Signify N.V. (LIGHT) Earnings Call Transcript & Summary

[Interpreted] Ladies and gentlemen, welcome. Due to the coronavirus, we decided to admit our shareholders only virtually, and we're taking advantage of the temporary legal measures that came into effect last year. We're extremely sorry that we're unable to welcome you in person in this meeting. But we do look forward to welcome you again at the next general meeting whenever circumstances permit. Given the current circumstances, we're in Eindhoven today, with only a limited number of people sitting next to me, 2 members of the Executive Board, our CEO, Eric Rondolat, and our CFO, Javier Van Engelen. On this side, the Chair of our Remuneration Committee, Mr. Gerard van de Aast. The other members of the Supervisory Board as well as of the Board will follow the meeting, just like you do via the webcast. Also present, our company Secretary and Secretary of this meeting, Michiel Thierry, as well as notary, Martin van Olffen, of De Brauw. Oscar Jonker is also present on behalf of the company's external auditor, Ernst & Young. So before I give Eric the floor for his speech, I would like to make a few comments about the practicalities of this meeting. We ask our shareholders to send in questions beforehand, and we will share them with you at the relevant agenda items. Those who registered prior to the meeting can also ask questions during the meeting. This happens via the chat and can be done at any time during the meeting. We will address the live incoming questions with the relevant agenda items. We do aim to answer all live questions today. I would like to note that as in non-virtual meetings, there may come a time when I feel compelled to maximize or limit the number of questions. With that in mind, I would like to ask you to ask your most pertinent questions first. We have received the preliminary questions in English. We would also like to answer them in English. For the live questions via the chat, we would like to ask you to pose them in English so that we have all questions and answers in English. The language of the general meeting is Dutch. Via the webcast, you can follow this meeting in English as well. You can also choose to follow in the spoken language, which means that you can hear Dutch when Dutch is spoken and English when English is spoken. The report of the meeting shall be in English. We will use an audio tape of this meeting for its preparation. I hereby open the general meeting of shareholders of Signify N.V. And I would like to invite Eric Rondolat to give his speech. He will hold it in English. Eric?

Thank you, Arthur. Good days, ladies and gentlemen. I propose that we start by looking back on 2020 to see the progress we made in improving our business, developing new innovations and in making our company even more sustainable. Overall, 2020 was a year of improving and building a sustainable future in a year of unprecedented challenges. We increased our LED-based sales to 80% and increased our installed base of connected light points to 77 million. Our top line declined by 12.7% on a comparable basis. We lowered our indirect cost base by EUR 166 million as a result of continued rigorous implementation of cost-reduction initiatives, thus improving our operational profitability to 10.7%. And we had a free cash flow of EUR 817 million, the highest level since our IPO. The integration of Cooper Lighting Solutions and Klite as well as the deliveries of synergies are ahead of plan, positively impacting our performance. We also scored very high on our 2020 sustainability targets. Indeed, we overachieved the goals of our Brighter Lives, Better World 2020 program. We achieved 84% of sustainable revenues. We also reached the milestone of having delivered 2.9 billion LED lamps and luminaires since 2015. And perhaps the biggest highlight was in September 2020 when we achieved carbon neutrality for all our operations and the use of 100% of renewable electricity. And by the end of the year, all our sites were sending 0 waste to landfill. We also had our best-ever safety performance, reducing incidents by 67% over 5 years and hit 99% sustainability performance in our supply chain. Our 2020 sustainability results have also been recognized externally, notably in the electrical components and equipment category of the Dow Jones Sustainability Index, where we have been in the top 3 for 4 consecutive years since our IPO, and even named Industry Leader in 2017, '18 and '19. We have also been on the A-list of the Carbon Disclosure Project ever since our IPO in 2016. Now let's have a deeper look at the execution of our 5 Frontiers Strategy. We are committed to building a truly customer-centric organization. In 2020, our customer Net Promoter Score improved by 9 points to 41. We also implemented a new operating model that is enhancing customer centricity. Customers are increasingly looking for brands and products that meet their needs and identity. That's why we are developing tiered offerings with multiple distinctive brands to cater for different customer segments. In 2020, we saw our B brand and private label sales increased by over 20%, and we invested 4.4% of our sales in R&D, underlining our commitment to continuously develop new and differentiated offerings. We are driving 5 sustainable growth areas to help address the world's greatest challenges, namely climate action, circular economy, food availability, safety and security, and health and well-being. As we drive growth for sustainability, last year sales of our connected lighting products increased by 38%. And revenues from agriculture, solar, UVC and 3D printing, collectively named our growth platforms, increased by almost 15% to approximately EUR 250 million. We are creating digital front and back end, embedding artificial intelligence in products and systems and boosting our digital competencies. Our efforts to digitalize and transform for the future are also bearing fruits as direct online sales to consumers have doubled. We are further investing in our people, creating a diverse and inclusive workplace and reskilling and upskilling to enhance our digital and commercial competencies. In 2020, our employee Net Promoter Score improved to 29, showing results of our efforts to be a great place to work. Let me now describe our overall positioning at the end of 2020. We are the world leader in conventional LED and connected lighting. By providing light sources, luminaire systems and services, we occupy a unique position on the value chain in the lighting industry. We achieved EUR 6.5 billion of sales in 2020 and employ 37,000 people in 74 countries. Last year, as part of our Brighter Lives, Better World 2020 program, we achieved 100% carbon neutrality in our operations worldwide. And while we have successfully closed off our Brighter Lives, Better World program 2020, we embark on a new 5-year journey to double our positive impact on the environment and society. Our Brighter Lives, Better World 2025 program sets even more ambitious commitments. We use the UN Sustainable Development Goals as our strategic compass and have identified 4 key metrics to measure our success. As part of our commitment to climate action and affordable and clean energy, we will go beyond carbon neutrality and double the pace to the Paris Agreement 1.5-degree scenario over our value chain. We will reach the 2031 pathway in 2025 by increasing the energy efficiency of our portfolio to reduce the emissions of our customers and by driving carbon reductions at our suppliers. We are committed to responsible consumption and production with products that can be reprinted, refurbished, reused or recycled. This will help us to achieve our goal of doubling our revenues from circular products, systems and services to 32% of our revenues. We are also committed to supporting good health and well-being and sustainable cities and communities. We will double the percentage of our revenues for Brighter Lives, which includes revenues from lighting innovation, which increase food availability, safety and security or health and well-being to 32% of our total revenues. We are committed to decent work and economic growth. We will strengthen our commitment to diversity and inclusion and aim to double the percentage of women in leadership in our business to 34%. In 2012, we generated just 22% of our sales through LED-based activities. And by the end of 2020, we had increased this to 80%, with a growing number of those being connected light points. This shows the major transition of our company. At the same time, we improved our adjusted EBITA margin by 600 basis point to 10.7% in 2020, showing consistent year-on-year improvements while transforming Signify. Let me now take you through our performance in the first 3 months of the year. Our Q1 results demonstrate the execution of our strategy as we report growth driven by our connected businesses and growth platforms. We increased the installed base of connected light points by another 6 million to 83 million. The adaptive measure we already took in 2020, combined with continued pricing discipline, cost and working capital management resulted in an improvement in the adjusted EBITA margin of 290 basis points to 10.8% and an increase in free cash flow to EUR 168 million. And in the first quarter, we also started to make our first progress towards doubling our positive impact on the environment and society. Now let's move to the 2021 outlook. Following the operational performance in the first quarter and based on current visibility, we now anticipate a comparable sales growth of 3% to 6% and an adjusted EBITA margin of 11.5% to 12.5%. We continue to expect free cash flow to exceed 8% of sales for the full year of 2021. We have refinanced EUR 350 million of our long-term debt with short-term loans with a maturity of December 2021. This shows that we are fully committed to reducing our debt by at least EUR 350 million by year-end. I would like now to show that Signify growth is linked to sustainability and to some of the world's greatest challenges, namely climate action, circular economy, food availability, safety and security, and health and well being. Looking at professional lighting systems, we have now more than 2,500 Interact City projects in more than 58 countries since 2012. When it comes to consumer lighting systems, we introduced 29 new Hue products and more than 100 WiZ products in 2020, further strengthening our position in smart home lighting. In agriculture, we have now sold our horticulture lighting solutions to more than 1,000 growers around the globe and to an increasing number of vertical farmers. So far, we have sold more than 2 million solar products around the globe. We believe that this business will only grow in relevance in the years to come. Addressing the needs of a circular economy, we have 3D printed more than 0.75 million luminaires and we are increasing our geographical footprint in 5 new production locations. Leveraging more than 35 years of expertise in UVC lighting, we launched in 2020 a broad range of UVC disinfection products for professionals and consumers, addressing the growing need for the disinfection of air, surfaces and objects. This in addition to increasing our production capacity of UVC light sources tenfold. This is how Signify has and will continue to making our planet more sustainable while also thriving as a company. Before I close, I want to draw your attention to the great work done by the Signify Foundation, which exists to enable access to the benefits of sustainable lighting solutions to underserved communities. The foundation is an independent NGO funded by Signify. In 2020, it's celebrated a fulfilled commitment to enable access to sustainable lighting technology for 6 million people globally. I'm enormously proud of the work done by everyone involved to reach this great milestone. The foundation also develops the competencies of local lighting entrepreneurs to enable community development. Since inception, the foundation has supported more than 9,200 entrepreneurs. Finally, the foundation provides humanitarian lighting to increase safety and security for vulnerable communities. In support of global COVID-19 relief efforts, the Signify Foundation responded quickly by providing lighting and UVC disinfection solutions to more than 590 health centers worldwide. This again underscores our commitment to unlocking the extraordinary potential of light for brighter Lives and a better world. In closing, I extend my thanks on behalf of the Board of Management and the leadership team to all our employees for their commitment and dedication, especially in these extraordinary times. We also want to thank our customers for their continued trust. And finally, we thank our shareholders for the confidence and support they've demonstrated in the execution of our strategy, especially as we navigate this unprecedented pandemic. As we move on, our 5 Frontiers Strategy will help accelerate the new technological leap towards greater connectivity. And by keeping sustainability at the heart of what we do, we are well placed to achieve multidimensional growth and strengthen our position as the world leader in the lighting industry. Thank you.

Thank you, Eric. [Interpreted] Thank you, Eric. Understandably, Eric Rondolat's speech closely relates to the agenda items concerning the remuneration report for 2020, the financial statements and the dividend policy. I therefore suggest addressing these topics jointly and hearing the explanatory notes about these items. First, and agenda item 4, following the explanation of the audit by auditor Ernst & Young, we will address agenda items 1 through 6, and we'll then proceed with the voting results on these agenda items. Now agenda item 2, the remuneration report for 2020. As in previous years, this report has been included in the annual report as a separate chapter. The report addresses the remuneration policy for the Board of Management and the Supervisory Board and its execution in 2020. I'm pleased to give the floor Gerard van de Aast, the Chair of the Remuneration Committee, and he will discuss some of the highlights of the remuneration report from 2020 with you. Gerard?

[Interpreted] Thank you very much, Arthur. Good afternoon, ladies and gentlemen. In 2020, we introduced a new remuneration policy for the Board of Management. And for 2020, we are not proposing any changes to our remuneration policy nor are we suggesting any additions. I would, therefore, like to focus on the 2020 remuneration report and the implementation of that policy during the year. And over the past year, we spoke with multiple stakeholders about remuneration in general and remuneration during the COVID-19 crisis in particular and have also requested feedback regarding our remuneration report. We had very valuable discussions with several stakeholders and the Dutch Works Council about compensation for executives, in general, and specifically about our remuneration report. In response to the feedback, we made various changes to our report, and we trust that you will find these changes positive, and we'll appreciate the underlying intent of transparency and continuous improvement. I would like to personally thank those we spoke with for the highly constructive discussions. Now on to the next slide. This table reveals the remuneration of the Board of Management in keeping with our remuneration policy, salaries and targets for annual and long-term bonuses. For 2020 in keeping with what applies for employees in the Netherlands, base salaries were increased by 2.5% in January 2020 and by 1% in October 2020. The Board of Management decided voluntarily to reduce their base salary by 20% in Q2 of 2020 in response to the COVID crisis that was emerging at the time. We also welcomed 2 new members to the Board of Management, Javier van Engelen and Maria Letizia Mariani. Now on to the next slide, just to refresh our memory. This slide describes the structure of the annual bonus and the long-term bonus as embedded in our policy. For the 2020 annual bonus plan, we selected comparable sales growth, adjusted EBITDA and free cash flow as our financial performance targets. In previous years, they were the same targets. In addition, 20% of the annual bonus for the Board of Management is determined by individual and team objectives. For 2020, these objectives included customer and employee Net Promoter Scores, operational efficiency, revenue growth for new growth engines and progress in integrating the acquired companies, Cooper Lighting Solutions and Klite. Over the course of 2020, when the potential impact of COVID-19 and its magnitude became clearer, understandably mitigating the impact on the business and the safety of our employees as a result of that pandemic became an important team goal. The long-term bonus plan has 4 performance objectives: relative TSR, total shareholder return; free cash flow; sustainability; and return on capital employed. Now next slide details the results obtained in the annual incentive plan. The targets for this incentive plan was set in early January 2020 and applied for the entire year. Relative to the targets set in early 2020, performance was good despite the impact of COVID-19. As discussed by Eric, Signify experienced a decline in demand, which impacted our overall revenue growth. By contrast, the Board of Manager managed the company's profitability and free cash flow very well in 2020. As a result, on both financial targets, the realization was below the annual incentive plan. And in the case of free cash flow, realization reached maximum. This concern the company's performance in relation to the targets set at the beginning of the year. And in 2020, these targets were not changed as a consequence of the impact of COVID-19. In addition, please note that the Supervisory Board did not apply any discretion to the results achieved or to the corresponding payouts. As far as individual and team goals were concerned, the Supervisory Board assesses at the end of the year, measured against the goal set for that year. We determined that the year was excellent, and the performance was outstanding, given the headwinds that the company faced from the end of Q1 and were managed successfully throughout the rest of the year. Now zooming in on individual and team achievements, we see the following. First, progress and realized synergies from the integration of Cooper Lighting Solutions and Klite worked very well. Our acquisition of Cooper Lighting boosted our position in the attractive North American lighting market. Synergies created by Cooper and Klite bring actual value and business transfer ahead of schedule. Cash and profit targets achieved for Cooper Lighting, while Klite revenue impact also exceeded targets. Now onto another target, the Net Promoter Scores. Customer Net Promoter Score, as in customer first, continued its upward trend, rising 9 points with respect to 2019. Employee Net Promoter Score, as in great place to work, reached a record high of 29 at the end of 2020, reflecting a significant increase. Now as for operational efficiency, achievement of procurement savings were above target, as was improvement in manufacturing base costs. Finally, which is also important, how did we manage COVID-19? Resolute action was taken to mitigate the impact on the company. Overall revenue growth slowed, admittedly, but the Board of Management managed to capitalize on new opportunities that emerged such as reinforced traction in UVC lighting portfolio products as well as strong performance in online sales. Profitability improved as did free cash flow as a percentage of sales despite the impact on our industry and the decrease in demand due to the pandemic. The Supervisory Board has assessed the performance of the Board of Management against individual and team objectives. Given what I have just outlined, the Supervisory Board was very pleased with the achievements when measured against those objectives despite the turbulence during the year and a business environment in general that we all experienced directly. And we particularly appreciate the excellent leadership of the company during the pandemic with well-managed profitability and excellent cash flow results and our people were safe and sound. Given that assessment, the performance achieved on these targets reached 150%. For Javier van Engelen, who joined us over the course of the year, the realized performance on these objectives was 100% for his positive impact in a brief time frame on these results. The final result across all objectives combined was less than target, but the performance ultimately achieved was 87%, and that's cause for satisfaction nonetheless. Now on to the next slide. And that concerns the long-term incentive as allocated in 2018. The long-term incentive allocated in 2018 has a period from the beginning of 2018 to the end of 2020. This award vested earlier this month. At the end of the period, performance was assessed against the targets set at the beginning of 2018. As with the annual bonus plan, please note that no changes were made to the targets as a result of the COVID-19 impact. In addition, the Supervisory Board did not apply any discretion to the results achieved or to the related payouts on these targets. Despite the challenges as a result of the pandemic we faced in 2020, the performance result for that 3-year period is as follows. Relative total shareholder return, the total shareholder return achieved by Signify over this period was 19.5%. Signify thereby ranked seventh out of the 15 companies in the peer group. The ultimate achievement of this performance target was 120%. Please note, nonetheless, that according to the new plan as adopted last year, ranking 7th out of 15 would have led to a considerably lower payout, but this is the plan as we had formulated it previously. Over the 3-year period, an amount of over EUR 1.5 billion in free cash flow was generated, excluding pension risk reduction and IFRS 16 impact. This represents 8.1% of revenue. The final realization on these targets equaled 200%. Now sustainability. Earlier, Rondolat described in detail how that program progressed. And as detailed in our annual report, the sustainability component comprises a range of targets. As announced, in September 2020, we became CO2 neutral. There was no more waste to landfill and the sustainability revenue increased and exceeded target. LED lamps and luminaires delivered a total of EUR 2.9 billion, 46%, above the target for 2020. A safe and healthy workplace is also a critical component in this program, and you already heard from Eric that the result is the best in 5 years with the reduction of incidents by 67%. And understandably, the final realization of this section in the long-term incentive plan equaled to 200%. The final total realization for 2020 -- for the 2018 long-term bonus thereby equals 168%. Now on to the next slide, which is the remuneration of the Supervisory Board. You see that here in detail. Please note also that the Supervisory Board Members also voluntarily chose to reduce their fees for Q2 by 20% in keeping with the other measures taken for other stakeholders in Signify. As you heard, the Board of Management did this as well. We had some changes in the Supervisory Board as well. And we welcomed Pamela Knapp and Frank Lubnau to the Supervisory Board. Next slide, please. And that's the remuneration of the Board of Management in 2021. For 2021, base salaries were adjusted by 2% in keeping with the budgets for collective and performance increases as determined for the CLA population in the Netherlands. In addition, Maria Letizia Mariani's salary was increased to align it with the CFO's salary and to reflect her vast range of responsibilities. The bonuses depicted on the screen for this slide concern the target levels. So this reveals for each member of the Board of Management what the direct remuneration will be for performance at target. Thank you very much. I'm pleased to hand you back to the chair.

[Interpreted] Thank you, Gerard. As I said, we will discuss the questions about this topic, agenda item 4. Now we will continue with agenda item 3, and I'm pleased to give the floor to our CFO, Javier Van Engelen, to elaborate on the reservation and dividend policy, and he will also discuss both dividend proposals as included in the agenda. Javier, could you please elaborate on these topics?

[Interpreted] Thank you, Arthur. Ladies and gentlemen, first, I'd like to tell you that Signify will continue to maintain strict financial discipline in generating and using cash. As part of our capital allocation policy, we continue to focus on generating free cash flows, maintaining a robust capital structure and prioritizing the deleveraging of debt to support and maintain investment-grade credit rating. When using cash and cash equivalents, we will prioritize reducing our debt. Our objective is to achieve a leverage ratio of less than 1x our net debt-to-EBITDA by the end of 2022. This is clear from the repayment of EUR 350 million of our outstanding debt on term loans in 2020 and the announcement of our commitment to repay at least EUR 350 million in 2021 as well. We will continue to invest in research and development, and we'll try to see selective mergers and acquisition opportunities in line with our strategic priorities. Our dividend policy is to pay an increasing annual dividend per share in cash each year. We propose a dividend of EUR 1.40 per share for 2020, plus an extraordinary dividend of EUR 1.35 per share, both payable in cash in 2021. The proposed extraordinary dividend of EUR 1.35 per share aligns with the dividend proposal for 2019, which was withdrawn last year to ensure the company's resilience during the COVID-19 crisis and to boost our financial position. The extraordinary dividend is in addition to the proposed regular dividend of EUR 1.40 per share of net income over the full year 2020. Now let's take a closer look at the development of the net debt position in 2020. Our net debt position increased by EUR 657 million from EUR 618 million in 2019 to EUR 1.275 billion at end 2020, due mainly to the acquisition of Cooper Lighting Solutions. After repayment of a term loan of EUR 350 million in September 2020, our gross debt position was EUR 2.377 million at end of 2020, consisting of EUR 1.275 billion of bonds with maturities to 2024 and 2027, and long-term loans comprising EUR 390 million and USD 500 million with maturities to 2023 and 2025. In March 2021, we converted EUR 350 million of the long-term loans into a short-term facility with a maturity until December 2021. And we are, therefore, fully committed to repay EUR 350 million of debt in Q4 2021. At the end of 2020, the total of cash and cash equivalents equaled EUR 1.033 billion. We generated EUR 817 million in free cash flow. In addition to our available cash resources, we can also draw on our revolving credit facility of EUR 500 million. Our net leverage ratio calculated as net debt to reported EBITDA equaled 1.7x at the end of 2020. Thank you very much for listening.

[Interpreted] Thank you, Javier. Questions about Javier's presentation will be addressed at the next agenda item. Now on to agenda item 4, the proposal to adopt the financial statements for 2020. As such, the proposed discharges in agenda item 6a and 6b will also be covered. Both dividend proposals have already been explained by Javier. First, I will make a remark about the 2020 annual report. The annual report, including the financial statements were made available at the company offices and were published in late February on the company website, comprising a report about how Signify did in the previous financial year. The entire financial report and the sustainability report have been integrated into a single report. The financial statements have been drafted based on IFRS. The financial statement in front of you now has been audited by our external auditor, Ernst & Young. On behalf of Ernst & Young, Oscar Jonker is present here, who is responsible for that audit. Mr. Jonker will deliver a brief explanation about the audit of Ernst & Young and also about these statements by Ernst & Young included in the annual report. Now I'm pleased to give the floor to Oscar Jonker.

[Interpreted] Thank you, Mr. Chairman. I'm pleased to use this opportunity at the general meeting to elaborate on our audit. As stated, I'm Oscar Jonker and I'm from Ernst & Young accountants. Since 2016, I have been the statutory auditor of Signify N.V., making this the fifth time I have the privilege of addressing you. On 25th February 2021, I issued an unqualified combined audit opinion regarding the company's financial statements and sustainability information for the financial year 2020. Now I will briefly discuss the audit we conducted and the key audit matters. The audit plan for our fifth audit year was agreed in April 2020 with the Audit Committee and management. In the audit of the financial statements, we applied a materiality of EUR 26 million based on the pretax result adjusted for nonrecurring items. Materiality is the indication of the limit of discrepancies in the figures that we estimate might influence the decisions by users. We have reported all audit differences exceeding EUR 1.2 million to the Audit Committee. As group auditors, we determine the scope of work by each group entity and instructed the local EY teams on the nature and depth of the work they were to perform. We selected 28 units in 12 countries, where our local teams conducted activities and work. We were in regular contact with these teams through telephone meetings due to the COVID-19 pandemic. After all, it was not possible to visit the teams. So we accommodated this by increasing the frequency of our contacts, including with teams that we would otherwise not have visited. For example, we attended all concluding discussions with local management, and we conducted the review of audit files entirely digitally and remotely. Stock taking in the various locations was conducted physically in most cases. The key audit matters of the audit were as follows: the revenue recognition process, especially with respect to delineating revenue; valuation of goodwill in view of the complexity and estimation elements involved and the relative size of goodwill; the measurement of deferred tax assets and liabilities, also in view of the complexity and estimation elements involved; and accounting for the acquisition of Cooper Lighting Solutions, considering the relative size of the acquisition and the complexity and estimating elements involved in the accounting; the key assurance matters specifically relating to sustainability information where the criteria used for reporting sustainable revenue and estimates and assumptions used in determining the reduction in our CO2 emissions as part of the value creation model. In our auditor statement, you can read about our audit approach with respect to each focus area with respect to these key audit matters. In reviewing the internal audit and the automated data processing, we did not make any significant findings. In our risk analysis, we take into account the risk of material misstatement due to fraud and are particularly alert to signs of fraud and follow-up on them adequately. For the audit of Signify, we used forensic accountants and auditors in risk identification and execution of the work. We reviewed the management report and concluded that it meets the requirements that were set. We were in touch with the company. Each week and each quarter, we discuss our findings with the CFO, other members of management and the audit committee. During the course of the year, we -- I spoke with the Audit Committee 6 times, so quarterly, once in December to give them an update on the status of the audit, and finally, in February to discuss the financial statements. We also met with the Audit Committee in the absence of management. During the year, we also spoke with the Audit Committee outside the regular meetings. Most contacts were digital, but wherever possible, we conducted meetings at the office. We conclude that Signify's 5th audit year has been completed successfully in connection with a mandatory rotation period of 5 years. This has been my last year as Signify's external auditor. My colleague, [ André Wijnsma ], will succeed me in my role. I hope this has provided you with more insight into our work as Signify's external auditor. And I'm handing the floor back to the Chairman.

[Interpreted] Thank you, Oscar. Ladies and gentlemen, we will now proceed to answer the questions that were submitted prior to this meeting. And we received questions from the Association of Investors for Sustainable Development, VBDO; further, Triodos Investment Management, who is also representing Eumedion in this shareholders' meeting; and the association of investors, VEB. For the discussion of these questions, I'd like to switch to English. Read the questions that we received from shareholders ahead of the meeting. Thelke, over to you.

Thank you very much, Arthur, and good afternoon, ladies and gentlemen. I will start with the questions we have received from VBDO. First of all, VBDO congratulates Signify for reaching carbon neutrality and achieving 100% renewable electricity for its operations in 2020, but remains critical on carbon offsetting projects. How does Signify ensure or inquire that its own conservation efforts and tree plantations are not leading to land grabbing and displacement of communities, human rights violations, freshwater scarcity, biodiversity loss and other negative impacts. Can Signify lead the way in transparent and comparable disclosure on the impact of its offsetting projects?

Eric, could you answer the question, please?

Yes, Arthur. So effectively, in the past 10 years from 2010 to 2020, we reduced our carbon footprint by 70%. And the selection of offsetting project is extremely important for us. So in order to do that, we use a very reputable company called South Pole to select carbon offsetting projects that are aligned with our purpose and that would deliver the social and environmental benefits that we do expect. All the projects that we select are certified by an independent standard. And we use basically 2 standards. It's either Gold or Verra. And those standards monitor and verify, ensuring carbon reduction and also ensure no negative impacts. On the other hand, we communicate about our project and the positive impacts, both on the website and also in the annual report. I would say to be brief, about 50% of our offsetting projects are going towards renewable energies; about 30%, 1/3, around protecting forest and reforestation. We do also something else. We capture benefits like biodiversity through reforestation projects, for instance, in our value creation model, which is also in our annual report.

Thank you. The second question from VBDO is the following. The CDP has recognized Signify as one of the 29 leading companies in reducing emissions and limiting climate-related risks in its supply chain. The number of Signify suppliers responding to the program is steadily increasing, which will enable Signify to lower its downstream Scope 3 emissions. How -- does Signify incentivize its suppliers to proactively initiate and develop carbon emission reduction activities? Can Signify provide more insights in this part of the strategy?

Eric, for you again.

Yes, Arthur. So we are effectively increasing efforts to reduce emission at suppliers. And as you mentioned, this is also key to lower Scope 3 emissions. So in 2020, we audited 248 risk suppliers, reaching more than 70,000 of their employees. So we are auditing our suppliers, and the initial score before audit is about 72. And at this point in time, 99% of our suppliers are reaching a score of more than 90 after audits and recommendations being implemented. So we have also put in place a program which we call Tritium, which is enabling us to select, incentivize and reward our suppliers to secure best-in-class supply chain. So suppliers are rewarded for carbon emission reduction. They get points for disclosing emissions, setting a target and also reducing the footprint.

Thank you. Signify has high-quality supplier sustainability management systems for its direct suppliers. This is shown through the 2020 supplier sustainability performance of 90%. In 2020, Signify acquired Cooper Lighting and Klite. How is Signify aiming to bring the suppliers of these recent acquisitions into its high ambition supplier program? Does Signify expect difficulties in integrating Signify sustainability ambitions at these 2 newly acquired businesses.

Eric?

So we are effectively engaging Cooper and Klite on our supplier sustainability and all the sustainability commitments, of course. So Cooper is already fully integrated in supplier sustainability as from Q1 2021. For Klite, it will take a bit longer. So 50 suppliers are shared, thus already included in the program. We will add 4 additional in '21 and 42 will be integrated in 2020.

The final question from VBDO is related to diversity and inclusion. Signify set a new target of 34% women in leadership positions by 2025 and focuses its global diversity efforts on gender and age. How is Signify employing concrete strategies towards inclusion of the following diversity groups: people of color, members of the LGBT community and people with disability? Is Signify measuring the inclusion of underrepresented groups, for example, through voluntary, anonymous or targeted portions of employee service.

Eric?

So there's a fundamental belief at Signify is that we want to be reflecting the society we live in, so we have been putting in place a global diversity, equity and inclusion board. And we have a network of 70 champions across the world. So we drive diversity and inclusion with what we call a 2-plus-1 approach. There are 2 indicators and 2 global priorities on the gender and generational diversity. And we tell our local entity to select one locally relevant topic for them. So in the U.S., for instance, it's about African heritage. In the DACH region is about disability inclusion. We also put in place something which was extremely fruitful, which is a training for the leadership about unconscious bias to raise their awareness about unconscious bias that had very positive outcome. And I would finish by saying that in the quarterly survey that we have been putting in place for many years, we have added one question about inclusion where we ask employees all over the world to rate inclusion at Signify. We have to know that, that survey is having a participation rate of above 80%. So it's quite statistical. Now we've done it only once. And in the first survey when that question was included, it received a score of 88 on the scale from 0 to 100.

Okay. Thank you, Eric. And that completes the list of questions from VBDO. Now let's take the questions from Triodos/Eumedion. Thelke?

Sure. The first question is related to remuneration. Triodos/Eumedion are pleased with how Signify has performed in 2020 and commend Signify for the improvement in the adjusted EBITDA margin and strong cash flow generation. This was not expected at the time of last year's AGM, and has resulted in the company meeting most of the objectives for the annual cash incentive. As a result, the annual cash incentive is relatively high. Partly due to this, the payout ratio has increased significantly from 47 to 63. They also note that the company is currently restructuring some parts of the organization. Triodos/Eumedion, therefore, believe some restraint with regards to the annual cash incentives could have been appropriate. What is the Supervisory Board's view on this?

I would like to give the floor to the Chairman of our Remuneration Committee, Gerard van de Aast. Gerard?

Thank you, Arthur. The question, in particular, focuses on the payout ratio, which has indeed has gone up. There are, of course, 2 elements to the payout ratio. One is the salary of the CEO and total compensation of the CEO; and secondly, the average salary paid. So let me focus in on those 2 elements. When it comes to the payout to the CEO, as I stated in my report, the base salary of the CEO in the last few years has increased in line with the central wage agreements. So the salary has not gone up more than what the salary of the general population has gone up with. The annual incentive for 2020, despite an excellent performance on managing cash and managing the COVID crisis, also came out below target. And I gave in my speech on the remuneration report, I have given quite a detailed summary of how that all was put together. Then the LTI 2018 element, which is the third component. That component was overachieved, in particular, due to an excellent performance on cash and sustainability. All numbers have not been adjusted. Targets have not reset. No discretion was applied. So the numbers came out as they are. That's one element. The second element is the average pay within the company. Due to the acquisition of Cooper and Klite, there has been a shift in where our people are located. For example, the European population, relatively speaking, has gone down from 36% to 30% with now a greater focus on lower wage countries due to those acquisitions. If then the average salary as a result of that drops, then you get to a higher payout rate. Then also a comment was made on restructuring. Restructuring in a large multinational is an ever ongoing effort. And it is, of course, done to stay fit for the future. There's always something you need to pay attention to, and Signify is no exception to that. So -- but we do that very responsibly, also with the highest respect for people and to build a better company for the future. Thank you.

The next question is again related to diversity and inclusion. Eumedion and Triodos, we're happy to see Signify achieving its 2020 diversity objectives and launching a new program for the period until 2025. On the new program specifically, they are pleased to see targets for women in leadership positions, but would encourage Signify to focus on diversity from all angles. Is signify open to the suggestion?

Eric?

Yes, Arthur. In line with the answer to the previous question from VBDO, we are very open to that suggestion. And I think we already look at diversity from many angles.

The next question is on sustainability. Royal DutchShell and Unilever have submitted their climate transition action plans for an advisory vote at their 2021 AGMs. Is Signify willing to do this in 2022.

Eric?

Yes. As you know, we're extremely committed to sustainability. We always found it a good engage with investors. And we also do this, but maybe in a different way. Given our strategic focus on climate actions and beyond, we have many ESG investors. We thus have permanent exchanges on the subjects with them. So in September 2020 when we launched our ambitious commitment to double our impact and the speed to the Paris Agreement 1.5-degree scenario, we already discussed not only with our Supervisory Board, but there was a key -- and it was a key engagement topic during our Capital Market Day. After that, we had 6 events where we could exchange with about 200 investors on the plan itself and not only explained, but also get their feedback.

Okay. Thank you.

The next question is related to audit fees. Triodos and Eumedion observed a significant 26% increase in audit fees. When reading the report of the auditor, it doesn't become clear what is driving this increase. They would, therefore, like to hear what is driving the increase of audit fees.

This one looks appropriate for Javier.

Thank you, Arthur. Correctly so, as we transparently show in the annual report, audit fees has increased from EUR 5.8 million to EUR 7.3 million. The majority of that increase is coming from audit fees relating to the consolidated financial statements. And within that, that increase is due to an expansion of the scope and additional procedures that are performed by Ernst & Young on the acquisition of Cooper, the important acquisition of Cooper and the subsequent financing transactions. So to scope enlargement and [ in turn ], inflation.

The next question is related to the Digital Committee. Eumedion/Triodos applaud the establishment of a Digital Committee and hope this is an example other companies will follow. How will this committee report to shareholders?

Thank you, Thelke. I'll take that question myself. Of course, we are pleased to hear that Triodos welcomes the establishment of the Digital Committee. We think this is an important trend indeed. Well, regarding the reporting on this, we will -- we have fulfilled our duties. We will follow a similar manner as we usually do for the other committees.

Then we get to the questions from VEB. Thelke?

Right. The first question is related to the restructuring program. Signify is eliminating 600 positions globally from its innovations group and from supporting functions, including marketing, communications and human resources. Will this decision not hamper the company's innovative strength in the long term?

Eric?

Yes. So if we take a bit of distance, our objective is to reach 25% to 29% of nonmanufacturing cost of the sales. We're above 22 days. This is why we're doing this. And it has a special focus, which is to reduce the central part of the organization. Over the 600 position mentioned, roughly 10% to 15% are in the innovation domain. And even after the suggested changes, we will still invest more in R&D than our nearest 4 competitors combined. So we're not concerned that we'll be less innovative in the future.

The next question is related to raw material costs. Signify is confident that faced with raw material inflation, it is able to keep gross margins stable by raising prices, in particular, in digital solutions. To what extent is this ability the consequence of low customer inventories and shortages, and thereby temporary?

Eric?

So in 2020, we increased the gross margin because of the situation. In 2021, we're proving that we can compensate the effect of the increase of raw material with pricing. And we believe that is a dynamic that we will be able to continue to do all year long. So clearly, what we see happening at the gross margin at this point in time is really structural.

And the next question is on component shortages. To what extent can Signify meet customer demand now that chip shortages keep getting worse? Have deliveries of computer chips by Signify been secured? And if so, how?

Eric?

So far, component shortages, we've already commented, have not resulted in cancellation of orders, mainly in delay in orders. So for example, at the end of Q1, there's EUR 15 million that we could not invoice and that have shifted into Q2. We expect an improvement in the second half of 2021, which will impact mainly our connected and professional businesses. In the short term, we have put in place an escalation mechanism, whereby our Chief Operations Officer is directly involved and he follows the availability on a daily basis of about 180 to 185 components. We also have a joint effort between supply chain and procurement task forces to drive component redesign. And last but not least, we have also long-term standing relationship with our suppliers, and we actively work with them to define short, medium and long-term integrated planning cycles together.

And now a question on UVC lighting. Signify increased its UVC lighting production capacity and expanded its UVC product portfolio. Is Signify able to meet the demand for UVC lighting? And is the company able to increase production capacity in case of higher demand?

Eric?

So we had to increase the capacity to meet last year's demand and to be up to the demand that we are seeing today. We don't see any need to increase current capacity for 2021.

The next question is the following. The global pandemic has shown that companies that have a strong digital channel are benefiting greatly from their online presence. What percentage of total sales is derived from online sales? And what, if any, consequences does this have on gross margins compared to in-store sales?

Eric?

Yes. So while we don't disclose our sales per channel, we can confirm that we have seen sales increase through our digital channels, especially in consumer. There is no difference in gross margin in e-tailers or off-line retailers. There is an accretive margin when we sell directly through our online portals.

The LED lighting market has attracted many new competitors, particularly from Asia. To counter the Asian competitors, Signify needs to continuously invest in innovation. Does the integration of software and products improve the competitiveness of the product offering?

Eric?

So our strategy to develop our activity through connected lighting is having us to develop more and more software, both embedded software and also standalone software. When you look at our offering on the consumer side with the Hue and the WiZ application, but also on the professional side with our Interact suite of software, we have much more software integration in our offering. And it's making them more competitive, for sure.

Now a question related to the Digital Solutions division. The decline in sales caused by the global pandemic has lead -- has had a large impact on Signify's Digital Solutions segment. During the first quarter, Signify experienced a partial recovery across Europe. Does the company expect this to accelerate during the year with the vaccination rollout and workers returning to the office?

Eric, again.

So as we said during our Q1 results, we expect the continued vaccination rollouts and easing of lockdowns to drive an upswing in demand for our professional portfolio, hence, Digital Solutions in the second half of the year. This will be also supported by various incentive plans in Europe and in the U.S. So with all these developments, we are confident that we will see a recovery of the professional segment at large in the second half of the year.

The next question is related to the stimulus packages. The U.S. government under President Biden has outlined a $2.3 trillion plan to reengineer the nation's infrastructure, including modernizing highways, roads and main streets. What revenue impact, if any, will this have on Signify?

Eric?

So this is effectively a major plan, $2.3 trillion. It will be voted in September, and we expect the funds to be available at the end of the year. So it's a plan that will take place between 2022 and 2031. We believe that it could bring to the lighting industry an additional market of about $3 billion to $4 billion. And the segment that you have mentioned are segments in which we are very active. So we expect to be able to benefit from this incentive program.

Now the final question from the VEB is related to the medium-term objectives. Signify aims for an adjusted EBITA margin of 11% to 13% in 2023. Last year and during the first quarter of this year, Signify almost reached the lower end of that medium-term guidance. Is this medium-term object -- target ambitious enough?

Javier, please reply to this question.

Thank you, Arthur. Let me start with the midterm guidance. Versus our 2020 actual adjusted EBITDA margin, our midterm guidance still requires us to deliver slightly above the 70 -- up to more than 70 basis points improvement per year. So we believe it does not necessarily show a lack of ambition that we have. On top of that, we're expecting the margin progress to be slightly faster in the early years, and that's helped by the faster recovery or the early recovery, strong recovery of sales post COVID-19 period. When we look at Q1, we are obviously pleased with the margin progress that we have made in Q1. And we are indeed now expecting to achieve an adjusted EBITDA margin of between 11.5% and 12.5% in 2021. Having said that, we are just one quarter of recovery from COVID-19. So we believe it's a bit premature to change our midterm guidance right now.

Okay. Thank you very much, Javier. If I am well-informed, this concludes the questions that we received beforehand, but there was also a statement that we received. Thelke?

Yes. There was one statement related to agenda item 2, which we have also received from the VEB. The statement is the following: European investors-VEB will vote against the remuneration report. The reason for this vote is the insufficient transparency on ambition levels regarding the short-term incentive measures. For the short-term incentives, for example, it is unclear what the ex-ante ambition level was as well as what threshold and maximum levels of performance were applicable for each individual performance criterion. Given that it concerns high-level objectives, which are also part of Signify's medium-term guidance, European Investors-VEB does not believe that these are commercially sensitive and would appreciate that Signify reports this information in next year's remuneration report.

May I invite Gerard as Chairman of the Remuneration Committee to comment to this statement from VEB?

Thank you, Arthur. In the 2020 remuneration report, we have improved our disclosure related to our annual incentive program and the results for the year 2020. We trust that VEB recognizes the spirit of transparency and continuous improvement with which these changes were implemented. We believe these changes significantly improve our transparency on the annual incentive program. At this stage in Signify's evolution, however, we continue to view the ambition levels we set for ourselves on which the annual incentive targets are based as commercially sensitive information, particularly since many of our direct competitors are subject to different expectations for disclosure in Asia and the United States of America. As with the 2020 report preparation, we will, however, continue to evaluate our reporting annually and identify improvements that be made within the confines of the business environment in which we operate.

All right. Thank you very much, Gerard. [Interpreted] We will then continue with the questions that came in via the chat with respect to these agenda points. And later agenda points will be tackled later. Now before we have a look at those questions that came in, we would like to show you a video. [Presentation]

Welcome back. And Thelke, could you please let us know what questions we received during the meeting that relate to the first agenda items?

Of course, we have received a number of questions. The first one is a follow-up question we received from the VBDO. First of all, thank you for your answers. We have a follow-up question. Is it also required to change or stop the current Cooper, Klite contracts with their suppliers? How do these changes -- how do these changes -- how are these changes directed towards sustainability?

All right. I think, Eric, this is one belonging to you?

Yes, sure. So we haven't so far stopped contracts. We have adapted some of the contracts. It's different when we consider Cooper and Klite, as I've said previously. In Cooper, it was smooth. Most of the suppliers were shared. So they just moved to the environment of our contract also regarding sustainability. For Klite, it's already done for 50 suppliers, but they are new suppliers, smaller suppliers. It's going to take a bit longer. And for those suppliers, we believe that the change in order go towards more sustainability are going to be a bit stronger than what we have experienced so far.

All right. Any question?

Yes. An additional question from Triodos/Eumedion. Thank you for answering the questions. Is it possible to give some more details about the topics the Digital Committee will report about? Can we, for example, expect specific information about cybersecurity?

Maybe, Javier?

Yes, I will take that one. So the Digital Committee, in general, would report on the progress we're making, as Eric has said, on our 5 Frontier Strategy. There's the -- the fourth frontier is digitalization. So Digital Committee, we will basically report on how we're making progress throughout the company on our total digitalization effort, whether this is on how we work with our customers, how we work on our processes or how we continue to developing products and services and the enablers to do that. Specifically to the second question on cybersecurity. Cybersecurity, as you can imagine, is on the top of my mind every day as we see the world evolving. And part of the Digital Committee, but also the Supervisory Board will be dedicated on reviewing our states on cybersecurity. So we will do that. To which extent? We will have a specific report on that. We'll assess that throughout the year.

All right. Thank you. Thelke, next question.

Yes. One more question from the VEB. Can you tell us which specific points were in the management letter?

Of course, the management letter is a letter to the management, but still, I guess, Oscar Jonker can provide a few comments here.

[Interpreted] We are here to elaborate on our audit, not necessarily our internal management report. The important items we noted appear in the financial statements and in our audit statement.

Very well. That sounds clear. Next question, please.

Mr. van Schooten had received a termination payment of EUR 598,000. Was the step down of his freewill? If so, why a termination fee? If not, had the Supervisory Board special reasons to end?

These questions I refer to the Chairman of the Remuneration Committee, Gerard van de Aast.

Thank you, Arthur. As mentioned in our remuneration report, the Supervisory Board decided not to renew Mr. van Schooten's contract. There were no special reasons not to renew the contract. And this is all further explained on Page 48 of our annual report. Thank you.

Okay. Thank you. Next question.

Yes. The last question we have at the moment. Can you tell us what progress the product LiFi is making?

Eric?

So we have continued to invest in the LiFi technology. It was slightly paused during the pandemic, but we're counting more than 200 pilots worldwide at this point in time. And most recently, we also illustrated the relevance of that technology to the sector of congress centers as we equip the work from The Hague with a secure and reliable connectivity technology.

It looks like this is the list of questions that came in via the live chat. Just double-checking. Is that it?

This is it for now.

This is it. Okay. Thank you very much. [Interpreted] Those were the questions corresponding with the agenda items 1 through 6. And that takes us to the microphones. As the speaker, this takes us to the results regarding voting items for the previous topics. Before I show them, I would like the civil law notary to make some formal observations. Martin, you have the floor.

Thank you, Arthur. Ladies and gentlemen, I have 5 points for you. The represented capital was 96,166,648 shares, entitling corresponding number of votes to be cast, 96,166,648 votes. These votes were cast in writing by civil law notary, Cindy Smid, from Zuidbroek Notarissen, an independent civil law notary and the authorized representative of shareholders who granted her authorization by the voting system. Given the number of issued shares of the company on the record date on which a vote may be cast, this accounts for 76.36% of the capital entitled to vote being present at the meeting. Cindy Smid in casting these votes confirmed that she cast votes on all proxies she received. The votes that she received are conveyed in the result for each vote. Finally, I can tell you that the Board of Management and the Supervisory Board did not receive any agenda proposals from shareholders. I will now hand the floor back to you, Arthur.

Thank you very much, Martin. Now I will disclose the voting results for agenda items 2, 4, 5 and 6. For practical reasons, I will consistently state the rounded percentages of the votes cast. The more detailed voting results will be published on our website shortly after this meeting and will later on be included in the report. The voting result for agenda item 2, starting with the approval of the remuneration report for 2020. And this vote is advisory. You see that 93% voted in favor of the proposal. And I note, therefore, that the remuneration report has been approved. Next, voting results concerning agenda item 4, the proposal to adopt the 2020 financial statements. You see that 99% has voted in favor of the proposal. And I, therefore, note that the proposal has been adopted and that the 2020 financial statements have hereby been adopted. Now that takes us to agenda item 5a, the proposal to adopt an extra dividend from the freely distributable reserves of the company of EUR 1.35 per ordinary share in cash. And you see that 97% has voted in favor of the proposal, and I therefore note that the proposal has been adopted. Next agenda item 5b, proposal to adopt the regular dividend for the 2020 financial year of EUR 1.40 per ordinary share in cash. Here again, you see that 97% has voted in favor of the proposal, and I note that the proposal has been adopted. Now agenda item 6a, the proposal to discharge the members of the Board of Management. And you can see that 98% has voted in favor of the proposal. And I note that the proposal has been adopted, thereby granting discharge to the members of the Board of Management. Now agenda item 6b, the proposal to discharge the members of the Supervisory Board, and you see that 98% has voted in favor of the proposal. I note that the proposal has been adopted, hereby granting discharge to the Supervisory Board Members. That takes me to agenda item 7, which concerns the composition of the Supervisory Board. The reappointment of Gerard van de Aast is on the agenda. And this reappointment has obviously been considered in the explanatory notes to the agenda. And this is for a 4-year reappointment term. Upon appointment or reappointment to the Supervisory Board as proposed, now we consider the envisaged profile of the Supervisory Board, including the diversity policy and the desired expertise and experience. In addition, with reappointments, we also consider how the individual performed and evaluations by the Board. Gerard van de Aast's proposed reappointment corresponds with the expiration of his current appointment term. As explained in the explanatory notes to the agenda, we have nominated Gerard van de Aast in part because of his extensive governance experience and knowledge about technical services in the construction industry. Gerard van de Aast know Signify well and contributes valuable knowledge and experience to our Board, and in his previous term, Gerard has been highly dedicated and contributed expertise in serving in his capacity including as Deputy Chair of the Supervisory Board and Chair of the Remuneration Committee. In the past year, Gerard has contributed immensely to Signify. And we have confidence that he is willing and able to continue to do so in the years ahead, and we are delighted that he will remain available for a second term. As far as I am aware, we did not receive any questions about this agenda item prior to the meeting, although the VEB did make a remark about the proposed reappointment and has requested that we share it with you, this agenda item.

European Investors-VEB will vote against the reappointment of Mr. Gerard van de Aast as member of the Supervisory Board. As Chairman of Management Board, van de Aast had ultimate responsibility at Imtech at the time of the bankruptcy. Whether this bankruptcy would have taken place despite or partly due to the efforts of Mr. van de Aast is currently the subject of investigation by the Imtech trustees. The VEB, therefore, finds it too early as no research results are available yet to express its confidence in va de Aast.

Please allow me to say a few words in response to this statement by the VEB. Of course, we are obviously aware of the still ongoing investigations by the [ receiver ] in bankruptcy into the causes of the bankruptcy of Imtech, in which also Gerard van de Aast is requested to provide information. Back in 2017, when we proposed his appointment to our Supervisory Board for a first term and now, we have carefully discussed and concluded to fully support the nomination to our Board. So we respect the opinion of VEB, but we stick to our view that he's a highly qualified candidate to continue as member of our Supervisory Board. [Interpreted] were any other questions received via the live chat about this topic? No. Very well. Then we can now proceed to the voting results for item 7, which is the proposal to reappoint Gerard van de Aast as a member of the Supervisory Board. And you can see that 96% has voted in favor of the proposal. And I note the proposal has been adopted. Gerard, Congratulations. This concludes the discussion of agenda item 7. Now on to agenda item 8. This agenda item concerns the authorization of the Board of Management to, a, issue shares or grant rights to acquire shares; and b, to restrict or exclude preemptive rights. According to the terms stipulated in the explanatory notes to the agenda, these are 2 voting items that are voted on separately, and the authorizations are being requested an 18-month period starting as of today. The authorizations requested are commonplace with public listed companies. In keeping with the market trend and voting practice of institutional investors in this item, the presently requested authorization is for a single 10% of the issued share capital, which the Board believes will provide sufficient flexibility to enable the firm to -- efficient financing. Prior to this agenda item, we did not receive any questions.

Sure. No questions.

[Interpreted] Now on to the voting results for agenda item 8a, the authorization of the Board of Management to issue shares. And as you see, 99% voted in favor of the proposal, and I note that the proposal has been adopted. Now on to the voting result for agenda item 8b, authorization of the Board of Management to restrict or exclude preemptive rights for shareholders. And you see that 99% have voted in favor of the proposal. I note that the proposal has been adopted. Now on to agenda item 9. This agenda item concerns the authorization of the Board of Management to acquire shares in the company according to the terms stated in the explanatory notes to the agenda. The authorization is requested for an 18-month period and is restricted to 10% of the currently issued share capital plus an additional 10% in connection with share repurchase programs for capital reduction purposes. A Board decision to repurchase shares requires approval by the Supervisory Board and this authorization is also commonplace with publicly listed companies. We did not receive any questions about this agenda item prior to the meeting. No questions? [Interpreted] No questions, then I will now move on to the voting results for agenda item 9, authorization of the Board of Management to acquire shares in the company. And you see that 98% has voted in favor of the proposal, and I note the proposal has been adopted. That takes us to agenda item 10. This concerns the decision to cancel shares according to the terms stated in the explanatory notes of the agenda. This concerns cancellation of shares that the company holds or has purchased and acquired. And keeping with agenda item 9 provided that they are not being used to comply with obligations concerning remuneration through shares or other obligations. The number of shares to be canceled shall be determined by the Board of Management within the bandwidth of the proposed decision, and this is also a standard authorization for publicly listed companies. We did not receive any questions about this item, right, to the meeting or via the live chat. I will now move on to the voting result at agenda Item 10, cancellation of a number of shares to be determined by the Board of Management, and you will see that 97% has voted in favor of the proposal, which I note has been adopted. Before we move on to the final item, which is any other business. I would just like to check, have we answered all questions via the live chat? Then we can move on to any other business. But first, I would like to express my gratitude. As known, at the end of last year, René van Schooten, stepped down last year from the Board of Management. On behalf of the Supervisory Board, I would like to thank René very much for his valuable contributions to Philips Lighting, and later Signify, over the previous period, exceeding 20 years. Ever since the IPO, René was a valued Board Member and twice served as Acting CFO. We are very grateful for his loyalty and in-depth knowledge of Signify's business. Thank you, René. Now on to any other business. In the live chat. That concludes all agenda items. And I am now concluding the general meeting of shareholders, and thank you all for listening. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]