Signify Nv · EURONEXT:LIGHT
Signify Nv — Philips Lighting — Shareholder Meeting (May 2017)
40 slides from Signify Nv's shareholder meeting presentation, May 9, 2017
Slide 1: Annual General Meeting of Shareholders
Annual General Meeting of Shareholders May 9, 2017
Slide 2: 1. Presentation by CEO Eric Rondolat
1. Presentation by CEO Eric Rondolat
Slide 3: Amsterdam
AMSTERDAM fi
Slide 4: Full Year 2016
Full Year 2016 Continued progression to achieve strategic goals and medium term financial objectives • Increase in Net Promoter Scores for both customers and employees • Significant increase in profitability, margin improved 180 basis points • Solid free cash flow of EUR 418 million • Comparable sal
Slide 5: First Quarter 2017
First Quarter 2017 Good start to the year • Continued improvement in profitability, margin improved 130 basis points • Free cash flow improved from EUR -78 million to EUR 2 million • Comparable sales declined 0.8%, further improvement of the trend vs 2016 5 LED SceneSwitch
Slide 6: Outlook 2017
Outlook 2017 • Further improvement of operating profit margin: approximately 50-100 basis points • In line with medium term outlook to gradually improve the operating profit margin to 11-13% • Committed to continue delivering solid free cash flow • Ambition to return to positive comparable sales gro
Slide 7: Philips Lighting is leading the industry worldwide
Philips Lighting is leading the industry worldwide Light sources Luminaires Systems and Services Dubai Lamp Smart Volume pendant Allianz Arena, Munich €7.1 34,000 4.9% #1 Conventional #1 LED #1 Connected billion sales people employed of sales superior lighting 61% of lighting lighting systems & in 2
Slide 8: Our industry is transforming fast
Our industry is transforming fast This creates new opportunities • Three Mega Trends: – The world needs more light – The world needs energy-efficient light – The world needs digital (connected) light 8 ’Roadmap Urban Lighting’, Eindhoven
Slide 9: Sound progress made on our strategic priorities in 2016
Sound progress made on our strategic priorities in 2016 Strategic priorities Proof points in 2016 Optimize cash from conventional products to fund our growth Free cash flow as % of sales for Lamps improved by 12% Innovate in LED products commercially and technologically to LED lighting share increas
Slide 10: Innovation is at the heart of our business
Innovation is at the heart of our business 10 • Legacy of more than 125 years of meeting customers needs • 4.9% of sales invested in R&D • More than 16,000 patents, 1,000 start-up and technical partners • State of the art labs in Eindhoven, Boston and Shanghai
Slide 11: Significant progress in employee engagement; redefined purpose and values
Significant progress in employee engagement Redefined purpose and values • Strongest evolution ever in 2016 of employee Net Promoter Score Our purpose – Participation levels above 75% Unlock the extraordinary potential of light for – Overall NPS score of eight, exceeding target by 60% brighter lives
Slide 12: Our 2020 sustainability commitments
Our 2020 sustainability commitments Sustainable revenues 2016 result • 80% sustainable revenues • 78% • 2 billion LED lamps by 2020 • 628 million since 2015 Sustainable operations 100% carbon neutral • Net 406 kt CO2, down 39% 100% renewable electricity Zero waste to landfill in our operations • 26%
Slide 13: Generations of leaders have created a strong company
Generations of leaders have created a strong company 13
Slide 14: Unlock the extraordinary potential of lighting
Unlock the extraordinary potential of lighting… For Brighter Lives and a Better World.
Slide 15: 2. Implementation of the remuneration policy in 2016
2. Implementation of the remuneration policy in 2016
Slide 16: Remuneration 2016
Remuneration 2016 Base Salary Annual Incentive Long Term Incentive 2016 (% of Base Salary) (% of Base Salary) (1) Min. Target Max. Rondolat € 850,000 0 80 160 100 Rougeot € 550,000 0 60 120 80 Van Schooten € 525,000 0 60 120 80 (1) Shares are granted conditionally and governed by the Royal Philips L
Slide 17: Annual Incentive Realization 2016
Annual Incentive Realization 2016 Remuneration Policy Implementation of Policy % of Base Salary Pay-out Realization % of Base Salary (1) % of Target Rondolat 0 – 80 - 160 114.6 151 Rougeot 0 – 60 – 120 78.6 131 Van Schooten 0 – 60 – 120 99.8 179 (1) Calculation Rondolat: pro rated, different on-targ
Slide 18: 3. Explanation of the policy on additions to reserves and dividends
3. Explanation of the policy on additions to reserves and dividends
Slide 19: Capital structure
Capital structure Characteristics at the end of 2016 Net debt development since IPO (in EURm) • Total cash of EUR 1,040 million 950 • Debt of EUR 740 million and USD 500 million 795 as per IPO financing with 5 year maturity and 614 including financial covenants 341 • Total net debt position of EUR 3
Slide 20: Capital allocation
Capital allocation Cash available Cash uses • Free cash flow generation • Annual regular cash dividend within 40-50% of continuing net income* • Financial ratios to maintain a financing • Additional capital return to shareholders structure compatible with an investment- grade profile • Non-organic o
Slide 21: Attractive shareholder return
Attractive shareholder return 2016 dividend EUR 1.10; return additional capital up to EUR 300 million over the period 2017-2018 Dividend 2016 (in EUR m) Additional capital return FY 2016 • Up to EUR 300m over the period 2017-2018 by Net income attributable to shareholders 189 participating in share
Slide 22: 4. Financial statements 2016
4. Financial statements 2016
Slide 23: 5. Dividend
5. Dividend Lighting
Slide 24: 6. Discharge members of the Board of Management and the Supervisory Board
6. Discharge members of the Board of Management and the Supervisory Board
Slide 25: 7. Composition of the Board of Management
7. Composition of the Board of Management
Slide 26: 8. Composition of the Supervisory Board
8. Composition of the Supervisory Board
Slide 27: 9. Remuneration of the Board of Management
9. Remuneration of the Board of Management
Slide 28: 9. Remuneration of the Board of Management
9. Remuneration of the Board of Management • (a) Annual Incentive Plan
Slide 29: Proposed changes Annual Incentive Plan
Proposed changes Annual Incentive Plan Changes vs 2016 submitted for approval to the shareholders at the 2017 AGM Annual incentive level: • CEO: at target annual incentive of 80% of his base salary • Other Board of Management members: at target annual incentive of 60% of their base salary Annual cho
Slide 30: Annual Incentive Plan 2017 Components
Annual Incentive Plan 2017 Components The Annual Incentive Plan 2017 consists of two major components 1 CSG% - Comparable Sales Growth Financial Component Three performance Adj. EBITA% - Adjusted Earnings Before Interest & Tax measures (80%) FCF - Free Cash Flow 2 Personal Component As agreed with a
Slide 31: 9. Remuneration of the Board of Management
9. Remuneration of the Board of Management • (b) Long-term Incentive Plan
Slide 32: Philips Lighting Long-term Incentive Plan
Philips Lighting Long-term Incentive Plan Level/Design/Performance Measures Long-term incentive grant levels (at target): Distribution • CEO: 100% of his base salary • Other Board of Management members: 80% of their base salary Performance measures Vehicles: Performance Shares only Performance Measu
Slide 33: Philips Lighting Long-term Incentive Plan
Philips Lighting Long-term Incentive Plan Relative Total Shareholder Return TSR peer group Vesting % TSR performance 200% Median 150% 100% 50% 0% 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Philips Lighting Substitute peer group 33
Slide 34: Philips Lighting Long-term Incentive Plan
Philips Lighting Long-term Incentive Plan Sustainability SMART and linked to strategy and business goals of Philips Lighting • Including Sustainability in the LTI plan design underpins the Philips Lighting strategy • Annual targets (2017-2020) are defined in our Brighter Lives, Better World program
Slide 35: 9. Remuneration of the Board of Management
9. Remuneration of the Board of Management
Slide 36: 10. Authorizations of the Board of Management to issue shares
10. Authorizations of the Board of Management to (a) issue shares or grant rights to acquire shares, and (b) restrict or exclude pre-emptive rights
Slide 37: 11. Authorization of the Board of Management to acquire shares
11. Authorization of the Board of Management to acquire shares in the company
Slide 38: 12. Cancellation of shares
12. Cancellation of shares Lighting
Slide 39: 13. Any other business
13. Any other business Lighting
Slide 40: Philips Lighting
PHILIPS Lighting