Philips 2009 Annual Report Download - page 153

11 Group financial statements
11.1 Introduction
Philips moved to International Financial Reporting Standards (IFRS) as
its sole accounting standard from January 1, 2009 onwards. The use of
US GAAP has been discontinued per the same date.
This chapter of the Annual Report contains the audited consolidated
financial statements including the notes thereon that have been
prepared in accordance with IFRS as adopted by the European Union
(EU) and with the statutory provisions of Part 9, Book 2 of the Dutch
Civil Code. All standards and interpretations issued by the International
Accounting Standards Board (IASB) and the International Financial
Reporting Interpretations Committee (IFRIC) effective year-end 2009
have been adopted by the EU, except that the EU carved out certain
hedge accounting provisions of IAS 39. The Company does not utilize
this carve-out permitted by the EU. Consequently, the accounting
policies applied by the Company also comply fully with IFRS as issued by
the IASB.
Together with the chapter Company financial statements, this chapter
contains the statutory financial statements of the Company.
The following chapters and sections of this Annual Report:
• chapter 1, Who we are, of this Annual Report
• chapter 2, Our strategy in action, of this Annual Report
• chapter 3, Our planet, our partners, our people, of this Annual
Report
• chapter 4, Our group performance, of this Annual Report
• chapter 5, Our sector performance, of this Annual Report
• chapter 6, Risk management, of this Annual Report
• section 9.3, Report of the Remuneration Committee, of this Annual
Report
• chapter 10, Corporate governance, of this Annual Report
• chapter 17, Forward-looking statements and other information, of
this Annual Report
form the Management report within the meaning of section 2:391 of the
Dutch Civil Code (and related Decrees).
The chapters Our group performance and Our sector performance
provide an extensive analysis of the developments during the financial
year 2009 and the results. The term EBIT has the same meaning as
Income from operations (IFO), and is used to evaluate the performance
of the business. These chapters also provide information on the
business outlook, investments, financing, personnel and research and
development activities.
The Statement of income included in the chapter Company financial
statements has been prepared in accordance with section 2:402 of the
Dutch Civil Code, which allows a simplified Statement of income in the
Company financial statements in the event that a comprehensive
Statement of income is included in the consolidated Group financial
statements.
For ‘Additional information’ within the meaning of section 2:392 of the
Dutch Civil Code, please refer to section 11.13, Auditor’s report -
Group, of this Annual Report on the Group financial statements,
section 12.6, Auditor’s report - Company, of this Annual Report on the
Company financial statements, section 4.4, Proposed distribution to
shareholders, of this Annual Report, and note 34 for subsequent events.
Please refer to chapter 17, Forward-looking statements and other
information, of this Annual Report for more information about
forward-looking statements, third-party market share data, fair value
information, and revisions and reclassifications.
The Board of Management of the Company hereby declares that, to the
best of our knowledge, the Group financial statements and Company
financial statements give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole and that the
management report referred to above gives a true and fair view
concerning the position as per the balance sheet date, the development
and performance of the business during the financial year of the
Company and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks that they face.
Board of Management
February 22, 2010
11.2 Management’s report on internal control
Management’s report on internal control over financial
reporting pursuant to section 404 of the US Sarbanes-
Oxley Act
The Board of Management of Koninklijke Philips Electronics N.V. (the
Company) is responsible for establishing and maintaining an adequate
system of internal control over financial reporting (as such term is
defined in Rule 13a-15(f) under the US Securities Exchange Act).
Internal control over financial reporting is a process to provide
reasonable assurance regarding the reliability of our financial reporting
for external purposes in accordance with IFRS as issued by the IASB.
Internal control over financial reporting includes maintaining records
that, in reasonable detail, accurately and fairly reflect our transactions;
providing reasonable assurance that transactions are recorded as
necessary for preparation of our financial statements; providing
reasonable assurance that receipts and expenditures of company assets
are made in accordance with management authorization; and providing
reasonable assurance that unauthorized acquisition, use or disposition
of company assets that could have a material effect on our financial
statements would be prevented or detected on a timely basis. Because
of its inherent limitations, internal control over financial reporting is not
intended to provide absolute assurance that a misstatement of our
financial statements would be prevented or detected.
The Board of Management conducted an assessment of the Company’s
internal control over financial reporting based on the “Internal Control-
Integrated Framework” established by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on that
assessment, the Board of Management concluded that, as of
December 31, 2009, the Company’s internal control over Group
financial reporting is considered effective.
The Board of Management’s assessment of the effectiveness of the
Company’s internal control over financial reporting as of December 31,
2009, excluded the following companies acquired by the Company after
January 1, 2009: Meditronics Healthcare Pvt. Ltd., Ilti Luce S.r.l.,
Dynalite Intelligent Light Pty. Limited, Traxtal Inc., Teletrol Systems Inc.,
and Saeco International Group S.p.A. These acquisitions are wholly-
owned subsidiaries whose total assets represented 1.7% of
consolidated total assets and whose net sales represented 0.7% of
consolidated net sales of the Company as of and for the year ended
December 31, 2009. If adequately disclosed, companies are allowed to
exclude acquisitions from their assessment of internal control over
financial reporting during the year of acquisition while integrating the
acquired company under guidelines established by the US Securities and
Exchange Commission.
The effectiveness of the Company’s internal control over IFRS financial
reporting as of December 31, 2009, as included in this chapter Group
financial statements, has been audited by KPMG Accountants N.V., an
independent registered public accounting firm, as stated in their report
which follows hereafter.
Board of Management
February 22, 2010
11 Group financial statements 11 - 11.2
Philips Annual Report 2009 153