bps to 10.9%• Net income increased to EUR 82 million (Q2 20: EUR 81 million)• Free cash flow of EUR 104 million (Q2 20: EUR 158 million)• Net debt/EBITDA ratio of 1.7x (Q2 20: 2.4x)
Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced thecompany’s second quarter 2021 results.
“In the second quarter we saw an acceleration of the pace of recovery in comparison to the first three months ofthe year. We successfully executed our strategy as demand for our connected lighting offers and our growth
platforms remained strong. The consumer segment held its momentum and demand for conventional products
proved resilient. The professional lighting segment showed sequential improvements, while still impacted byboth extended lockdowns and supply constraints. Overall, we managed to improve the operating margin by 190
basis points and generated a solid free cash flow. We again progressed on our Brighter Lives, Better World 2025
program, well on track to achieving our four key objectives. Looking back at the first half year, we are pleased
with the pace of our recovery in a volatile and disrupted environment, achieving more than 8 percent
comparable sales growth with an operating margin improvement of 230 basis points and generating EUR 272
million of free cash flow,” said CEO Eric Rondolat.
“While we are seeing increasing COVID-19 cases, new variants leading to continued lockdowns in parts of theworld and supply constraints continuing to impact us into the second half of the year, we are confident that themeasures we have taken will enable us to counter those challenges and deliver our guidance for the year.”¹ This press release contains certain non-IFRS financial measures and ratios, such as comparable sales growth, EBITA, adjusted EBITA and free cash flow, andrelated ratios, which are not recognized measures of financial performance or liquidity under IFRS. For a reconciliation of these non-IFRS financial measures to themost directly comparable IFRS financial measures, see appendix B, Reconciliation of non-IFRS financial measures, of this press release.
2
Excludes 2 million connected light points for Telensa, as acquisition closed on July 1, 2021

Brighter Lives, Better World 2025
In the second quarter of the year, Signify continued on the journey to achieving its ambitious goals for the
Brighter Lives, Better World 2025 sustainability program, progressing on all four commitments that contribute to
doubling its positive impact on environment and society:
•

•

•

•

Double the pace of the Paris agreement:
Cumulative carbon reduction over value chain was 33 million tonnes, ahead of track for the 2025 targetof 340 million tonnes. This is mainly caused by an accelerated shift to energy efficient and connected
LED lighting in the first two quarters of 2021, decreasing our carbon emissions in the use phase.
Double our Circular revenues to 32%:
Circular revenues increased to 24%, compared to the 2019 baseline of 16%. We are on track for the2025 target of 32%. This is mainly due to our strong portfolio of serviceable luminaires and the further
expansion of our 3D printing footprint.
Double our Brighter lives revenues to 32%:Brighter lives revenues were 25%, progressing well towards the 2025 target of 32%. We had several
customer wins that contribute to our Brighter lives revenues, including 'quality of light' EyeComfort
products, horticulture lighting and UV-C disinfection lighting.
Double the percentage of women in leadership positions to 34%:
The percentage of women in leadership positions was 25%, on track to reach the 2025 target of 34%.
This target is part of a broader program, where we focus our efforts on attracting, retaining anddeveloping diverse talents, while ensuring equal opportunities, fairness and impartiality for all.

In addition, Signify received recognition for its leadership in sustainability, amongst which a first place ranking in
our industry and top 5% of the ESG Risk Ratings Universe from Sustainalytics.

OutlookSignify continues to expect comparable sales growth of 3% to 6% for the full year 2021. In addition, Signify
expects to achieve an Adjusted EBITA margin of 11.5% to 12.5% and free cash flow to exceed 8% of sales for thefull year 2021. As previously stated, the company reassesses its medium-term guidance after each financial year.

2

Financial review
2020

Second quarter2021

change
14.1%
-4.5%
0.0%
9.6%
12.5%

1,469
567
38.6%

1,609
638
39.7%

-401
-67
-468
31.9%

-423
-70
-493
30.6%

133
9.0%
-13
119

175
10.9%
-39
136

32.0%

87
-16
10
81

106
-7
-17
82

21.5%

158
0.62
35,789104
0.65
39,143

-5.4%

13.8%

0.8%

in millions of EUR, except percentages

2020

Six months
2021

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

2,896
1,112
38.4%

3,209
1,275
39.7%

Adj. SG&A expenses
Adj. R&D expenses
Adj. indirect costs
Adj. indirect costs (as % of sales)

-794
-134
-928
32.0%

-847
-142
-989
30.8%

Adjusted EBITA
Adjusted EBITA margin
Adjusted items
EBITA

245
8.5%
-55
189

347
10.8%
-97
251

41.8%

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

130
-26
4
108

191
-16
-32
142

46.7%

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

270
0.85
35,789272
1.12
39,143change
8.4%
-5.5%
8.0%
10.8%
14.7%

-6.6%

32.3%

31.3%

* For comparability purposes please note that FY 2020 includes only 10 months of Cooper Lighting performance

Second quarter
Sales increased by 9.6% to EUR 1,609 million, including 4.5% negative currency effects. Comparable sales
increased by 14.1%, driven by continued strong demand for connected lighting offers and traction on the
consumer side. The adjusted gross margin increased by 110 bps to 39.7%, driven by both carefully balancing
pricing decisions versus cost increases, and a favorable mix. Adjusted indirect costs increased by EUR 25 million,
mainly reflecting last year's positive effect of solidarity measures by our employees, and government
contributions. Adjusted EBITA amounted to EUR 175 million, a 32.0% increase compared to the same period lastyear. The Adjusted EBITA margin improved by 190 bps to 10.9%, mainly driven by a gross margin improvement
and operating leverage.
Total restructuring costs were EUR 9 million, acquisition-related charges were EUR 13 million and otherincidental costs were EUR 16 million, mainly related to environmental provisions for inactive sites andtransformation costs. Net income increased to EUR 82 million, as higher operational profitability in 2021 wasoffset by the impact of a significant one-time tax benefit in the second quarter of 2020. Free cash flow was EUR
104 million, reflecting a healthy balance between profitability and some reinvestment in continued top line
recovery.

3Digital Solutions
Second quarter
2020

2021

781
75
9.6%
59
29

837
89
10.7%
72
44

Six months
change in millions of EUR, unless otherwise indicated12.6%

Comparable sales growth

7.2%
19.2%

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

21.9%
51.5%

2020*

2021

change

1,420
118
8.3%
77
23

1,631
161
9.9%
120
65

14.8%
36.5%

5.1%

55.6%
184.8%* For comparability purposes please note that first quarter 2020 includes only 1 month of Cooper Lighting performance

Second quarter
Sales increased by 7.2% to EUR 837 million, with a comparable sales growth of 12.6%, demonstrating asequential improvement that is only partially offset by supply constraints. Adjusted EBITA increased to EUR 89
million, resulting in an Adjusted EBITA margin of 10.7%, supported by operating leverage.

Digital Products
2020

Second quarter2021

change in millions of EUR, unless otherwise indicated2020

Six months
2021change20.4%

Comparable sales growth

17.9%

Sales
Adjusted EBITA
Adjusted EBITA margin

1,002
91
9.1%

1,128
148
13.1%

12.6%
62.1%

473
44
9.3%

553
66
12.0%

16.9%
50.3%

43

63

45.1%

EBITA

81

138

70.1%

41

61

47.4%

Income from operations (EBIT)

77

135

74.3%

Second quarter
Sales increased by 16.9% to EUR 553 million, with a comparable sales growth of 20.4%. The segment continued
to benefit from strong consumer demand for connected products, even if also hampered by supply constraints.
The Adjusted EBITA margin improved by 270 basis points to 12.0%, mainly driven by a solid gross margin
improvement behind a continued strong demand for connected home lighting.

Conventional Products
Second quarter
2020

2021

211
37
17.5%
45
45

213
40
18.6%
35
35

Six months
change in millions of EUR, unless otherwise indicated
4.7%

Comparable sales growth

1.2%
7.4%

Sales
Adjusted EBITA
Adjusted EBITA margin
EBITA
Income from operations (EBIT)-21.7%-21.7%

2020

2021

468
82
17.6%
84
84

440
86
19.6%
88
88

change
-1.2%
-5.9%
5.2%
5.4%
5.4%

Second quarter
Sales increased by 1.2% to EUR 213 million, with a comparable growth of 4.7%, mainly as a result of the market
recovery and traction across most of its segments. The division continues to deliver market share gains and to
generate a solid free cash flow. The Adjusted EBITA margin increased by 110 bps to 18.6%, mainly driven bypricing discipline and operational efficiencies.
4OtherSecond quarter'Other' represents amounts not allocated to the operating segments and includes costs related both to central
R&D activities to drive innovation, and to group enabling functions. Adjusted EBITA amounted to EUR -20 million(Q2 20: EUR -23 million). EBITA amounted to EUR -34 million (Q2 20: EUR -28 million). Restructuring costs andother incidentals were EUR 14 million (Q2 20: EUR 4 million) during the quarter.

Sales by market
Second quarter
2020

2021

Change

406
619
323
122
1,469

477
623
377
133
1,609

17.5%
0.7%
17.0%
8.9%
9.6%

Six months
CSG in millions of EUR, except percentages

2020

2021

change

CSG

17.5%
9.4%
20.8%
8.1%
14.1%

908
1,104
647
237
2,896

999
1,211
747
251
3,209

10.1%
9.7%
15.4%
6.1%
10.8%

11.2%
0.3%
21.8%
5.0%
8.4%

EuropeAmericasRest of the world
Global businesses
Total

Americas includes Cooper Lighting from March 1, 2020, and Global businesses includes Klite
Wiz Connected is included in Market Groups Europe, Americas and Rest of the world (was previously part of Global businesses)

Second quarterIn the second quarter most markets benefited from a low comparison base, as the impact of COVID-19 cameinto full effect during the second quarter of last year. In the second quarter of this year, comparable sales in
Europe grew by 17.5%, as most markets accelerated their recovery. In the Americas, comparable sales grew by
9.4%. The Rest of the world grew by 20.8%, as the underlying recovery path showed robustness across mostgeographies.

Working capitalin millions of EUR, unless otherwise indicatedInventories
Trade and other receivables
Trade and other payables
Other working capital items
Working capital
As % of LTM* sales*

LTM: Last Twelve Months
6,614
6,336

30 Jun,2020 31 Mar, 2021
1,032
1,096
-1,659
-17
452
7.3%

946
1,074
-1,784-1236
3.5%

30 Jun, 2021
1,120
1,056
-1,935
29
269
4.0%

6,275

Second quarter
Working capital decreased by EUR 183 million year on year to EUR 269 million, mainly driven by higher payables,
partly offset by higher inventories and other working capital items. As a percentage of sales, working capital
improved by 330 bps to 4.0% of sales. When including last twelve-month sales pro-forma Cooper Lighting andKlite, working capital improved by 230 bps.

5

Cash flow analysis
Second quarter
2020
2021
87
106
86
24
-47
22
-13
0
-5
3
158

81
29
-48
-3
-28
-10
-30
7
104

Six months
2020
130

in millions of EUR

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

164
57
-99
74
-23
-28
-21
16
270

2021
191
158
89
-98
27
-29
-31
-46
10
272

Second quarter
Free cash flow of EUR 104 million was EUR 54 million lower than last year, reflecting an increased investment ingrowth, as higher income from operations was offset by higher net capex, financing costs, an outflow fromworking capital and higher taxes paid. Free cash flow included a restructuring payout of EUR 20 million (Q2 20:
EUR 12 million).

Net debt and total equity
in millions of EUR

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

30 Jun,2020 31 Mar, 2021 30 Jun, 2021
113

433

427

2,619
2,732
1,026
1,706
2,341

1,899
2,332
1,192
1,141
2,469

1,893
2,320
945
1,375
2,149

Second quarter
Our cash position decreased by EUR 247 million to EUR 945 million compared to the end of March 2021,
impacted by the dividend payments and the purchase of treasury shares in the second quarter. Net debt
amounted to EUR 1,375 million, an increase of EUR 234 million compared with the end of March 2021. Net
leverage improved from 2.4x at the end of June 2020 to 1.7x at the end of June 2021. Total equity decreased to
EUR 2,149 million at the end of the second quarter (Q1 21: EUR 2,469 million), with dividend distribution andshare repurchases to cover obligations arising from long-term employee share plans offsetting the increase in
net income.

6

Other information
Appendix A – Selection of financial statements
Appendix B – Reconciliation of non-IFRS financial measures
Appendix C – Financial Glossary
Conference call and audio webcast
Eric Rondolat (CEO) and Javier van Engelen (CFO) will host a conference call for analysts and institutional
investors at 9:00 a.m. CET to discuss the 2021 second quarter results. A live audio webcast of the conference callwill be available via the Investor Relations website.
Financial calendar 2021
October 29, 2021
January 28, 2022

Third quarter results 2021
Fourth quarter and full year results 2021

For further information, please contact:
Signify Investor Relations
Thelke Gerdes
Tel: +31 6 1801 7131
E-mail: thelke.gerdes@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 theInternet of 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 2020 sales of EUR 6.5 billion, we
have approximately 39,000 employees and are present in over 70 countries. We unlock the extraordinary
potential of light for brighter lives and a better world. We achieved carbon neutrality in 2020, have been in the
Dow Jones Sustainability World Index since our IPO for four consecutive years and were named Industry Leader
in 2017, 2018 and 2019. News from Signify is located at the Newsroom, Twitter, LinkedIn and Instagram.
Information for investors can be found on the Investor Relations page.

7

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 andprojections of Signify N.V. (the “Company”, and together with its subsidiaries, the “Group”), including
statements regarding strategy, estimates of sales growth and future operational results.
By their nature, these statements involve risks and uncertainties facing the Company and its Group companies,
and a number of important factors could cause actual results or outcomes to differ materially from thoseexpressed in any forward-looking statement as a result of risks and uncertainties. Such risks, uncertainties andother important factors include but are not limited to: adverse economic and political developments, theimpacts of COVID-19, rapid technological change, competition in the general lighting market, development oflighting systems and services, successful implementation of business transformation programs, impact ofacquisitions and other transactions, reputational and adverse effects on business due to activities inEnvironment, 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 otherimportant 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 2020.
Looking ahead to the second half of 2021, the Group's key concerns are about both the supply chain constraints
and shortage of certain components, and the uncertainties related to the COVID-19 pandemic in the global anddomestic markets in which it operates. The main challenge remains the visibility on how quickly the generallighting market may recover to (pre-COVID-19) 2019 levels. This is relevant to the Group as a large part of its
business relates to the professional market which has been, and continues to be, significantly impacted bygovernment lockdowns. Additional risks currently not known to the Group or that the Group has not consideredmaterial 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 theforward-looking events discussed in this document not to occur. The Group undertakes no duty to and will notnecessarily update any of the forward-looking statements in light of new information or future events, except tothe extent required by applicable law.
Market and Industry Information
All references to market share, market data, industry statistics and industry forecasts in this document consist of
estimates compiled by industry professionals, competitors, organizations or analysts, of publicly available
information or of the Group’s own assessment of its sales and markets. Rankings are based on sales unlessotherwise stated.
Non-IFRS Financial Measures
Certain parts of this document contain non-IFRS financial measures and ratios, such as comparable sales growth,
adjusted gross margin, EBITA, adjusted EBITA, and free cash flow, and other related ratios, which are notrecognized measures of financial performance or liquidity under IFRS. The non-IFRS financial measurespresented 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 becomparable 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 thisdocument. 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 preparedin accordance with the accounting policies as stated in the Annual Report 2020 and Semi-Annual Report 2021.
8Market Abuse Regulation
This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

9Unaudited condensed
consolidated interim
financial statements

For the six-month period ended June 30, 2021

10

Index to the unaudited condensed consolidated interim
financial statements
Introduction

12

Management report13

1. Condensed consolidated interim financial statements

15

1.1 Condensed consolidated statement of income

15

1.2 Condensed consolidated statement of comprehensive income

16

1.3 Condensed consolidated statement of financial position

17

1.4 Condensed consolidated statement of cash flows

18

1.5 Condensed consolidated statement of changes in equity

19

2. Notes to the condensed consolidated interim financial statements

20

2.1 Reporting entity20

2.2 Basis of preparation

20

2.3 Notes

21

11

Semi-annual report
Introduction

The semi-annual report for the six-month period
ended June 30, 2021 of Signify N.V. (the‘Company’) consists of the semi-annual
condensed consolidated interim financial
statements, the semi-annual management report
and the responsibility statement by theCompany’s Board of Management.
The main risks and uncertainties for the second
half of 2021 are addressed in the first part of thepress release - please refer to the section‘Important Information’.
The information in this semi-annual report isunaudited. The semi-annual condensed
consolidated interim financial statements do notinclude all the information and disclosuresrequired in the annual financial statements andshould be read in conjunction with the Company’s
Consolidated financial statements for the year
ended December 31, 2020.

Responsibility statement

The Board of Management of the Company
hereby declares that, to the best of its
knowledge, the semi-annual condensed
consolidated interim financial statements for thesix-month period ended June 30, 2021, whichhave been prepared in accordance with IAS 34,
Interim Financial Reporting, as adopted by theEuropean Union, gives a true and fair view of theassets, liabilities, financial position and profit orloss of the Company and the undertakings
included in the consolidation taken as a whole,and the semi-annual management report for thesix-month period ended June 30, 2021, gives afair view of the information required pursuant to
Section 5:25d(8)-(9) of the Dutch Financial
Markets Supervision Act (Wet op het Financieeltoezicht).
Eindhoven, July 23, 2021
Board of Management
Eric Rondolat
Javier van Engelen
Maria Letizia Mariani

12

Management report
Business performance1

Market environment

The first half of 2021 showed early signs of an
economic recovery as vaccination rollouts led toan easing of lockdowns in many parts of theworld. The strongest market recovery was seen in
China and across Europe, while the Americas
region continued to be more strongly impacted by
the pandemic.
Signify saw particularly strong consumer demandfor connected lighting products, a resilient
performance of conventional lighting, while
professional demand continued to be impacted bygovernment measures to curb the spread of thevirus as well as supply constraints caused bycomponent shortages and logistics challenges.

Financial performance

Sales amounted to EUR 3,209 million, an increaseof 10.8% on a nominal basis. Adjusted for a -5.5%
currency effect and an 8.0% consolidation andother impact (mainly related to the acquisition of
Cooper Lighting), comparable sales grew by 8.4%.
LED-based sales accounted for 82% of total
sales, including Cooper Lighting.
The gross margin increased by 130 basis points to39.3%. The adjusted gross margin of 39.7% was
130 basis points higher than last year. Indirect
costs as percentage of sales increased by 10
basis points to 33.7%, while the adjusted indirect
costs as percentage of sales were 120 basis
points lower at 30.8%. Income from operations
amounted to EUR 191 million. EBITA amounted to
EUR 251 million, which is an increase of 32.3%
over last year. When adjusting for EUR 56 millionof restructuring costs, partly related to therestructuring of the central organization, EUR 28
million of acquisition-related charges and EUR 12
million of incidental items, the Adjusted EBITA
amounted to EUR 347 million, or 10.8% of sales.
Net income was EUR 142 million compared with
EUR 108 million last year, mainly driven by higher
income from operations.
Compared with the end of June 2020, working
capital as percentage of sales decreased by 330
basis points to 4.0% of sales, reflecting structural
working capital improvement. Net cash fromoperating activities was EUR 318 million, an
increase of EUR 27 million over last year, mainly
driven by higher profitability.

Digital Solutions

Sales amounted to EUR 1,631 million, reflecting anominal sales increase of 14.8%, mainly as a resultof the consolidation of Cooper Lighting.
Comparable sales grew by 5.1%, gradually
improving on the back of a stronger COVID-19
impact in 2020.
Income from operations amounted to EUR 65
million. EBITA of EUR 120 million included EUR 41
million of restructuring costs, acquisition-related
charges and other incidental costs. Adjusted
EBITA amounted to 161 million, resulting in an
improvement in the Adjusted EBITA margin of 160
bps to 9.9% which was driven by continued grossmargin management and operating leverage.

Digital Products

Sales amounted to EUR 1,128 million, an increaseof 12.6% on a nominal basis and an increase of
17.9% on a comparable basis, driven by strong
consumer demand.
Income from operations amounted to EUR 135
million. EBITA of EUR 138 million included EUR 10
million of restructuring and other incidental costs.
Adjusted EBITA was EUR 148 million. The adjusted
EBITA margin improved by 400 basis points to
13.1%, mainly driven by a solid gross margin
improvement, benefiting from a strong consumer
business.

Conventional Products

Sales amounted to EUR 440 million, a decline of
5.9% on a nominal and 1.2% on a comparable
basis, which is estimated to be lower than themarket decline and hence results in continued
market share gains.
Income from operations and EBITA both increased
by EUR 4 million to EUR 88 million. This includes
EUR 2 million positive impact of restructuring andother incidental costs. The Adjusted EBITA margin
improved by 200 basis points to 19.6%, mainly
driven by pricing discipline and operational
efficiencies.

Other

Reported EBITA amounted to EUR -96 million. This
represents amounts not allocated to theoperating segments and includes certain costs
related to group enabling functions as well as
central R&D activities to drive innovation.
Adjusted EBITA amounted to EUR -48 million,
compared with EUR -46 million in the same period
last year. Restructuring and other incidental
costs were EUR 48 million, which were mainly
related to the restructuring of the central
organization.

1

This section contains certain non-IFRS financial measures and ratios, such as comparable sales growth, EBITA, Adjusted EBITA, 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 directlycomparable IFRS measures, see “Reconciliation of non-IFRS financial measures”.

13Outlook

Signify continues to expect comparable sales
growth of 3% to 6% for the full year 2021. In
addition, Signify expects to achieve an Adjusted
EBITA margin of 11.5% to 12.5% and free cash flow
to exceed 8% of sales for the full year 2021. The
company reassesses its medium-term guidance
for the period 2021-2023 after each financial
year.

14

1

Condensed consolidated
financial statements

1.1

Condensed consolidated statement of income

In millions of EUR unless otherwise stated
Note

Second quarter

January to June

2020

2021

2020

2021

1,469

1,609

2,896

3,209

Cost of sales

(901)

(979)

(1,795)(1,949)Gross margin

568

631

1,101

1,260

Selling, general and administrative expenses

(416)

(455)

(838)

(938)

Research and development expenses

(67)

(71)

(136)

(143)

Impairment of goodwill

—

—

—

—

4

3

6

16

Sales

1, 2

Other business income

3

Other business expenses

3

Income from operations

(1)

(2)

(3)

(4)

87

106

130

191

Financial income

4

8

9

13

Financial expenses

(20)

(14)

(35)

(29)

Results relating to investments in associates

—

—

—

(1)

Income before taxes

71

99

104

174

10

(17)

4

(32)

81

82

108

142

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

79

81

109

140

Net income (loss) attributable to non-controlling interests

2

1

(1)

2

Income tax expense

4

Net income
Attribution of net income for the period:

Earnings per ordinary share attributable to shareholders
Weighted average number of ordinary shares outstanding used for
calculation (in thousands):
Basic

126,715

124,668

126,646

124,945

Diluted127,814

128,200

128,008

128,814

Basic

0.62

0.65

0.86

1.12

Diluted

0.62

0.63

0.85

1.08

Net income attributable to shareholders per ordinary share in EUR:

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

15

1.2

Condensed consolidated statement of comprehensive income

In millions of EUR
Second quarter

January to June

2020

2021

2020

2021

81

82

108

142

Remeasurements

—

—

—

—

Income tax effect on remeasurements

—

—

—

—

—

—

—

—

Net current period change, before tax

(81)

(34)

(113)

113

Income tax effect

—

—

—

—

Net income (loss)
Pensions and other post-employment plans:

Total of items that will not be reclassified to profit or loss
Currency translation differences:

Net investment hedge
Net current period change, before tax

6

8

6

(11)

Income tax effect

—

—

—

—
(12)

Cash flow hedges:
Net current period change, before tax

(9)

6

5

Income tax effect

2

(2)

(1)

3

Total of items that are or may be reclassified to profit or loss

(82)

(21)

(102)

92

Other comprehensive income (loss)

(82)

(21)

(102)

92

Total comprehensive income (loss)

(1)

61

6

234

Shareholders of Signify N.V.

(1)

61

8

227

Non-controlling interests

—

—

(3)

7

Total comprehensive income (loss) attributable to:

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

16

1.3

Condensed consolidated statement of financial position

In millions of EUR
Note

December 31, 2020

June 30, 2021

Non-current assets
Property, plant and equipment

1

708

704

Goodwill

1

2,251

2,329

Intangible assets, other than goodwill

1

775

740

Investments in associates

12

12

55

43

Deferred tax assets

473

464

Other assets

60

71

4,334

4,363

Inventories

885

1,120

Other assets

171

229

104

63

Financial assets

8

Total non-current assets
Current assets

Derivative financial assets

8

Income tax receivable
Trade and other receivables
Cash and cash equivalents

8

Assets classified as held for sale

39

35

1,140

1,056

1,033

945

3

3

Total current assets

3,376

3,450

Total assets

7,710

7,814

2,196

2,018

EquityShareholders’ equity

5

Non-controlling interests
Total equity

124

131

2,321

2,149

2,221

1,893

Non-current liabilities
Debt

6

Post-employment benefits
Provisions

7

390

389

224

229

Deferred tax liabilities

22

22

Income tax payable

108

104

Other liabilities
Total non-current liabilities

159

170

3,123

2,807

Current liabilities
Debt, including bank overdrafts

6

86

427

Derivative financial liabilities

8

44

21

Income tax payable
Trade and other payables
Provisions
Other liabilities
Liabilities from assets classified as held for sale

7

20

12

1,731

1,935

172

171

213

290

—

—

Total current liabilities

2,266

2,857

Total liabilities and total equity

7,710

7,814

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

17

1.4

Condensed consolidated statement of cash flows

In millions of EUR
Note

Second quarter

January to June

2020

2021

2020

2021

81

82

108

142

120

139

254

295

86

81

164

158

Cash flows from operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided byoperating activities:• Depreciation, amortization and impairment of non-financial assets• Impairment (reversal) of goodwill, other non-current financial assets andinvestments in associates

—

—

—

—

3

(1)

—

(1)

(11)

7

7

14

14

• Income tax expense

4

(10)

17

(4)

32

• Additions to (releases of) provisions

780• Net gain on sale of assets• Net interest expense on debt, borrowings and other liabilities

18

24

47

• Additions to (releases of) post-employment benefits

5

5

11

9

• Other items

15

5

23

13

Decrease (increase) in working capital:

22

(3)

74

27

• Decrease (increase) in trade and other receivables

85

13

305

96

• Decrease (increase) in inventories

(48)

(176)

(57)

(211)

• Increase (decrease) in trade and other payables

(17)

187

(202)

179

• Increase (decrease) in other current assets and liabilities

2

(26)

28

(37)

Increase (decrease) in other non-current assets and liabilities

(1)

2

5

11

(39)

(41)

(82)

(82)

Utilizations of provisions

7

Utilizations of post-employment benefits

(8)

(7)

(17)

(15)

Net interest and financing costs paid

(13)

(28)

(23)

(29)

Income taxes paid

—

(10)

(28)

(31)

163

134

291

318

Net capital expenditures:

(5)

(30)

(21)

(46)

• Additions of intangible assets

(8)

(8)

(13)

(16)

• Capital expenditures on property, plant and equipment

(16)

(23)

(28)

(44)

• Proceeds from disposal of property, plant and equipment

19

1

20

14

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

(4)

23

7

18

Purchases of businesses, net of cash acquired(5)—(1,275)—

Proceeds from sale of businesses, net of cash disposed of

2

—

2

—

Net cash provided by (used for) investing activities

(11)

(7)

(1,288)

(28)

(294)

Net cash provided by (used for) operating activities
Cash flows from investing activities

Cash flows from financing activities
Dividend paid

5

—

(292)

—

Proceeds from issuance of debt

6

1,280

—

3,735

350

Repayment of debt

6

(1,311)(19)(2,529)(391)

Purchase of treasury shares

5

—

(48)

(6)

(72)

Net cash provided by (used for) financing activities

(31)

(360)

1,201

(407)

Net cash flows
Effect of changes in exchange rates on cash and cash equivalents andbank overdrafts
Cash and cash equivalents and bank overdrafts at the beginning of the1
period

121

(233)

205

(117)

(24)

(16)

(29)

30

Cash and cash equivalents and bank overdrafts at the end of the period

2

919

1,191

840

1,030

1,016

943

1,016

943

8

12

17

34

Non-cash investing and financing activities:
Acquisition of fixed asset by means of leases
1
2

For Q2 2021 and Q2 2020, included bank overdrafts of EUR 1 million and EUR 5 million, respectively. For the first half of 2021 and 2020, included bankoverdrafts of EUR 3 million and EUR 7 million, respectively.
Included bank overdrafts of EUR 2 million and EUR 10 million as at June 30, 2021 and 2020, respectively.

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

18

1.5

Condensed consolidated statements of changes in equity

In millions of EUR
Currency
Retained translation
earnings differences

SharecapitalSharepremium

Balance as at January 1,
2020

1

2,195

53

Net Income

—

—

109

Other comprehensive
income (loss)

—

—

—

Total comprehensive
income (loss)——

Movement in noncontrolling interests—

Purchase of treasury
shares
Delivery of treasury
sharesShare-based
compensation plans
Balance as at June 30,
2020

Total
shareNonholders' controlling
equity interests

Cash flow
hedgesTreasuryshares

7

(7)

(68)

2,181

142

2,324

—

—

—

109

(1)

108

(105)

4

—

(101)

(2)

(102)

109

(105)

4

—

8

(3)

6

—

—

—

—

—

—

1

1

—

—

—

—

—

(6)

(6)

—

(6)

—

(29)

(2)

—

—

31

—

—

—

—

16

—

—

—

—

16

—

16

Equity

1

2,182

160

(98)

(3)

(42)

2,201

141

2,341

Balance as at January 1,
2021

1

2,201

387

(337)

17

(74)

2,196

124

2,321

Net Income

—

—

140

—

—

—

140

2

142

Other comprehensive
income (loss)

—

—

—

97

(10)

—

88

5

92

Total comprehensive
income (loss)

—

—

140

97

(10)

—

227

7

234

Movement in noncontrolling interests

—

—

—

—

—

—

—

—

—

Dividend distributed

—

—

(343)

—

—

—

(343)

—

(343)

Purchase of treasury
shares

—

—

7

—

—

(83)

(77)

—

(77)

Delivery of treasury
shares

—

(57)

26

—

—

30

—

—

—

Share-based
compensation plans

—

15

—

—

—

—

15

—

15

Balance as at June 30,
2021

1

2,159

217

(239)

8

(127)

2,018

131

2,149

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

19

2 Notes to the consolidated
interim financial statements
All amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up to
totals provided.

2.1

Reporting entity

Signify N.V. is a public company with limited liability
incorporated under the laws of the Netherlands
and listed on Euronext Amsterdam under thesymbol ‘LIGHT’.
As used herein, the term Signify is used for Signify
N.V. (the 'Company’) and its subsidiaries within themeaning of Section 2:24b of the Dutch Civil Code.
The corporate seat of the Company is in
Eindhoven, the Netherlands and its registeredoffice is at High Tech Campus 48, 5656 AE
Eindhoven. The Company is registered in theCommercial Register of the Chamber ofCommerce under number 65220692.

In Signify's Consolidated financial statements forthe year ended December 31, 2020, Signify
included an analysis of the impact of COVID-19 on
certain areas where the most significant
judgments and estimates are made. During thesix-month period ended June 30, 2021, no
significant events and transactions wereidentified which resulted in an update of theprevious views and observations disclosed.
Signify has not identified events during the sixmonth period ended June 30, 2021 that required
an update of the goodwill impairment tests thatwere performed in the fourth quarter of 2020.

Basis of preparation

Critical accounting judgments and key
sources of estimation uncertainty

The income tax expense is recognized based on
management’s estimate of the weighted average
effective annual income tax rate expected for thefull year.

The areas where the most significant judgments
and estimates are made, were the same as those
disclosed in Signify’s Consolidated financial
statements for the year ended December 31,
2020.

2.2

The condensed consolidated interim financial
statements have been prepared in accordancewith IAS 34 ‘Interim Financial Reporting’ as
adopted by the European Union. Several otheramendments apply to the accounting standards
for the first time in 2021, but do not have an
impact on the condensed consolidated interim
financial statements of Signify.

The preparation of the condensed consolidated
interim financial statements requires management
to make judgments, estimates and assumptions
that affect the application of accounting policies
and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ
from the estimates.

The accounting policies applied in the condensed
consolidated interim financial statements are
consistent with those applied in chapter 14.6 of
the Consolidated financial statements for theyear ended December 31, 2020.

Impact of the COVID-19 pandemic

The COVID-19 pandemic has created an
unprecedented situation globally. From theoutset, Signify has taken considerable action
focused on the health and safety of its
employees, on customer engagement and supply
chain continuity and on free cash flow generationand operating expenses optimization.
Signify continues to closely monitor thedevelopment of the COVID-19 outbreak by
analyzing the risks which the pandemic imposes
for its financial results, position and cash flows
and implementing mitigating actions promptly.

20

2.3

Notes

1

Information by segment and main country

The following is an overview of Signify revenues and results by segment:
Second Quarter
Conventi
Digitalonal
Products Products

Digital5
SolutionsJanuary to June

4

Other

Intersegm
ent
elimination

Signify

Digital5
Solutions

DigitalProducts

Conventi
onal
Products

1,609

1,631

1,128

440

10

1,609

1,632

1,231

444

11

4

Other

Intersegm
ent
elimination

Signify

2021
Sales to externalcustomers
Sales includingintersegment

837

553

213

6

838

605

215

6

Depreciation and1amortization

(20)

(7)

(4)

(20)

(51)

(41)

(14)

(8)

(35)

72

63

35

(34)

136

120

138

88

(96)

8.6%

11.3%

16.4%

8.4%

7.4%

12.3%

20.0%

2

EBITA

EBITA as a % of sales

(55)

3

Amortization

3,209

(110)

(98)
251
7.8%

(30)

Income fromoperations

44

61

35

(34)

(60)

106

Financial income andexpenses

3,209

65

135

88

(97)

191

(7)

(16)

Results frominvestments inassociates—(1)

Income before taxes

99

174

2020
Sales to externalcustomers
Sales includingintersegment
Depreciation and1amortization
2

EBITA

EBITA as a % of sales

781

473

211

4

1,469

1,420

1,002

468

6

781

515

212

4

1,469

1,421

1,084

471

6

(22)

(7)

(8)

59

43

45

(17)

(54)

(37)

(14)

(18)

(35)

(28)

119

77

81

84

(53)

7.6%

9.1%

21.2%

8.1%

5.4%

8.1%

17.9%

(44)

3

Amortization

29

41

45

(28)

3
4
5

189
6.5%

23

77

84

(53)

130

(16)

(26)

—

—

Income before taxes

71

104

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 Cooper Lighting from March 1, 2020

Tangible and intangible1
assetsSales
January to2June 2020

January toJune 2021

December31, 2020

June 30,
2021

Netherlands

228

249

466

470

United States

923

1,010

2,261

2,283

China

258

256

291

306

Disaggregated revenue
information

2

Information on sales per segment is disclosed innote 1, Information by segment and main country.
For the six-month period ended June 30, 2021,
sales consisted primarily (96%) of sales of goods
to customers (January to June 2020: 97%).
Sales by market:
2

Second quarter

2021

2020

406

477

908

999

619

623

1,104

1,211

Rest of the world

323

377

647

747

Global businesses

122

133

237

251

1,469

1,609

2,896

3,209

179

184

14

13

France

104

123

13

12

EuropeCanada

90

112

44

50

Americas

91

112

31

36

Other countries

1,024

1,163

615

604

Total countries

2,896

3,209

3,734

3,773

Includes goodwill
Includes Cooper Lighting from March 1, 2020

Total
1
2

2

January to June

2020

Germany

India

2

(105)

Results frominvestments inassociates

Sales between the segments mainly relate to the
supply of goods. The pricing of such transactions
is determined on an ‘arm’s length basis’. Sales andtangible and intangible assets are reported basedon the country of origin as follows:

1

2,896

(59)

87

Financial income andexpenses

2

(87)

(32)

Income fromoperations

1

2,896

1

2021

Includes Cooper Lighting from March 1, 2020
Wiz Connected is included in Market Groups Europe, Americas and Restof the world (was previously part of Global businesses)

21

3

Other business income andexpenses

Other business income and expenses consists ofthe following:
January to June
2020

2021

• Income——• Expense——• Income2

11• Expense——

Result on disposal of businesses:

Result on disposal of fixed assets:

An adjustment to dividend withholding tax liability,
in connection with the Company’s purchase oftreasury shares for capital reduction purposes in
2018, is recorded in retained earnings.

Treasury shares

As at June 30, 2021, the total number of treasury
shares amounted to 3,512,890 which werepurchased at an average price of EUR 36.23 pershare.

6

Debt

In millions of EUR

Result on other remaining businesses:

December31, 2020

June 30,2021• Income

45

Facility (EUR)

389

40

• Expense

(2)

(4)

Facility (USD)

406

418

1,262

1,263

Other business income and expenses

3

12Eurobonds

Total other business income

6

16

Lease liabilities

Total other business expense

(3)

(4)

Other Debt

For the six-month period ended June 30, 2021,
the result on disposal of fixed assets includes a
EUR 10 million income related to a sale of realestate in Conventional Products, in India.

4

Income taxes

The income tax expense in the first six months of2021 increased by EUR 36 million compared to thecorresponding period of the previous year.
The effective tax rate for the six-month period
ended June 30, 2021, was 18.5% compared to(3.6%) in 2020. The increase in the effective tax
rate is mainly caused by one-time non cash tax
benefits from changes in the organizational
structure in the first six months of 2020.

5

EquityDividend distribution

In June 2021, the Company settled an
extraordinary dividend of EUR 1.35 per ordinary
share, representing a total value of EUR 169
million including costs. In addition, the Company
also settled the regular dividend of EUR 1.40 per
ordinary share, representing a total value of EUR
175 million including costs. An amount of EUR 292
million was paid in cash in June and the remaining
dividend tax liability of EUR 49 million presented in
Other liabilities as at June 30, 2021 was paid in
July.

Subtotal
Bank overdrafts

233

234

15

363

2,305

2,318

3

2

Gross debt

2,307

2,320

Cash and cash equivalents(1,033)(945)

Net debt (cash)

1,275

1,375

Total equity

2,321

2,149

Net debt and total equity

3,595

3,524

Net debt divided by net debt andtotal equity (in %)

35%

39%

Total equity divided by net debt
and total equity (in %)

65%

61%

In March 2021, Signify refinanced EUR 350 millionof its long-term facility with short-term loans
maturing in December 2021, which are included in"Other Debt" in the table above.
As of June 2021, our long-term facilities consistof EUR 40 million and USD 275 million maturing inJanuary 2023, and USD 225 million maturing inJanuary 2025.

7

Provisions

Additions to restructuring provisions during thesix-month period ended June 30, 2021 weremainly related to the restructuring of the central
organization.

Share repurchases

Between February and May 2021, the Company
purchased shares to cover obligations arisingfrom its long-term incentive performance shareplans and other employee share plans. The total
number of shares repurchased was 1,937,489 fora total consideration of EUR 83 million.

22

Provisions are summarized as follows:
Restructuring Environmental
provisions
Provisions

In millions of EUR
Balance as at January 1,
2021

Product
warranty

Other
provisions

Total
396

84

109

70

133

Additions

52

7

14

22

96

Utilizations

(33)

(11)

(20)

(19)

(82)

Acquisitions

—

—

—

—

—

Releases

(12)

—

—

(3)

(15)

Changes in discount rate

—

—

—

—

—

Accretion

—

—

—

—

—

Translation differences andother movements

1

1

2

3

6

Balance as at June 30, 2021

92

107

66

136

400

Short-term

78

22

33

38

171

Long-term

14

84

32

98

229

8

Financial assets and liabilities

Fair value hierarchy

The valuation techniques and inputs used todevelop measurements for financial assets andliabilities are consistent with those disclosed in
the Consolidated financial statements for theyear ended December 31, 2020.

Financial risk management

The Company’s financial risk management
objectives and policies are consistent with those
disclosed in the Consolidated financial statements
for the year ended December 31, 2020.

Carried at

Gross amountrecognisedon thebalancesheet

Amounts notoffset on thebalance sheet,
but are subject
to master
nettingarrangements

Net amount

Fair value
hierarchy Estimated fair
level
value

Balance as at December 31, 2020
1

Non-current financial assets

amortised cost

34

—

34

Unquoted equity sharesfair value (FVOCI)

3

—

3

1

34
3

Trade and other receivables

amortised cost

1,140

—

1,140

Derivative financial assets
designated as hedging instruments

fair value (FVTPL)

122

(41)

81

2

Derivative financial assets notdesignated as hedging instruments

fair value (FVTPL)

3

Cash and cash equivalents
Debt (Eurobonds)

—

—

—

1,033

—

1,033

3
1,140
122
9
1,033

amortised cost

(1,262)—(1,262)

1(1,378)Debt (excluding Eurobonds)

amortised cost

(1,046)—(1,046)2(1,046)

Derivative financial liabilities
designated as hedging instruments

2

1

fair value (FVTPL)

(45)

41

(4)

Trade and other payables

amortised cost

(1,727)—(1,727)

Contingent considerations

fair value (FVTPL)

(4)

—

(4)

Non-current financial assets

amortised cost

34

—

34

Unquoted equity sharesfair value (FVOCI)

3

—

3

amortised cost

1,056

—

1,056

fair value (FVTPL)

64

(21)

43

2
3

1

(45)
(1,727)

3(4)

Balance as at June 30, 2021
1

1

Trade and other receivables

Derivative financial assets
designated as hedging instruments
Derivative financial assets notdesignated as hedging instruments

fair value (FVTPL)Cash and cash equivalents
Debt (Eurobonds)

—

6

—

945

3
1,056
64
14
945

amortised cost

(1,263)—(1,263)

1(1,375)

Debt (excluding Eurobonds)

amortised cost

(1,057)—(1,057)2(1,057)

Derivative financial liabilities
designated as hedging instruments

2

1

fair value (FVTPL)

(22)

21

(1)

Trade and other payables

amortised cost

(1,933)—(1,933)

Contingent considerations

fair value (FVTPL)

(2)

—

(2)

1

1

6
945

34
3

(22)
(1,933)

3(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 otherreceivables, debt (excluding Eurobonds), trade and other payables are not materially different from their carrying value.

23

9

Events after the balance sheet
date

On July 1, 2021, Signify acquired Telensa Holdings
Ltd, a UK-based expert in wireless monitoring andcontrol systems for smart cities. Telensa isheadquartered in Cambridge, UK, employs 58
people and had preliminary sales of GBP 11 million
for the year ending March 2021. The acquisition
supports Signify’s strategic priority to grow in
professional systems and services.

24Appendix B - Reconciliation of non-IFRS financial measures
Sales growth composition per business in %Second quarter
Comparable
growthCurrency effects

Consolidation andother changes

Nominal growth2021 vs 2020
Digital Solutions

12.6

(5.4)

0.0

7.2

Digital Products

20.4

(3.5)

0.0

16.9

Conventional Products

4.7

(3.5)

0.0

1.2

Total

14.1

(4.5)

0.0

9.6

Consolidation andother changes

Nominal growth

January to June
Comparable
growthCurrency effects

2021 vs 2020
Digital Solutions

5.1

(6.1)

15.9

14.8

Digital Products

17.9

(5.0)

(0.3)

12.6

Conventional Products

(1.2)

(4.6)

(0.1)

(5.9)

Total

8.4

(5.5)

8.0

10.8

Consolidation andother changes

Nominal growth
17.5

Sales growth composition per market in %Second quarter
Comparable
growthCurrency effects

2021 vs 2020
Europe

17.5

0.0

0.1

Americas

9.4

(8.3)

(0.4)

0.7

Rest of the world

20.8

(3.6)

(0.2)

17.0

Global businesses

8.1

(1.6)

2.5

8.9

Total

14.1

(4.5)

0.0

9.6

January to June
Comparable
growthCurrency effects

Consolidation andother changes

Nominal growth

Europe

11.2

(0.9)

(0.2)

10.1

Americas

0.3

(8.7)

18.1

9.7

Rest of the world

21.8

(6.6)

0.1

15.4

Global businesses

5.0

(2.2)

3.3

6.1

Total

8.4

(5.5)

8.0

10.8

2021 vs 2020

Amounts may not add up due to rounding.

25

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

DigitalSolutions

DigitalProducts

Conventional
Products

Other

Adjusted EBITA

175

89

66

40

(20)

Restructuring

(9)

—

—

4

(13)

Acquisition-related charges

(13)

(13)

—

—

—

Incidental items

(16)

(4)

(4)

(8)

0

EBITA

136

72

63

35

(34)

Second quarter 2021

Amortization

1

(30)

(28)

(2)

—

—

106

44

61

35

(34)

Adjusted EBITA

133

75

44

37

(23)

Restructuring

(2)

(1)

—

1

(2)

Acquisition-related charges

(15)

(14)

—

—

—

4

—

0

7

(2)
(28)

Income from operations (or EBIT)
Second quarter 2020

Incidental items
EBITA

119

59

43

45

(32)

(30)

(2)

—

—

87

29

41

45

(28)

Signify

DigitalSolutions

DigitalProducts

Conventional
Products

Other

Adjusted EBITA

347

161

148

86

(48)

Restructuring

(56)

(7)

(3)

1

(47)

Acquisition-related charges

(28)

(27)

—

—

—

Incidental items

(12)

(6)

(6)

—

(1)

EBITA

251

120

138

88

(96)

(60)

(56)

(3)

—

(1)

191

65

135

88

(97)

Adjusted EBITA

245

118

91

82

(46)

Restructuring

(15)

(5)

(4)

(2)

(4)

Acquisition-related charges

(33)

(31)

(2)

—

—

Incidental items

(7)

(4)

(4)

3

(2)

189

77

81

84

(53)

(59)

(55)

(4)

—

(1)

130

23

77

84

(53)

Amortization

1

Income from operations (or EBIT)
1

Amortization and impairments of acquisition related intangible assets and goodwill.

January to June 2021

Amortization

1

Income from operations (or EBIT)
January to June 2020

EBITA
Amortization

1

Income from operations (or EBIT)
1

Amortization and impairments of acquisition related intangible assets and goodwill.

Amounts may not add up due to rounding.

26

Second quarter 2021 Income from operations to Adjusted EBITA in millions of EUR

Reported

Restructuring

Acquisition
relatedcharges

Sales

1,609

—

—

—

1,609

Cost of sales

(979)

(1)

2

7

(971)

Gross margin

631

(1)

2

7

638

Selling, general and administrative expenses

(455)

10

13

8

(423)

Incidental
1
items

Adjusted

Second quarter 2021

Research and development expenses

(71)

1

—

—

(70)

(526)

11

13

8

(493)

Impairment of goodwill

—

—

—

—

—

Other business income

3

—

(2)

(1)

1

Other business expenses

(2)

—

—

1

(1)

Income from operations

106

9

13

16

145

Amortization

(30)

—

—

—

(30)

Income from operations excluding amortization(EBITA)

136

9

13

16

175

Sales

1,469

—

—

—

1,469

Cost of sales

(901)

(1)

7

(7)

(901)

Gross margin

568

(1)

7

(7)

567

Selling, general and administrative expenses

(416)

3

8

4

(401)

Research and development expenses

(67)

—

—

—

(67)

Indirect costs

(483)

3

8

4

(468)

Impairment of goodwill

—

—

—

—

—

Other business income

4

—

—

(1)

2

Other business expenses

(1)

—

—

—

(1)

Indirect costs

Second quarter 2020

1

Income from operations

87

2

15

(4)

100

Amortization

(32)

—

—

—

(32)

Income from operations excluding amortization(EBITA)

119

2

15

(4)

133

Incidental items are non-recurring by nature and relate to separation, transformation, net real estate gains, environmental provision for inactive sites and theeffect of changes in discount rates on long-term provisions.

Amounts may not add up due to rounding.

27

January to June 2021 Income from operations to Adjusted EBITA in millions of EUR

Reported

Restructuring

Acquisition
relatedcharges

Sales

3,209

—

—

—

3,209

Cost of sales(1,949)4

4

7(1,933)Gross margin

1,260

4

4

7

1,275

Selling, general and administrative expenses

(938)

53

25

14

(847)

Research and development expenses

(143)

0

—

—

(142)

(1,081)

52

25

14

(989)

Impairment of goodwill

—

—

—

—

—

Other business income

16

—

(2)

(11)

4

Other business expenses

(4)

—

0

2

(2)

Income from operations

191

56

28

12

288

Amortization

(60)

—

—

—

(60)

Income from operations excluding amortization(EBITA)

251

56

28

12

347

Sales

2,896

—

—

—

2,896

Cost of sales(1,795)

3

13

(5)

(1,784)

Incidental
1
items

Adjusted

January to June 2021

Indirect costs

January to June 2020

1

Gross margin

1,101

3

13

(5)

1,112

Selling, general and administrative expenses

(838)

11

19

14

(794)

Research and development expenses

(136)

1

—

—

(134)

Indirect costs

(973)

12

19

14

(928)

Impairment of goodwill

—

—

—

—

—

Other business income

6

—

—

(1)

4

Other business expenses

(3)

—

—

—

(3)

Income from operations

130

15

33

7

186

Amortization

(59)

—

—

—

(59)

Income from operations excluding amortization(EBITA)

189

15

33

7

245

Incidental items are non-recurring by nature and relate to separation, transformation, net real estate gains, environmental provision for inactive sites and theeffect of changes in discount rates on long-term provisions.

Amounts may not add up due to rounding.

28Composition of cash flows in millions of
EUR
Second quarter

Working capital to total assets in millions
of EUR

January to June

June 30, December June 30,
202031, 2020
2021

2020

2021

2020

2021

Cash flows fromoperating activities

163

134

291

318

Cash flows frominvesting activities

(11)

(7)

(1,288)(28)

Cash flows before
financing activities

151

127

(996)

290

Cash flows fromoperating activities• Derivative financial
liabilities

163

134

291

318

• Other current liabilities

Net capital
expenditures:

(5)

(30)

(21)

(46)

Include assets notcomprised in WoCa:• Additions ofintangible assets

(8)

(8)

(13)

(16)

• Capital expenditureson property, plant andequipment

Working capital

(16)

(23)

(28)

• Trade and other payables

19

1

20

14

Free cash flows

158

104

270

272

313

269

1,659

1,731

1,935

34

44

21

223

213

242

• Non-current assets

4,641

4,334

4,363

• Income tax receivable

59

39

35

1,026

1,033

945

1

• Cash and cash
equivalents(44)• Proceeds from
disposal of property,
plant and equipment452

Eliminate liabilities
comprised in WoCa:• Assets classified as held
for sale
Total assets

—

3

3

8,094

7,710

7,814

1

Other current liabilities excluding EUR 49 million of dividend related
payables as of June 30, 2021.

29

Appendix C – Financial glossary
Acquisition-related charges

Costs that are directly triggered by theacquisition of a company, such as transaction
costs, purchase accounting related costs andintegration-related expenses.

Adjusted EBITAEBITA excluding restructuring costs, acquisitionrelated charges and other incidental charges.

Effects of changes in consolidation andother changes

In the event a business is acquired (or divested),
the impact of the consolidation (or deconsolidation) on the Group’s figures is included(or excluded) in the calculation of the comparable
sales growth figures. Other changes include
regulatory changes and changes originating fromnew accounting standards.

Effects of currency movements

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

Calculated by translating the foreign currency
financials of the previous period and the current
period into euros at the same average exchange
rates.

Adjusted gross margin

Employees

Adjusted EBITA margin

Gross margin, excluding restructuring costs,
acquisition-related charges and other incidental
items attributable to cost of sales.

Adjusted indirect costs

Indirect costs, excluding restructuring costs,
acquisition-related charges and other incidental
items attributable to indirect costs.

Adjusted R&D expenses

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

Adjusted SG&A expenses

Selling, general and administrative expenses,
excluding restructuring costs, acquisition-related
charges and other incidental items attributable toselling, general and administrative expenses.

Changes in scope

Consolidation effects related to acquisitions(mainly Cooper Lighting).

Comparable sales growth (CSG)

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

EBIT

Income from operations.

EBITA

Income from operations excluding amortizationand impairment of acquisition related intangible
assets and goodwill.

EBITDA

Income from operations excluding depreciation,amortization and impairment of non-financial
assets.

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.

Incidental charges

Any item with an income statement impact (loss orgain) that is deemed to be both significant andnot part of normal business activity. Other
incidental items may extend over several quarters
within the same financial year.

Indirect costs

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

Net capital expenditures

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

Net debt

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

Net leverage ratio

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

R&D expenses

Research and development expenses.

Restructuring costs

The estimated costs of initiated reorganizations,the most significant of which have been approvedby the group, and which generally involve the30realignment of certain parts of the industrial andcommercial organization.

SG&A expenses

Selling, general and administrative expenses.

Working capital

The sum of inventories, trade and otherreceivables, other current assets, derivative
financial assets minus the sum of trade and otherpayables, derivative financial liabilities and othercurrent liabilities (excluding dividend related
payables).

31