Philips 2015 Annual Report Download - page 33

Group performance 5.1.22
Annual Report 2015 33
5.1.22 Liquidity position
Including the Company’s cash position (cash and cash
equivalents), as well as its EUR 1.8 billion committed
revolving credit facility, the Company had access to
available liquidity of EUR 3,566 million vs. Gross Debt
(including short and long-term) of EUR 5,760 million as
of December 31, 2015.
Including the Company’s cash position (cash and cash
equivalents), as well as its EUR 1.8 billion committed
revolving credit facility, the Company had access to
available liquidity of EUR 3,673 million vs. Gross Debt
(including short and long-term) of EUR 4,104 million as
of December 31, 2014.
Philips Group
Liquidity position in millions of EUR
2013 - 2015
2013 2014 2015
Cash and cash equivalents 2,465 1,873 1,766
Committed revolving credit
facility/CP program/Bilateral loan 1,800 1,800 1,800
Liquidity 4,265 3,673 3,566
Available-for-sale nancial assets
at fair value 65 75 75
Short-term debt (592) (392) (1,665)
Long-term debt (3,309) (3,712) (4,095)
Net available liquidity resources 429 (356) (2,119)
Philips has a EUR 1.8 billion committed revolving credit
facility that can be used for general group purposes and
as a backstop of its commercial paper program and will
mature in February 2018. The commercial paper
program amounts to USD 2.5 billion, under which
Philips can issue commercial paper up to 364 days in
tenor, both in the US and in Europe, in any major freely
convertible currency. There is a panel of banks, in
Europe and in the US, which service the program. The
interest is at market rates prevailing at the time of
issuance of the commercial paper. There is no collateral
requirement in the commercial paper program. Also,
there are no limitations on Philips’ use of funds from the
program. As at December 31, 2015, Philips did not have
any loans outstanding under these facilities.
Philips’ existing long-term debt is rated Baa1 (with
stable outlook) by Moody’s and BBB+ (with stable
outlook) by Standard & Poor’s. Our net debt position is
managed in such a way that we expect to retain a strong
investment grade credit rating. Furthermore, the
Group’s aim when managing the net debt position is
dividend stability and a pay-out ratio of 40% to 50% of
continuing net income. Following the intended
separation of the Lighting business, the dividend pay-
out ratio with respect to future years could be subject
to change. The Company’s outstanding long-term debt
and credit facilities do not contain nancial covenants
or cross-acceleration provisions that are based on
adverse changes in ratings or on material adverse
change.
As at December 31, 2015, Philips had total cash and cash
equivalents of EUR 1,766 million. Philips pools cash
from subsidiaries to the extent legally and
economically feasible. Cash not pooled remains
available for local operational or investment needs.
Philips believes its current liquidity and direct access to
capital markets is sucient to meet its present working
capital requirements.
5.1.23 Cash obligations
Contractual cash obligations
Presented below is a summary of the Group’s
contractual cash obligations and commitments at
December 31, 2015.
Philips Group
Contractual cash obligations1) in millions of EUR
2015
Payments due by period
total
less
than 1
year
1-3
years
3-5
years
after 5
years
Long-term
debt2) 4,034 84 1,152 1 2,797
Finance lease
obligations 242 72 92 36 42
Short-term
debt 1,515 1,515 - - -
Operating
leases 952 243 280 162 267
Derivative
liabilities 995 253 383 156 203
Interest on
debt3) 2,767 221 438 334 1,774
Purchase
obligations4) 175 68 69 30 8
Trade and other
payables 2,673 2,673 - - -
Contractual
cash
obligations 13,353 5,129 2,414 719 5,091
1) Obligations in this table are undiscounted
2) Long-term debt includes short-term portion of long-term debt and
excludes nance lease obligations
3) Approximately 32% of the debt bears interest at a oating rate. The
majority of the interest payments on variable interest rate loans in the
table above reect market forward interest rates at the period end and
these amounts may change as the market interest rate changes
4) Philips has commitments related to the ordinary course of business
which in general relate to contracts and purchase order commitments
for less than 12 months. In the table, only the commitments for multiple
years are presented, including their short-term portion
Philips has no material commitments for capital
expenditures.
Additionally, Philips has a number of commercial
agreements, such as supply agreements, which provide
that certain penalties may be charged to the Company
if it does not fulll its commitments.
Certain Philips suppliers factor their trade receivables
from Philips with third parties through supplier nance
arrangements. At December 31, 2015 approximately
EUR 395 million of the Philips accounts payable were
known to have been sold onward under such
arrangements whereby Philips conrms invoices.