Philips 2012 Annual Report Download - page 118

12 Group financial statements 12 - 12.2
118 Annual Report 2012
12 Group financial statements
Introduction
This section of the Annual Report contains the audited consolidated
financial statements including the notes thereon that have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as endorsed 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 IFRS Interpretations Committee
effective year-end 2012 have been endorsed by the EU, except that the
EU did not adopt some paragraphs of IAS 39 applicable to certain hedge
transactions. Philips has no hedge transactions to which these
paragraphs are applicable. Consequently, the accounting policies
applied by Philips also comply fully with IFRS as issued by the IASB.
Together with the section Company financial statements, this section
contains the statutory financial statements of the Company.
The following sections and chapters of this Annual Report:
• chapter 1, Our company, of this Annual Report
• chapter 2, Group strategic focus, of this Annual Report
• chapter 3, Our strategy in action, of this Annual Report
• chapter 4, Our planet, our partners, our people, of this Annual
Report
• chapter 5, Group performance, of this Annual Report
• chapter 6, Sector performance, of this Annual Report
• chapter 7, Risk management, of this Annual Report
• section 10.1, Report of the Corporate Governance and Nomination
& Selection Committee, of this Annual Report
• section 10.2, Report of the Remuneration Committee, of this Annual
Report
• chapter 11, Corporate governance, of this Annual Report
• chapter 19, 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 sections Group performance and Sector performance provide an
extensive analysis of the developments during the financial year 2012
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 sections also provide information on the business
outlook, investments, financing, personnel and research and
development activities.
The Statement of income included in the section 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 12.12, Independent auditor’s
report - Group, of this Annual Report on the Group financial
statements, section 13.5, Independent auditor’s report - Company, of
this Annual Report on the Company financial statements, section 5.4,
Proposed distribution to shareholders, of this Annual Report, and
note 35, Subsequent events.
Please refer to chapter 19, 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 25, 2013
12.1 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, 2012, the Company’s internal control over Group
financial reporting is considered effective.
The effectiveness of the Company’s internal control over financial
reporting as of December 31, 2012, as included in this section 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 25, 2013
12.1.1 Changes in internal control over financial
reporting
During the year ended December 31, 2012 there have been no changes
in our internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
12.2 Reports of the independent auditor
The report set out below is provided in compliance with auditing
standards of the Public Company Accounting Oversight Board in the
US and includes an opinion on the effectiveness of internal control over
financial reporting as at December 31, 2012. Management’s report on
internal control over financial reporting is set out in section 12.1,
Management’s report on internal control, of this Annual Report. KPMG
Accountants N.V. has also issued reports on the consolidated financial
statements in accordance with Dutch law, including the Dutch
standards on auditing, which is set out in section 12.12, Independent
auditor’s report - Group, of this Annual Report, and in accordance with
auditing standards of the Public Company Accounting Oversight Board
in the US, which will be included in the Annual Report on Form 20-F