Philips 2006 Annual Report Download - page 10

Philips Annual Report 200610
dividend policy, we are proposing to the upcoming
General Meeting of Shareholders to increase the dividend
for the third year in a row, taking it to EUR 0.60 per share.
Driving change, delivering value
Focusing strongly on Group-wide value creation, our
2006 Management Agenda defi ned a number of priority
actions. How did we perform on these?
Realize 5-6% top-line growth and a 7-10% EBIT margin
as from the end of 2006
In 2006 we realized comparable top-line growth of 6%
year-on-year, a marked increase on the 4% achieved in
2005 and well in line with our target. Comparable sales
grew at all main divisions, led by DAP (11%) and Lighting
(8%); Medical Systems (7%) and Consumer Electronics
(5%) also achieved good growth. Sales in the sector
Other Activities decreased by 7% on a comparable
basis, in nominal terms a decline of 24%, refl ecting
the ongoing divestment of non-core businesses.
EBIT at Medical Systems, DAP and Lighting increased
compared to 2005, as did EBIT at CE when excluding
the 2005 gain on the TPV transaction. Our strong
performance in the last quarter of the year reinforces
our confi dence that we will realize our EBITA target
in 2007. Referencing EBITA will make the underlying
performance of our businesses more transparent by
factoring out the amortization of intangible assets, which
occurs when acquisitions are consolidated. Our EBITA
margin in 2006 would have been 5.1% for the year and
9.1% in the last quarter.
Continue to grow healthcare as part of the portfolio
As a consequence of our portfolio changes, professional
and consumer healthcare now represents some 27%
of sales, compared with 21% in 2005. Organic growth in
our Medical Systems division remains strong and steady,
and in 2006 we made further value-adding acquisitions,
including key component supplier Intermagnetics and
cardiology healthcare company Witt Biomedical.
In the fi eld of medical IT, our 2005 acquisition of Stentor
has proved a resounding success, with sales of our iSite
PACS solution doubling since the takeover. iSite’s data-
integration capabilities make a signifi cant contribution
to the delivery of high-quality patient care.
We also made progress with our ambitions to build
a sizeable consumer health and wellness business,
acquiring
mother and babycare products company Avent
and emergency response provider Lifeline Systems. Given
their different characteristics, we subsequently decided
to split this initiative into a retail/product business
and a service business, with the former continuing in
DAP as part of the Health & Wellness business (which
includes Avent, Sonicare and Skin Care) and the latter
as part of Consumer Healthcare Solutions in the
Innovation & Emerging Businesses sector, which has
replaced the Other Activities sector as of January 2007.
Our Ambient Experience solutions continue to gain
ground. In February 2006 the world’s fi rst Ambient
Experience catheterization lab was opened at the
Catharina Hospital in Eindhoven, Netherlands.
In Asia Pacifi c, the fi rst exports from the Philips-Neusoft
venture in China – established in 2004 for the development
and worldwide supply of economically priced imaging
equipment – took place in 2006 with the release and
shipment of dual and single-slice CT scanners, radiology
systems and remote-control fl uoroscopy systems.
6 Financial highlights 8 Message from the President 14 Our leadership 20 The Philips Group