Press Release
October 23, 2020

Signify reports third quarter sales of EUR 1.7 billion, operational profitability of 11.5% andfree cash flow of EUR 214 million
1

Third quarter 2020
• Signify’s installed base of connected light points increased from 64 million in Q2 20 to 71 million in Q3 20• Sales of EUR 1,728 million, nominal sales growth of 12.1% and CSG of -8.3%• LED-based sales represented 82% of total sales (Q3 19: 81%)• Adj. indirect costs down EUR 22 million, or -4.9% excl. FX effects and changes in scope2• Adj. EBITA margin increased by 50 bps to 11.5%, including currency impact of -30 bps• Adj. EBITA margin of the growing profit engines increased by 130 bps to 12.3%• Net income of EUR 90 million (Q3 19: EUR 74 million)• Free cash flow increased to EUR 214 million (Q3 19: EUR 45 million)• Cooper Lighting integration and synergies ahead of plan
• Achieved carbon neutrality and set course to double positive impact on environment and society in 2025
• Debt prepayment of EUR 350 million to reduce overall gross debt position; net leverage at 2.2x
Eindhoven, the Netherlands – Signify (Euronext: LIGHT), the world leader in lighting, today announced thecompany’s 2020 third quarter results. “We are very proud of our carbon neutrality achievement in Q3 and of thelaunch of our new sustainability program aimed at doubling our positive impact on the environment and society
in 2025. Amidst difficult market dynamics caused by the COVID-19 pandemic, this financial quarter we arereporting yet another resilient performance underpinned by our consumer and connected lighting. Our grossmargin improvement, through rigorous price management, translated into a higher operational margin. Our
discipline in working capital management allowed us to generate a solid free cash flow for the quarter, while aspreviously announced, we reduced our debt by EUR 350 million,” said CEO Eric Rondolat. “Given theacceleration of the pandemic in many regions, we remain cautious about market developments, but confident in
our ability to further adapt, which we have demonstrated since the beginning of the year. Our teams remain
focused on making continued good progress on the integration of Cooper Lighting and Klite, while relentlessly
driving our growth platforms to develop new business opportunities in line with our strategy.”

OutlookGiven recent developments of the pandemic, Signify does not provide financial guidance for full year 2020.
Signify remains confident in the underlying resilience of its businesses and operating model, and that its liquidity
needs are well covered by the financial framework it has in place. During the virtual Capital Markets Day 2020,
which is scheduled on December 9, Signify will provide more details on its expectations for the medium-term.

¹This 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 tothe most directly comparable IFRS financial measures, see appendix B, Reconciliation of non-IFRS financial measures, of this press release.
2
Changes in scope relate to the consolidation of Cooper Lighting and Klite

2

Financial review
2019

Third quarter2020

change
-8.3%
-3.6%
24.0%
12.1%
17.8%

1,542
585
37.9%

1,728
689
39.9%

-377
-65
-442
28.7%

-443
-77
-520
30.1%

169
11.0%
-31
138

199
11.5%
-38
161

17.7%

114
-11
-28
74

131
-16
-25
90

14.9%

45
0.58
27,337214
0.67
37,057-17.7%

16.6%

21.0%

in millions of EUR, except percentages

2019

Nine months
2020

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

4,497
1,699
37.8%

4,624
1,801
39.0%

Adj. SG&A expenses
Adj. R&D expenses
Adj. indirect costs
Adj. indirect costs (as % of sales)-1,155-201-1,35630.2%-1,237-211-1,44831.3%

Adjusted EBITA
Adjusted EBITA margin
Adjusted items
EBITA

416
9.3%
-80
336

444
9.6%
-93
351

6.6%

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

263
-32
-63
169

261
-42
-21
198

-0.7%

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

220
1.34
27,337484
1.53
37,057change-15.3%
-1.2%
19.3%
2.8%
6.0%

-6.8%

4.4%

17.3%

Third quarter
Sales amounted to EUR 1,728 million, a nominal increase of 12.1%. Adjusted for 3.6% negative currency effects
and 24.0% consolidation, comparable sales decreased by 8.3%. LED-based sales decreased by 8.2% and now
account for 82% of total sales. The adjusted gross margin increased by 200 bps to 39.9%, including a currency
effect of -10 bps, largely as a result of solid pricing management. The adjusted indirect costs increased by EUR 78
million. Excluding currency effects and changes in scope, the adjusted indirect costs are down EUR 22 million, or4.9%. Adjusted EBITA amounted to EUR 199 million, a 17.7% increase compared to the same period last year.
The Adjusted EBITA margin improved by 50 bps to 11.5%, mainly driven by the robust gross margin
improvement. Total restructuring costs were EUR 25 million and acquisition-related charges and otherincidentals were EUR 13 million. Net income increased from EUR 74 million last year to EUR 90 million in Q3 20.
Free cash flow amounted to EUR 214 million, reflecting profitability improvements, strong working capitalmanagement and the consolidation of Cooper Lighting and Klite.

3

Growing profit engines
In percentages

CSG
Q3 2019
1.7%
0.1%
1.0%

Digital Solutions
Digital Products
Growing profit engines

Q3 2020-11.2%-2.0%-7.9%

Adj. EBITA margin
Q3 2019
Q3 2020
12.3%
11.7%
9.4%
13.1%
11.0%
12.3%

Third quarter
Comparable sales of the growing profit engines declined by 7.9% due to the ongoing spread of COVID-19 and themeasures taken by governments and customers. Despite the decline in top-line, the growing profit engines have
improved the Adjusted EBITA margin by 130 bps to 12.3%, with a particularly strong margin improvement in the
Digital Products division, driven by an increase in gross margin and indirect cost savings.

Digital Solutions
Third quarter
2019
698
86
12.3%
86
63

2020
916
107
11.7%
78
50

Nine months
change in millions of EUR, unless otherwise indicated-11.2%

Comparable sales growth

31.2%
24.4%

Sales
Adjusted EBITA
Adjusted EBITA margin
EBITA
Income from operations (EBIT)-8.7%-21.3%

20192020

change-16.0%

1,929
174
9.0%
151
84

2,336
225
9.6%
155
72

21.1%
29.6%
2.8%
-14.0%

Third quarter
Sales amounted to EUR 916 million, a nominal increase of 31.2% as a result of the consolidation of Cooper
Lighting. Comparable sales declined by 11.2% and reflects a continued difficult market environment, albeit an
improved trend compared with last quarter. The most severely impacted markets were Latin America, Canada,
India, Southeast Asia, Italy and France. LED-based sales accounted for 92% of total sales including Cooper
Lighting. Connected-based sales represented 27% of total sales excluding Cooper Lighting. Adjusted EBITA
amounted to EUR 107 million, resulting in an Adjusted EBITA margin of 11.7%. Adjusted EBITA margin remained
stable year-on-year when including the pro-forma Cooper Lighting financials in Q3 19.

Digital Products
2019

Third quarter2020

changein millions of EUR, unless otherwise indicated-2.0%

Comparable sales growth2019

Nine months
2020

change-12.6%

565
53
9.4%

575
76
13.1%

1.9%
42.2%

Sales
Adjusted EBITA
Adjusted EBITA margin

1,681
145
8.6%

1,577
167
10.6%

-6.2%
15.2%

35

73

111.3%

EBITA

118

154

31.0%

33

71

115.7%

Income from operations (EBIT)

114

149

30.9%

Third quarter
Sales amounted to EUR 575 million, a nominal increase of 1.9% and a decrease of 2.0% on a comparable basis.
Connected-based sales represented 21% of total sales. While demand in the OEM and Professional channels
continued to be impacted by the measures taken by governments and customers, sales in the consumer channel
showed a strong performance, particularly in the connected home category for which sell-out rates remainedrobust. Adjusted EBITA amounted to EUR 76 million, resulting in an improvement in the Adjusted EBITA marginof 370 bps driven by a positive mix impact from connected home, solid price management and continued bill-ofmaterial savings, and the ongoing successful integration of Klite.

4

Conventional Products
Third quarter
2019

2020

274
53
19.4%
41
41

233
42
17.9%
35
35

Nine months
change in millions of EUR, unless otherwise indicated-11.0%

Comparable sales growth-15.0%-21.4%

Sales
Adjusted EBITA
Adjusted EBITA margin
EBITA
Income from operations (EBIT)-13.7%-13.7%

2019

2020

869
172
19.8%
152
151

701
124
17.7%
119
119

change-18.1%-19.4%-28.0%-21.5%-21.4%

Third quarter
Sales amounted to EUR 233 million, a comparable decrease of 11.0%. Despite the impact of the pandemic,
Conventional Products showed a solid performance mainly as a result of strong demand for consumer lamps,
UV-C lighting and horticulture lighting. The division continued to gain market share and generate solid free cash
flow.

Other
Third quarter
Other represents amounts not allocated to the operating segments and includes certain costs related to central
R&D activities to drive innovation as well as group enabling functions. Adjusted EBITA amounted to EUR -26
million (Q3 19: EUR -23 million). EBITA amounted to EUR -25 million (Q3 19: EUR -23 million). Restructuring costs
and other incidentals were insignificant during the quarter.

Sales by market
Third quarter
2019

2020

Change

553
433
466
91
1,542

523
659
404
141
1,728

-5.3%
52.1%
-13.2%
56.2%
12.1%

Nine months
CSG in millions of EUR, except percentages-3.8%-13.2%
-8.2%
1.7%
-8.3%

EuropeAmericasRest of the World
Global businesses
Total

2019

2020

change

CSG

1,585
1,295
1,356
261
4,497

1,431
1,758
1,050
385
4,624

-9.8%
35.7%
-22.5%
47.3%
2.8%

-8.8%
-17.6%-20.7%-9.9%-15.3%In 2020 Americas include Cooper Lighting and Global businesses include Klite

Third quarter
Comparable sales in Europe decreased by 3.8%, following gradual recoveries in markets such as the Benelux,
Nordics and Germany. Comparable sales in the Americas decreased by 13.2% reflecting continued challenging
market conditions. In the Rest of the World, comparable sales declined by 8.2%, with a negative impact inparticular from India, Indonesia and Southeast Asia. In China, demand continues to show signs of recovery.

5Working capital
30 Sep, 201930 Jun, 2020 30 Sep, 2020in millions of EUR, unless otherwise indicatedInventories
Trade and other receivables
Trade and other payables
Other working capital items 2)
Working capital
As % of LTM* sales*

LTM: Last Twelve Months
6,614
6,336

1,030
1,213
(1,582)
(74)
588
9.4%

1,032
1,096
(1,659)
(17)
452
7.3%

1,000
1,155
(1,749)
37
443
7.0%

6,275

Third quarter
Working capital improved by EUR 145 million to EUR 443 million year-on-year, reflecting solid inventory andreceivables management, notwithstanding the addition of Cooper Lighting's working capital. Working capital
represents 7.0% of sales, compared with 9.4% at the end of September 2019. Working capital improved by 300
bps to 6.4% of sales when including pro-forma last twelve-months sales for both Cooper Lighting and Klite.

Cash flow analysis
Third quarter
2019
114
74
44
-67
-69
-3
-25
-8
-14
45

2020
131

Income from operations (EBIT)

82
40
-40
46
-4
-23
-26
9
214

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 flowin millions of EUR

Nine months
2019
263
211
113
-177
-42
-13
-64
-44
-27
220

2020
261
245
97
-138
120
-27
-51
-47
24
484

Third quarter
Free cash flow amounted to EUR 214 million. This is reflecting higher profitability, strong working capitalmanagement and the consolidation of Cooper Lighting and Klite. Free cash flow included a restructuring payoutof EUR 11 million (Q3 19: EUR 20 million).

6

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 Sep, 2019 30 Jun, 2020 30 Sep, 2020
117

113

100

1,379
1,496
639
857
2,200

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

2,251
2,351
762
1,589
2,295

Third quarter
Following the debt prepayment of EUR 350 million to reduce our overall gross debt position, our cash position
decreased by EUR 264 million to EUR 762 million compared with the end of June 2020. Net debt amounted to
EUR 1,589 million, a decrease of EUR 117 million compared with the end of June 2020. Net leverage reduced
from 2.4x at the end of June 2020 to 2.2x at the end of September 2020, which is in line with our deleveraging
strategy. Total equity decreased to EUR 2,295 million at the end of Q3 (Q2 20: EUR 2,341 million), primarily due
to currency translation results and the purchase of treasury shares to cover employee long term incentive plans,
offset partly by net income.

7

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), René van Schooten (CFO) and Javier van Engelen (CFO) will host a conference call for
analysts and institutional investors at 9:00 a.m. CET to discuss third quarter 2020 results. A live audio webcast of
the conference call will be available via the Investor Relations website.
Financial calendar 2020
October 27, 2020
EGM 2020
December 9, 2020
Capital Markets Day 2020
January 29, 2021
Fourth quarter and full year results 2020
For further information, please contact:
Signify Investor Relations
Rogier Dierckx
Tel: +31 6 1138 4609
E-mail: rogier.dierckx@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 2019 sales of EUR 6.2 billion, we
have approximately 37,000 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 and have been
named Industry Leader in the Dow Jones Sustainability Index for three years in a row. News from Signify islocated at the Newsroom, Twitter, LinkedIn and Instagram. Information for investors can be found on theInvestor Relations page.

8

Important Information
Forward-Looking Statements and Risks & Uncertainties

This document and the related oral presentation contain, and responses to questions following the presentation may
contain, forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Signify N.V.
(the “Company”, and together with its subsidiaries, the “Group”), including statements regarding strategy, estimates of sales
growth and future operational results.
By their nature, these statements involve risks and uncertainties facing the Company and its Group companies, and a numberof important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking
statement as a result of risks and uncertainties. Such risks, uncertainties and other important factors include but are notlimited to: adverse economic and political developments, the impacts of COVID-19, rapid technological change, competitionin the general lighting market, development of lighting systems and services, successful implementation of business
transformation programs, impact of acquisitions and other transactions, reputational and adverse effects on business due toactivities in Environment, Health & Safety, compliance risks, ability to attract and retain talented personnel, adverse currency
effects, pension liabilities, and exposure to international tax laws. Please see “Risk Factors and Risk Management” in Chapter
12 of the Annual Report 2019 for discussion of material risks, uncertainties and other important factors which may have amaterial 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 2019.
Additional risks currently not known to the Group or that the Group has not considered material as of the date of thisdocument could also prove to be important and may have a material adverse effect on the business, results of operations,financial condition and prospects of the Group or could cause the forward-looking events discussed in this document not to
occur. The Group undertakes no duty to and will not necessarily update any of the forward-looking statements in light of
new information or future events, except to the extent required by applicable law.

Market and Industry Information

All references to market share, market data, industry statistics and industry forecasts in this document consist of 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
gross margin, EBITA, adjusted EBITA, and free cash flow, and other related ratios, which are not recognized measures offinancial 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 thesemeasures and ratios may not be comparable to measures used by other companies under the same or similar names. A
reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures is contained inthis document. For further information on non-IFRS financial measures, see “Chapter 18 Reconciliation of non-IFRS
measures” in the Annual Report 2019.

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 2019 and semi-annual report 2020.

Change in reporting segments

Effective Q2 2020, to further adapt to the industry transition and strengthen customer centricity, Signify changed theorganizational structure, which included changing the previously four business groups (BG’s) to three divisions.

••

Division Digital Solutions (formerly BG Professional, including Cooper Lighting Solutions) offers luminaires, lighting
systems and services for the Internet of Things to the customers in the professional segment;
Division Digital Products (combines BG LED and BG Home). This division offers LED lamps, LED luminaires andconnected products, including Hue and Wiz, and LED electronics to professional customers, OEM partners andconsumers. By bringing together its entire consumer LED portfolio, Signify can better manage this lighting category for
its channel partners; and9•Division Conventional Products (formerly BG Lamps) continues to focus on conventional lamps and electronics for
professional customers, OEM partners and consumers. It is organized separately to bring a clear distinction between
conventional and digital offerings.

In line with this change, effective Q2 2020, Signify's operating segments are Digital Solutions, Digital Products, andConventional Products. The segments are organized based on the nature of the products and services. ‘Other’ represents
amounts not allocated to the operating segments and includes certain costs related to central R&D activities to drive
innovation as well as group enabling functions.

Market Abuse Regulation

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

10

Appendix A – Financial statement information
A. Condensed consolidated statement of income
In millions of EUR unless otherwise stated

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 to shareholders of Signify N.V.
Net income (loss) attributable to non-controlling interests
Amounts may not add up due to rounding

Third quarter
2019
2020
1,542
1,728
(967)
(1,060)
575
668
(406)
(458)
(68)
(80)
—
—
15
4
(2)
(2)
114
131
4
4
(15)
(20)
0
0
103
115
(28)
(25)
74
90
73
1

85
5

January to September
2019
2020
4,497
4,624
(2,819)(2,855)
1,678
1,768(1,219)(1,296)
(207)
(216)
—
—
18
9
(7)
(5)
263
261
12
13
(44)
(55)
1
0
232
219
(63)
(21)
169
198
169
0

194
4

11

B. Condensed consolidated statement of comprehensive income
In millions of EUR

Net income (loss)
Pensions and other post-employment plans:Remeasurements
Income tax effect on remeasurements
Total of items that will not be reclassified to profit or loss

Third quarter
2019
2020
74
90

January to September
2019
2020
169
198

—
—
—

(5)
—
(5)

(2)
—
(2)

(5)
—
(5)

73
—

(139)
—

91
(1)

(251)
—

Currency translation differences:
Net current period change, before tax
Income tax effect
Net investment hedge
Net current period change, before tax
Income tax effectCash flow hedges:
Net current period change, before tax
Income tax effectTotal of items that are or may be reclassified to profit or loss

—
—

16
—

—
—

22
—

(10)
2
65

19
(4)
(108)

(5)
2
86

24
(5)
(210)

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

65
140

(113)
(23)

83
252

(216)
(18)

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

135
4

(26)
3

249
3

(18)
—

Amounts may not add up due to rounding.

12

C. Condensed consolidated statement of financial position
In millions of EUR

December 31,
2019

September 30,
2020

Non-current assets
Property, plant and equipment
Goodwill
Intangible assets, other than goodwill
Investments in associates
Financial assets
Deferred tax assets
Other assets
Total non-current assets

644
1,943
443
14
49
384
64
3,541

738
2,331
831
11
58
468
60
4,498

Current assets
Inventories
Financial assets
Other assets
Derivative financial assets
Income tax receivable
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
Total current assets
Total assets

874
—
161
16
48
1,223
847
4
3,174
6,715

1,000
—
213
60
53
1,155
762
—
3,243
7,740

EquityShareholders’ equity
Non-controlling interests
Total equity

2,181
142
2,324

2,152
143
2,295

Non-current liabilities
Debt
Post-employment benefits
Provisions
Deferred tax liabilities
Income tax payable
Other liabilities
Total non-current liabilities

1,369
437
216
28
52
135
2,236

2,251
420
228
26
102
142
3,168

Current liabilities
Debt, including bank overdrafts
Derivative financial liabilities
Income tax payable
Trade and other payables
Provisions
Other liabilities
Liabilities from assets classified as held for sale
Total current liabilities
Total liabilities and total equity

96
20
22
1,684
149
183
2
2,155
6,715

100
16
37
1,749
155
220
—
2,277
7,740

Amounts may not add up due to rounding.

13

D. Condensed consolidated statement of cash flows
In millions of EUR
Third quarter2019 1January to September
20202019 1

2020

Cash flows from operating activities
Net income (loss)

74

90

169

198

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

147

169

404

423

• Depreciation, amortization and impairment of non-financial assets• Impairment (reversal) of goodwill, other non-current financial assets andinvestments in associates

74

82

211

245

—

—

—

—

• Net gain on sale of assets

(9)

—

(10)

(1)

• Net interest expense on debt, borrowings and other liabilities

3

9

11

24

• Income tax expense

28

25

63

21

• Additions to (releases of) provisions

37

35

95

82

• Additions to (releases of) post-employment benefits

6

4

18

15

• Other items

7

14

15

37

Decrease (increase) in working capital:

(69)

46

(42)

120

• Decrease (increase) in trade and other receivables

(2)

(91)

41

214

• Decrease (increase) in inventories

(23)

5

(135)

(52)

• Increase (decrease) in trade and other payables

(55)

124

38

(78)

• Increase (decrease) in other current assets and liabilities

10

8

14

36

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

(4)

1

(12)

7

Utilizations of provisions

(41)

(32)

(133)

(114)

Utilizations of post-employment benefits

(27)

(8)

(44)

(24)

Net interest and financing costs paid

(3)

(4)

(13)

(27)

Income taxes paid

(25)

(23)

(64)

(51)

Net cash provided by (used for) operating activities

53

240

265

532

Net capital expenditures:

(8)

(26)

(44)

(47)

• Additions of intangible assets

(6)

(10)

(22)

(23)

• Capital expenditures on property, plant and equipment

(12)

(17)

(35)

(45)

• Proceeds from disposal of property, plant and equipment

11

1

13

21

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

(2)

(36)

(1)

(29)

Purchases of businesses, net of cash acquired

(4)

(11)

(24)

(1,285)

Cash flows from investing activities

Proceeds from sale of businesses, net of cash disposed of

—

—

5

2

Net cash provided by (used for) investing activities

(14)

(73)

(64)

(1,360)

Dividend paid

(1)

—

(165)

—

Proceeds from issuance of debt

11

1

12

3,737

Repayment of debt

(41)

(369)

(96)

(2,898)Cash flows from financing activities

12
3

Purchase of treasury shares

—

(32)

(6)

(38)

Net cash provided by (used for) financing activities

(32)

(400)

(255)

801

Net cash flows

7

(233)

(54)

(28)

Effect of changes in exchange rates on cash and cash equivalents and bank overdrafts

12

(28)

21

(56)

Cash and cash equivalents and bank overdrafts at the beginning of the period2

612

1,016

664

840

Cash and cash equivalents and bank overdrafts at the end of the period3

631

756

631

756

Certain reclassifications have been made to prior year figures to conform with current year presentation. Refer to our Annual Report 2019 for further details of
the reclassifications. These reclassifications did not impact net cash flows, or total cash flows from operating, investing and financing activities.
For Q3 2020 and Q3 2019, included bank overdrafts of EUR 10 million and EUR 9 million, respectively. For January to September of 2020 and 2019, included bankoverdrafts of EUR 7 million and EUR 12 million, respectively.
Included bank overdrafts of EUR 6 million and EUR 7 million as at September 30, 2020 and 2019, respectively.

Amounts may not add up due to rounding.

14

Appendix B - Reconciliation of non-IFRS financial measures
Change in reporting segments
As indicated in the Important Information section, Signify changed its segment reporting. The main change
relates to combining BG LED and BG Home into division Digital Products. The comparatives 2019 in below
tables have been updated to reflect the updated segment structure.
Sales growth composition per business in %Comparable
growth2020 vs 2019
Digital Solutions
Digital Products
Conventional Products
Total(11.2)(2.0)(11.0)(8.3)

Comparable
growth2020 vs 2019
Digital Solutions
Digital Products
Conventional Products
Total(16.0)(12.6)(18.1)(15.3)

Third quarter
Currency
Consolidation andeffectsother changes
(3.4)
(3.9)
(3.8)
(3.6)

Nominalgrowth

45.8
7.8
(0.3)
24.0

31.2
1.9
(15.0)
12.1

January to September
Currency
Consolidation andeffectsother changes

Nominalgrowth

(1.1)
(1.4)
(1.1)
(1.2)

38.2
7.8
(0.2)
19.3

21.1
(6.2)
(19.4)
2.8

Third quarter
Currency
Consolidation andeffectsother changes

NominalgrowthSales growth composition per market in %Comparable
growth2020 vs 2019
EuropeAmericasRest of the World
Global businesses
Total

(3.8)
(13.2)
(8.2)
1.7
(8.3)
Comparable
growth2020 vs 2019
EuropeAmericasRest of the World
Global businesses
Total

(8.8)
(17.6)(20.7)(9.9)(15.3)In 2020 Americas include Cooper Lighting and Global businesses include Klite
Amounts may not add up due to rounding.

(1.2)
(4.7)
(5.1)
(2.8)
(3.6)

(0.4)
70.0
0.1
57.2
24.0

(5.3)
52.1
(13.2)
56.2
12.1

January to September
Currency
Consolidation andeffectsother changes

Nominalgrowth

(0.7)
(1.2)
(1.9)
(1.3)
(1.2)

(0.3)
54.6
0.1
58.5
19.3

(9.8)
35.7
(22.5)
47.3
2.8

15

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

1

1

Signify

DigitalSolutions

Digital Conventional
Products
Products

Third quarter 2020
Adjusted EBITA
Restructuring
Acquisition-related charges
Incidental items
EBITA
Amortization1
Income from operations (or EBIT)

199
(25)
(14)
1
161
(31)
131

107
(14)
(15)
(1)
78
(28)
50

76
(3)
1
—
73
(2)
71

42
(8)
—
1
35
—
35

(26)
—
—
—
(25)
0
(26)

Third quarter 2019
Adjusted EBITA
Restructuring
Acquisition-related charges
Incidental items
EBITA
Amortization1
Income from operations (or EBIT)

169
(24)
(1)
(6)
138
(25)
114

86
(1)
—
1
86
(22)
63

53
(13)
(1)
(5)
35
(2)
33

53
(8)
—
(5)
41
—
41

(23)
(2)
—
3
(23)
(1)
(23)

Digital Conventional
Products
Products

Other

Other

Amortization and impairments of acquisition related intangible assets and goodwill.

Signify

DigitalSolutionsJanuary to September 2020
Adjusted EBITA
Restructuring
Acquisition-related charges
Incidental items
EBITA
Amortization1
Income from operations (or EBIT)

444
(40)
(47)
(7)
351
(90)
261

225
(19)
(46)
(5)
155
(83)
72

167
(7)
(1)
(4)
154
(6)
149

124
(10)
—
5
119
—
119

(72)
(4)
—
(2)
(78)
(1)
(79)

January to September 2019
Adjusted EBITA
Restructuring
Acquisition-related charges
Incidental items
EBITA
Amortization1
Income from operations (or EBIT)

416
(57)
(2)
(21)
336
(73)
263

174
(16)
(1)
(5)
151
(67)
84

145
(16)
(1)
(10)
118
(4)
114

172
(13)
—
(7)
152
—
151

(74)
(12)
—
1
(85)
(2)
(86)

Amortization and impairments of acquisition related intangible assets and goodwill.

Amounts may not add up due to rounding.

16

Third quarter 2020 Income from operations to Adjusted EBITA in millions of EUR

Reported Restructuring
Third quarter 2020
Sales
Cost of sales
Gross margin
Selling, general and administrative
expenses
Research and development expenses
Indirect costs1
Impairment of goodwill
Other business income
Other business expenses
Income from operations
Amortization
Income from operations excluding
amortization (EBITA)
Third quarter 2019
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)
1
2

Acquisition
relatedcharges

Incidental
items2Adjusted

1,728(1,060)
668

—
20
20

—
3
3

—
(1)
(1)

1,728
(1,039)
689

(458)
(80)
(538)
—
4
(2)
131
(31)

2
3
5
—
—
—
25
—

12
—
12
—
(1)
—
14
—

1
—
1
—
(1)
1
(1)
—

(443)
(77)
(520)
—
1
(1)
168
(31)

161

25

14

(1)

199

1,542
(967)
575

—
8
8

—
—
—

—
2
2

1,542
(957)
585

(406)
(68)
(474)
—
15
(2)
114
(25)

13
2
16
—
—
—
24
—

1
—
1
—
—
—
1
—

15
—
15
—
(11)
1
6
—

(377)
(65)
(442)
—
3
(2)
144
(25)

138

24

1

6

169

Adj. indirect costs included a positive currency impact of EUR 12 million and changes in scope of EUR 112 million in Q3 20. Adjusting for the currency andchanges in scope, indirect costs reduced by EUR 22 million on a comparable basis.
Incidental items are non-recurring by nature and relate to separation, company name change, transformation, environmental provision for inactive sites
and discounting effect of long-term provisions.

Amounts may not add up due to rounding.

17January to September 2020 Income from operations to Adjusted EBITA in millions of EUR

Reported Restructuring
January to September 2020
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)
January to September 2019
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)
2

Acquisition
relatedcharges

Incidental
items2Adjusted

4,624(2,855)
1,768

—
22
22

—
17
17

—
(6)
(6)

4,624
(2,823)
1,801(1,296)(216)(1,512)
—
9
(5)
261
(90)

13
4
17
—
—
—
40
—

31
—
31
—
(1)
—
47
—

15
—
15
—
(1)
—
7
—

(1,237)(211)(1,448)
—
7
(5)
354
(90)

351

40

47

7

444

4,497
(2,819)
1,678

—
19
19

—
—
—

—
2
2

4,497
(2,798)
1,699(1,219)(207)(1,426)
—
18
(7)
263
(73)

32
6
38
—
—
—
57
—

2
—
2
—
—
—
2
—

30
—
30
—
(12)
1
21
—

(1,155)(201)(1,356)
—
6
(6)
343
(73)

336

57

2

21

416

Incidental items are non-recurring by nature and relate to separation, company name change, transformation, environmental provision for inactive sites anddiscounting effect of long-term provisions.

Amounts may not add up due to rounding.

18

Appendix C – Financial glossary
Acquisition-related charges
Costs that are directly triggered by the acquisitionof a company, such as transaction costs, purchaseaccounting related costs and integration-related
expenses
Adjusted EBITAEBITA excluding restructuring costs, acquisitionrelated charges and other incidental charges
Adjusted EBITA margin
Adjusted EBITA divided by sales to third parties(excluding intersegment)
Adjusted gross margin
Gross margin, excluding restructuring costs,
acquisition-related charges and other incidental
items attributable to cost of sales
Adjusted indirect costs
Indirect costs, excluding restructuring costs,
acquisition-related charges and other incidental
items attributable to indirect costs
Adjusted R&D expenses
Research and development expenses, excluding
restructuring costs, acquisition-related charges
and other incidental items attributable to researchand 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 theeffects 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
Effects of changes in consolidation and otherchangesIn 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
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
Incidental charges
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
Indirect costs
The sum of selling, general and administrative
expenses and R&D expenses
Net capital expenditures
Additions of intangible assets, capital expenditureson property, plant and equipment and proceedsfrom disposal of property, plant and equipment
Net debt
Short-term debt, long-term debt minus cash andcash equivalents

19

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 therealignment 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