Philips 2015 Annual Report Download - page 2

2 Annual Report 2015
Contents
IFRS basis of presentation
The nancial information included in this document is based on IFRS, as
explained in note 1, Signicant accounting policies, of this report, unless
otherwise indicated.
Dutch Financial Markets Supervision Act
This document comprises regulated information within the meaning of the
Dutch Financial Markets Supervision Act (Wet op het Financieel Toezicht).
Statutory nancial statements and management report
The chapters Group nancial statements and Company nancial
statements contain the statutory nancial statements of the Company. The
introduction to the chapter Group nancial statements sets out which parts
of this Annual Report form the Management report within the meaning of
Section 2:391 of the Dutch Civil Code (and related Decrees).
Signicant developments
In September 2014, Philips announced its plan to sharpen its strategic focus
by establishing two stand-alone companies focused on the HealthTech and
Lighting opportunities respectively. We have established a stand-alone
structure for Philips Lighting within the Philips Group eective February 1,
2016. We expect to be able to announce the separation of the Lighting
business in the rst half of 2016, subject to market conditions and other
relevant circumstances. As previously stated, we are reviewing all strategic
options for Philips Lighting, including an initial public oering and a private
sale.
It should however be noted that the completion of the separation could
take more time than originally planned or anticipated and that there is no
certainty as to the method or timing of the separation of the Lighting
business, which may expose Philips to risks of additional cost and other
adverse consequences. For further information on specic risks involved in
the separation please refer to chapter 7, Risk management, of this Annual
Report.
The separation impacts all businesses and markets as well as all supporting
functions and all assets and liabilities of the Group. With eect from Q1
2016 onwards Philips plans to report and discuss its nancial performance
on the basis of dierent reportable segments than the sectors currently
presented and discussed in this Annual Report. For more details on the
new segment reporting in 2016 and onwards, please refer to the
introduction of chapter 6, Sector performance, of this Annual Report.
As announced on January 22, 2016, the agreement pursuant to which the
consortium led by GO Scale Capital would acquire an 80.1% interest in the
combined businesses of Lumileds and Automotive, has been terminated.
Philips is now actively engaging with other parties that have expressed an
interest in the businesses and will continue to report the Lumileds and
Automotive businesses as discontinued operations (see note 3,
Discontinued operations and other assets classied as held for sale).
Further updates will be provided in the course of 2016.
Philips ArenaVision LED is the world’s rst LED pitch
lighting to meet the stringent requirements of
international television broadcasters and sports
federations, ensuring a fantastic match experience, both
for the fans in the stadium and those watching at home.
Increasingly, Philips is teaming up with hospital and
health systems to understand their needs, provide
integrated solutions, and engage in multi-year
cooperation to drive improvements in terms of patient
outcomes, quality of care delivery and cost productivity.
1Performance highlights 4
2Message from the CEO 6
3Philips in 2015 at a glance 9
4Our strategic focus 10
4.1 Addressing global challenges 10
4.2 How we create value 12
4.3 Accelerate! journey continues 14
4.4 Lives improved 15
4.5 Global presence 15
4.6 Our strategy in action 16
5Group performance 23
5.1 Financial performance 23
5.2 Social performance 34
5.3 Environmental performance 39
5.4 Proposed distribution to shareholders 45
5.5 Outlook 45
6Sector performance 46
6.1 Healthcare 47
6.2 Consumer Lifestyle 51
6.3 Lighting 55
6.4 Innovation, Group & Services 60
7Risk management 64
7.1 Our approach to risk management and business
control
64
7.2 Risk categories and factors 66
7.3 Strategic risks 67
7.4 Operational risks 68
7.5 Compliance risks 70
7.6 Financial risks 71
7.7 Separation risk 72
8Management 74
9Supervisory Board 76
10 Supervisory Board report 78
10.1 Report of the Corporate Governance and
Nomination & Selection Committee
81
10.2 Report of the Remuneration Committee 82
10.3 Report of the Audit Committee 87
11 Corporate governance 89
11.1 Board of Management 89
11.2 Supervisory Board 93
11.3 General Meeting of Shareholders 97
11.4 Meeting logistics and other information 98
11.5 Investor Relations 101