Philips 2008 Annual Report Download - page 243

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Philips has 2 embedded derivatives within convertible bonds. One was
issued to Philips in September 2005 by TPV Technology Ltd., the face
value of the bond being EUR 149 million and the value of the option
at year-end EUR 10 million. Changes in the value of the embedded
derivative are reported in Financial income and expenses during 2008
(EUR 37 million). A further convertible bond was issued to Philips in
August 2008 by CBAY, the face value of the bond being EUR 65 million
and the value of the option at year-end less than EUR 1 million.
Changes in the value of the embedded derivative are reported in
Financial income and expenses during 2008 (EUR 6 million).
Please refer to the section Details of treasury risks that begins on
page 102 of this Annual Report, which is deemed incorporated and
repeated herein by reference.
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Subsequent events
Share repurchase program
On January 26, 2009, the Company announced that it stopped the
EUR 5 billion share repurchase program, which was announced on
December 19, 2007, until further notice.
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Auditor’s report
To the Supervisory Board and Shareholders of Koninklijke Philips
Electronics N.V.:
Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements
2008 which are part of the financial statements of Koninklijke Philips
Electronics N.V., Eindhoven, the Netherlands, which comprise
the consolidated balance sheet as at December 31, 2008, the
statement of income, statement of changes in equity and cash flow
statement for the year then ended, and a summary of significant
accounting policies and other explanatory notes as set out on
page 198 to 243.
Management’s responsibility
The Board of Management is responsible for the preparation and fair
presentation of the consolidated financial statements in accordance
with International Financial Reporting Standards as adopted by the
European Union and with Part 9 of Book 2 of the Netherlands Civil
Code, and for the preparation of the Management report in accordance
with Part 9 of Book 2 of the Netherlands Civil Code. This responsibility
includes: designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of the consolidated
financial statements that are free from material misstatement,
whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are
reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on the consolidated
financial statements based on our audit. We conducted our audit in
accordance with Dutch law. This law requires that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the consolidated financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair
presentation of the consolidated financial statements in order to design
audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness
of accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements give a true and
fair view of the financial position of Koninklijke Philips Electronics N.V.
as at December 31, 2008, and of its result and its cash flows for the
year then ended in accordance with International Financial Reporting
Standards as adopted by the European Union and with Part 9 of Book
2 of the Netherlands Civil Code.
Report on other legal and regulatory requirements
Pursuant to the legal requirement under 2:393 sub 5 part f of the
Netherlands Civil Code, we report, to the extent of our competence,
that the Management report as set out on page 192 to 197 is
consistent with the consolidated financial statements as required
by 2:391 sub 4 of the Netherlands Civil Code.
Amsterdam, February 23, 2009
KPMG Accountants N.V.
M.A. Soeting RA
Philips Annual Report 2008 243
254
Corporate governance
250
Reconciliation of
non-US GAAP information
262
Ten-year overview
266
Investor information