Philips 2015 Annual Report Download - page 73

Risk management 7.7
Annual Report 2015 73
The design and execution of the separation requires the
devotion of substantial time and attention from
management and sta. Although Philips has set-up a
dedicated senior project team to work on a successful
separation, the separation eorts could distract from
and have an adverse eect on the conduct of normal
business and our strategy. The separation could
increase the likelihood of occurrence and/or potential
impact of the risks as described in section 7.2, Risk
categories and factors, of this Annual Report, such as
strategic risks (e.g. insucient integration of
acquisitions), operational risks (e.g. delays in
innovation-to-market), compliance risk (e.g. ineective
internal controls) and nancial risks (e.g. reporting risks).
The design and execution of the separation will involve
and depend on support from external legal, tax,
nancial and other professional consultants and as a
result Philips will incur substantial cost. The separation
could take more time than originally anticipated, which
may expose Philips to risks of additional cost and other
adverse consequences.
The separation of businesses, assets, liabilities,
contractual or contingent rights and obligations and
legal entities may require Philips to recognize expenses
and/or incur nancial payments, which otherwise
would not have been incurred.
While it is the rm intention to complete the separation,
Philips has reserved the right not to proceed with the
separation if it determines that it would be in the
Company’s interest not to do so. If it does proceed with
the separation, no assurances can be given that the
separation will ultimately lead to the increased benets
contemplated by Philips currently.