Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
July 21, 2014
KONINKLIJKE
PHILIPS N.V.
(Exact name of registrant as specified in its charter)
Royal Philips
(Translation of registrant’s name into English)
The Netherlands
(Jurisdiction of incorporation or organization)
Breitner Center, Amstelplein 2, 1096 BC Amsterdam, The Netherlands
(Address of principal executive offices)
Indicate by check mark whether
the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule101(b)(7): ¨
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No
x
Name and address of person authorized to receive notices
and communications from the Securities and Exchange Commission:
M.J. van Ginneken
Koninklijke
Philips N.V.
Amstelplein 2
1096 BC Amsterdam – The Netherlands
This report comprises a copy of the following press release:
| • |
|
“Philips Q2 2014 Quarterly report and Semi-annual report”, dated July 21, 2014. |
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized at Amsterdam, on the 21st day of July 2014.
KONINKLIJKE PHILIPS N.V.
/s/ M.J. van Ginneken
(General Secretary)
Q2 2014 Quarterly report and Semi-annual report
Philips reports Q2 sales of EUR 5.3 billion and EBITA of EUR 415 million
| • |
|
Comparable sales growth stable, with sales in growth geographies up 4% |
| • |
|
EBITA of EUR 415 million, compared to EUR 601 million in Q2 2013 |
| • |
|
EBITA, excluding restructuring and acquisition-related charges and other items, amounted to EUR 449 million, or 8.5% of sales, compared to 9.4% in Q2 2013 |
| • |
|
Currencies negatively impacted sales by 6% and EBITA by 0.8 percentage points of sales |
| • |
|
Net income amounted to EUR 243 million, supported by lower tax charges |
| • |
|
Free cash flow of EUR 261 million, compared to free cash outflow of EUR 105 million in Q2 2013 |
Frans van Houten, CEO:
“In the second quarter we
continued to face headwinds, including ongoing softness in certain markets, unfavorable currency exchange rates and the voluntary suspension of production at our health care facility in Cleveland. At the same time, we are taking decisive action to
accelerate value creation, improve performance and capitalize on higher growth opportunities in our businesses. This is demonstrated by our announcement to create a stand-alone company within Philips for the combined Lumileds (LED components) and
Automotive lighting businesses and the implementation of the new management structure in Healthcare.
While 2014 is expected to be a challenging
year overall, we anticipate EBITA for the Group, excluding restructuring and acquisition-related charges and other items, in the second half of the year to exceed the level of the same period last year. We continue to increase efficiency and drive
profitable growth through the execution of our multi-year Accelerate! transformation and are firmly committed to reaching our 2016 targets.”
Q2 financial and operational overview:
Healthcare
“In the second quarter, we continued to see results of our focus to win large-scale multi-year partnerships – such as the recently
announced agreement with New Karolinska Hospital in Solna, Sweden – designed to structurally improve patient care at lower and more predictable costs. Further, our strategic alliance with salesforce.com on a new cloud-based health care IT
platform demonstrates our holistic innovation approach to health care, enabling us to rapidly launch new clinical applications for home care and care coordination. Our recently announced new management structure will further drive operational
excellence and agility to restore performance over the next several quarters.
“While the voluntary temporary suspension of production at our
Cleveland facility continued to impact our performance this quarter, our corrective actions are progressing according to plan and shipments are expected to resume gradually in the course of Q3 2014. In light of this and the recent strong equipment
order intake in China and Europe, we expect the performance improvement in the second half of the year to be back-end loaded.”
Healthcare
comparable sales showed a 4% decline year-on-year. The EBITA margin, excluding restructuring and acquisition-related charges, declined to 10.5%, a decrease of 3.8 percentage points year-on-year. Equipment order intake in Europe and growth
geographies showed a high-single-digit increase, while North America posted a double-digit decline.
Consumer Lifestyle
“In Consumer Lifestyle, we have implemented a strategic shift to leverage our strengths in the growing area of personal health and well-being, which is
empowering millions of consumers to make healthier choices every day. This has resulted in more than 10 consecutive quarters of strong comparable sales growth. With the sale of WOOX Innovations completed at the end of June, Consumer Lifestyle is now
fully focused on realizing the great potential in its portfolio by offering locally relevant products while leveraging its global scale.”
Consumer Lifestyle comparable sales increased by 7%, with above-average sector growth coming from Health & Wellness and Domestic Appliances. Sales in
Personal Care were flat due to market dynamics in China and North America. In growth geographies, comparable sales showed double-digit growth, while mature geographies achieved low-single-digit growth. The EBITA margin, excluding restructuring and
acquisition-related charges and other items, increased to 9.4%, a year-on-year improvement of 1.6 percentage points.
Philips Consumer Lifestyle has
rationalized its portfolio to focus on personal health and well-being. Accordingly, Philips is expanding its market reach, building the Philips brand in business adjacencies such as the beauty and air categories and expanding its geographic
distribution in China, Philips’ second-largest market. Moreover, Philips is capturing the digital opportunity by growing its online presence and developing its connected products portfolio.
Lighting
“In Lighting, we are intensifying our
focus on connected LED lighting systems and services, LED luminaires, and LED lamps for the professional and consumer markets. Our decision to combine the Lumileds and Automotive lighting businesses into a stand-alone company within Philips will
allow it to extend its leading portfolio of digital lighting components and achieve robust growth, serving even more customers in the industry, as well as Philips Lighting. Lighting is taking advantage of the many opportunities in the growing LED
space, driven by increased demand for energy efficiency and digital controls. We are also making good progress in Professional Lighting Solutions North America, and we anticipate improvement in Q3 and a return to profitability in the second half of
the year.”
Lighting comparable sales increased 1% year-on-year. LED-based sales grew 43% and now represent 36% of total Lighting sales, compared
to 25% in Q2 2013. The EBITA margin, excluding restructuring and acquisition-related charges and other items, improved to 8.6%, an increase of 0.5 percentage points year-on-year.
Philips is taking actions to improve profitability in its Lighting business while also accelerating the drive to LED. The Company’s strong and continuous
focus on optimizing its manufacturing footprint and the overall cost base has resulted in the 8th consecutive quarter of year-on-year improved operational profitability. The recovery in Consumer Luminaires in Europe is progressing, and the Company
aims to make this business break-even for the full year.
In the second quarter, we continued to see strong momentum in LED-based sales, which grew 43%
and now represent 36% of total Lighting sales. At the same time, we saw a 13% decline in our conventional lighting sales in the quarter. The Company is therefore accelerating actions to ensure the continued profitability of conventional lighting
over the coming years and plans to pull forward the ongoing industrial footprint rationalization program for the Lighting sector, raising charges in the second half of 2014 from EUR 100 million to approximately EUR 170 million.
Innovation, Group & Services
“The favorable performance in IG&S, supported by increased royalties from intellectual property, is the result of our continued investments in
industry-leading technology platforms and innovative research and development.”
Excluding restructuring charges and past-service pension cost
gains, EBITA was a net cost of EUR 44 million, compared to a net cost of EUR 60 million in Q2 2013. The improvement was mainly due to lower costs in the IT Service Units and higher IP royalties, partly offset by higher investments by Group
Innovation in emerging business areas.
Update on Accelerate! program:
We continue to execute on our multi-year transformation program Accelerate!, as we are strengthening our innovation pipeline through our focus on reducing time
to market, increasing local relevance, improving quality, and better prioritization of investments. Moreover, the Company continued to make good progress on its three cost savings programs in the second quarter. The overhead cost savings were EUR
34 million for the quarter, bringing the cumulative annualized overhead cost savings in the first half of the year to EUR 190 million. The Design for Excellence (DfX) program generated EUR 44 million of incremental savings in the bill of
material in the quarter, and the End-to-End productivity program generated EUR 5 million of savings. With these actions, we are continuing to deliver on our promise to improve operational and financial performance company-wide, as we transform
Philips into a leading technology company in health and well-being.
As of June 30 2014, Philips had completed 26% of the EUR 1.5 billion share
buy-back program.
Conference call and audio webcast
Frans van Houten, CEO, and Ron Wirahadiraksa, CFO, will host a conference call for investors and analysts at 10:00 am CET to discuss the results. A live audio
webcast of the conference call will be available by visting the Philips Investor Relations website.
Philips Group
Net income
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
| |
|
Q2 |
|
|
Q2 |
|
| |
|
2013 |
|
|
2014 |
|
|
|
|
| Sales |
|
|
5,632 |
|
|
|
5,293 |
|
| EBITA |
|
|
601 |
|
|
|
415 |
|
| as a % of sales |
|
|
10.7 |
|
|
|
7.8 |
|
| EBIT |
|
|
507 |
|
|
|
332 |
|
| as a % of sales |
|
|
9.0 |
|
|
|
6.3 |
|
| Financial income (expenses) |
|
|
(78 |
) |
|
|
(74 |
) |
| Income taxes |
|
|
(121 |
) |
|
|
(40 |
) |
| Results investments in associates |
|
|
14 |
|
|
|
2 |
|
| Net income from continuing operations |
|
|
322 |
|
|
|
220 |
|
| Discontinued operations |
|
|
(5 |
) |
|
|
23 |
|
| Net income |
|
|
317 |
|
|
|
243 |
|
|
|
|
| Net income attributable to shareholders per common share (in euros) - diluted |
|
|
0.35 |
|
|
|
0.26 |
|
Net income
| • |
|
Net income amounted to EUR 243 million, compared to EUR 317 million in Q2 2013. The year-on-year decrease reflects lower operational results, partly offset by lower income tax expense. |
| • |
|
EBITA amounted to EUR 415 million, or 7.8% of sales, compared to EUR 601 million, or 10.7% of sales, in Q2 2013. Restructuring and acquisition-related charges amounted to EUR 34 million, compared with
EUR 26 million in Q2 2013. EBITA in Q2 2013 included a EUR 78 million gain related to past-service pension costs in the US and a EUR 21 million gain on the sale of a business at Healthcare. Unfavorable currency effects had an
impact on Q2 2014 EBITA of 0.8 percentage points of sales. |
| • |
|
EBITA, excluding restructuring and acquisition-related charges and other items, was EUR 449 million, or 8.5% of sales, compared to EUR 528 million, or 9.4% of sales, in Q2 2013. Improved earnings at Consumer
Lifestyle, Lighting and IG&S were offset by lower results at Healthcare. |
| • |
|
Tax charges were EUR 81 million lower than in Q2 2013, largely due to lower earnings and the application of the Dutch Innovation Box tax rule, which has been retroactively applied since 2013. As a result, this is
expected to lower the Group’s effective tax rate by approximately 2 percentage points going forward. |
| • |
|
Income from discontinued operations increased by EUR 28 million, mainly due to the sale of WOOX Innovations.
|
|
|
|
| 4 |
|
Q2 2014 Quarterly report and Semi-annual report |
Sales by sector
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Q2 |
|
|
Q2 |
|
|
% change |
|
| |
|
2013 |
|
|
2014 |
|
|
nominal |
|
|
comparable |
|
|
|
|
|
|
| Healthcare |
|
|
2,362 |
|
|
|
2,137 |
|
|
|
(10 |
) |
|
|
(4 |
) |
| Consumer Lifestyle |
|
|
1,083 |
|
|
|
1,073 |
|
|
|
(1 |
) |
|
|
7 |
|
| Lighting |
|
|
2,048 |
|
|
|
1,943 |
|
|
|
(5 |
) |
|
|
1 |
|
| Innovation, Group & Services |
|
|
139 |
|
|
|
140 |
|
|
|
1 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
5,632 |
|
|
|
5,293 |
|
|
|
(6 |
) |
|
|
0 |
|
Sales per geographic cluster
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Q2 |
|
|
Q2 |
|
|
% change |
|
| |
|
2013 |
|
|
2014 |
|
|
nominal |
|
|
comparable |
|
|
|
|
|
|
| Western Europe |
|
|
1,328 |
|
|
|
1,327 |
|
|
|
0 |
|
|
|
0 |
|
| North America |
|
|
1,782 |
|
|
|
1,598 |
|
|
|
(10 |
) |
|
|
(4 |
) |
| Other mature geographies |
|
|
441 |
|
|
|
414 |
|
|
|
(6 |
) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total mature geographies |
|
|
3,551 |
|
|
|
3,339 |
|
|
|
(6 |
) |
|
|
(2 |
) |
| Growth geographies |
|
|
2,081 |
|
|
|
1,954 |
|
|
|
(6 |
) |
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
5,632 |
|
|
|
5,293 |
|
|
|
(6 |
) |
|
|
0 |
|
Sales per sector
| • |
|
Group sales amounted to EUR 5,293 million and were flat year-on-year on a comparable basis. |
| • |
|
Healthcare comparable sales decreased by 4% year-on-year. Home Healthcare Solutions recorded mid-single-digit growth and Customer Services achieved low-single-digit growth, while Patient Care & Clinical
Informatics saw a mid-single-digit decline and Imaging Systems a double-digit decline. |
| • |
|
Consumer Lifestyle comparable sales were 7% higher year-on-year, driven by double-digit growth at Health & Wellness and high-single-digit growth at Domestic Appliances, while Personal Care sales were flat
year-on-year. |
| • |
|
Lighting sales grew by 1% on a comparable basis, led by double-digit growth at Lumileds and Automotive and by low-single-digit growth at Professional Lighting Solutions. Light Sources & Electronics and Consumer
Luminaires sales showed a mid-single-digit decline. |
Sales per geographic cluster
| • |
|
Growth geographies delivered 4% comparable sales growth, driven by Consumer Lifestyle and Lighting. Particularly strong growth was seen in Central & Eastern Europe, Middle East & Turkey, India and
Africa. |
| • |
|
In mature geographies, comparable sales declined by 2% compared to Q2 2013, due to Healthcare and Lighting, while Consumer Lifestyle sales improved.
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
5 |
EBITA
in
millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
| |
|
2013 |
|
|
2014 |
|
| |
|
amount |
|
|
as a % of
sales |
|
|
amount |
|
|
as a % of
sales |
|
|
|
|
|
|
| Healthcare |
|
|
420 |
|
|
|
17.8 |
|
|
|
225 |
|
|
|
10.5 |
|
| Consumer Lifestyle |
|
|
82 |
|
|
|
7.6 |
|
|
|
100 |
|
|
|
9.3 |
|
| Lighting |
|
|
153 |
|
|
|
7.5 |
|
|
|
138 |
|
|
|
7.1 |
|
| Innovation, Group & Services |
|
|
(54 |
) |
|
|
— |
|
|
|
(48 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
601 |
|
|
|
10.7 |
|
|
|
415 |
|
|
|
7.8 |
|
EBITA excluding restructuring and acquisition-related charges and other items
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
| |
|
2013 |
|
|
2014 |
|
| |
|
amount |
|
|
as a % of
sales |
|
|
amount |
|
|
as a % of
sales |
|
|
|
|
|
|
| Healthcare |
|
|
338 |
|
|
|
14.3 |
|
|
|
224 |
|
|
|
10.5 |
|
| Consumer Lifestyle |
|
|
84 |
|
|
|
7.8 |
|
|
|
101 |
|
|
|
9.4 |
|
| Lighting |
|
|
166 |
|
|
|
8.1 |
|
|
|
168 |
|
|
|
8.6 |
|
| Innovation, Group & Services |
|
|
(60 |
) |
|
|
— |
|
|
|
(44 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
528 |
|
|
|
9.4 |
|
|
|
449 |
|
|
|
8.5 |
|
EBIT
in millions of
euros unless otherwise stated
|
|
|
|
|
|
|
|
|
| |
|
Q2
2013 |
|
|
Q2
2014 |
|
|
|
|
| Healthcare |
|
|
379 |
|
|
|
186 |
|
| Consumer Lifestyle |
|
|
69 |
|
|
|
86 |
|
| Lighting |
|
|
115 |
|
|
|
111 |
|
| Innovation, Group & Services |
|
|
(56 |
) |
|
|
(51 |
) |
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
507 |
|
|
|
332 |
|
| as a % of sales |
|
|
9.0 |
|
|
|
6.3 |
|
Earnings
| • |
|
Healthcare EBITA decreased by EUR 195 million year-on-year. Q2 2013 EBITA included a EUR 61 million past-service pension cost gain in the US and a EUR 21 million gain on the sale of a business.
Excluding restructuring and acquisition-related charges and other items, EBITA declined by EUR 114 million. The decline was mainly attributable to negative currency impact and the voluntary production suspension at the Cleveland facility.
|
| • |
|
Consumer Lifestyle EBITA increased by EUR 18 million year-on-year. Excluding restructuring and acquisition-related charges and a EUR 1 million past-service pension cost gain in the US in Q2 2013, EBITA
improved by EUR 17 million. The increase was driven by higher gross margins. |
| • |
|
Lighting EBITA decreased by EUR 15 million year-on-year. Excluding restructuring and acquisition-related charges and a EUR 10 million past-service pension cost gain in the US in Q2 2013, EBITA was EUR
2 million higher. The year-on-year EBITA increase was driven by higher gross margins. |
| • |
|
Innovation, Group & Services EBITA improved by EUR 6 million to a net cost of EUR 48 million. Excluding restructuring and acquisition-related charges and a EUR 6 million past-service pension cost gain
in the US in Q2 2013, EBITA was EUR 16 million higher. The improvement was mainly due to lower costs in the IT Service Units and higher IP royalties, partly offset by higher investments by Group Innovation in emerging business areas.
|
|
|
|
| 6 |
|
Q2 2014 Quarterly report and Semi-annual report |
Financial income and expenses
in millions of euros
|
|
|
|
|
|
|
|
|
| |
|
Q2 |
|
|
Q2 |
|
| |
|
2013 |
|
|
2014 |
|
|
|
|
| Net interest expenses |
|
|
(71 |
) |
|
|
(61 |
) |
| Other |
|
|
(7 |
) |
|
|
(13 |
) |
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
(78 |
) |
|
|
(74 |
) |
Cash balance
in millions
of euros
|
|
|
|
|
|
|
|
|
| |
|
Q2 |
|
|
Q2 |
|
| |
|
2013 |
|
|
2014 |
|
|
|
|
| Beginning cash balance |
|
|
3,066 |
|
|
|
1,727 |
|
| Free cash flow |
|
|
(105 |
) |
|
|
261 |
|
| Cash flows from operating activities |
|
|
141 |
|
|
|
487 |
|
| Net capital expenditures |
|
|
(246 |
) |
|
|
(226 |
) |
| Acquisitions, divestments of businesses |
|
|
96 |
|
|
|
(57 |
) |
| Other cash flow from investing activities |
|
|
(7 |
) |
|
|
(72 |
) |
| Treasury shares transactions |
|
|
(265 |
) |
|
|
(235 |
) |
| Changes in debt/other |
|
|
(137 |
) |
|
|
— |
|
| Dividend paid |
|
|
(231 |
) |
|
|
(248 |
) |
| Net cash flow discontinued operations |
|
|
(110 |
) |
|
|
59 |
|
|
|
|
|
|
|
|
|
|
| Ending cash balance |
|
|
2,307 |
|
|
|
1,435 |
|
Cash flows from operating activities
in millions of euros
Financial income and expenses
| • |
|
Financial income and expenses amounted to a net expense of EUR 74 million, an improvement of EUR 4 million compared with Q2 2013. This was mainly attributable to lower interest expenses on reduced debt.
|
Cash balance
| • |
|
The Group cash balance decreased during Q2 2014 to EUR 1,435 million, with a free cash inflow of EUR 261 million, which included an outflow of EUR 31 million in the form of a pension contribution related
to the de-risking of the Dutch pension plan. The cash balance was impacted by a EUR 110 million investment outflow related to the former TP Vision joint venture, EUR 248 million of cash dividend, as well as the use of EUR 235 million
in treasury shares transactions, primarily for the share buy-back program. Q2 2014 also included a net cash inflow of EUR 59 million from discontinued operations, mainly related to the sale of WOOX Innovations. |
| • |
|
In Q2 2013 the cash balance decreased to EUR 2,307 million. This was largely due to a free cash outflow of EUR 105 million, the use of EUR 265 million in treasury shares transactions, primarily for the
share buy-back program, EUR 231 million of cash dividend, as well as a net decrease of EUR 137 million mainly related to debt redemption. This was partly offset by a EUR 96 million inflow from divestments. Q2 2013 also included a cash
outflow of EUR 110 million from discontinued operations, of which EUR 77 million related to WOOX Innovations and EUR 33 million to the former TP Vision joint venture. |
Cash flows from operating activities
| • |
|
Operating activities resulted in a cash inflow of EUR 487 million, compared to a cash inflow of EUR 141 million in Q2 2013. The increase was mainly driven by higher accounts payable and lower accounts
receivable. |
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
7 |
Gross capital expenditures1)
in millions of euros
| 1) |
Capital expenditures on property, plant and equipment only |
Inventories
as a % of sales1)
| 1) |
Sales calculated over the preceding 12 months |
Net debt and group equity
in billions of euros
Gross capital expenditures
| • |
|
Gross capital expenditures on property, plant and equipment were EUR 17 million lower than in Q2 2013, mainly due to lower investments at Lighting. |
Inventories
| • |
|
Inventory value at the end of Q2 2014 was EUR 3.6 billion and amounted to 16.0% of sales. |
| • |
|
Compared to Q2 2013, inventories as a percentage of sales increased by 0.3 percentage points. This was mainly attributable to an increase at Healthcare. |
Net debt and group equity
| • |
|
At the end of Q2 2014, Philips had a net debt position of EUR 2.3 billion, compared to EUR 2.1 billion at the end of Q2 2013. During the quarter, the net debt position increased by EUR 343 million, mainly due to
treasury shares transactions and the distribution of the annual dividend. |
| • |
|
Group equity decreased by EUR 267 million in the quarter to EUR 10.8 billion. The decrease compared to Q1 2014 was largely a result of treasury shares transactions and the distribution of the annual dividend,
partly offset by net income earned during the period. |
|
|
|
| 8 |
|
Q2 2014 Quarterly report and Semi-annual report |
Number of employees
in FTEs
| 1) |
Number of employees excludes discontinued operations. Discontinued operations, comprising the Audio, Video, Multimedia and Accessories business divested at the end of Q2 2014, had 2,245 employees in Q2 2013 and 2,195
employees in Q1 2014. |
| 2) |
Number of employees includes 13,065 third-party workers in Q2 2014 (Q1 2014: 12,314, Q2 2013 12,283).
|
Employees
| • |
|
Compared to Q2 2013, the number of employees decreased by 2,290. This decrease includes 705 employees from divestments. Excluding divestments, the number of employees decreased by 1,585, mainly due to the company’s
overhead reduction program and the industrial footprint rationalization at Lighting and Healthcare. |
| • |
|
Compared to Q1 2014, the number of employees increased by 761, mainly due to a new definition of third-party workers.
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
9 |
Healthcare
Key data
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
| |
|
Q2 |
|
|
Q2 |
|
| |
|
2013 |
|
|
2014 |
|
|
|
|
| Sales |
|
|
2,362 |
|
|
|
2,137 |
|
| Sales growth |
|
|
|
|
|
|
|
|
| % nominal |
|
|
(2 |
) |
|
|
(10 |
) |
| % comparable |
|
|
0 |
|
|
|
(4 |
) |
| EBITA |
|
|
420 |
|
|
|
225 |
|
| as a % of sales |
|
|
17.8 |
|
|
|
10.5 |
|
| EBIT |
|
|
379 |
|
|
|
186 |
|
| as a % of sales |
|
|
16.0 |
|
|
|
8.7 |
|
| Net operating capital (NOC) |
|
|
7,684 |
|
|
|
7,457 |
|
| Number of employees (FTEs)1) |
|
|
37,270 |
|
|
|
37,157 |
|
| 1) |
Number of employees includes 2,599 third-party workers in Q2 2014 (Q2 2013: 2,525). |
Sales
in millions of euros
EBITA
Business highlights
| • |
|
In an innovative collaboration to address future health care challenges, Philips and Stockholm City Council signed a 14-year solutions partnership across the continuum of care. This comprises a research and innovation
hub and education programs, and state-of-the-art medical imaging equipment for the new Karolinska Hospital in Solna, Sweden. |
| • |
|
Recognizing Philips’ expertise in enabling effective care management, Community Health Systems selected Philips as a dual-source service provider for almost all of their 208 facilities across the US. The
partnership will help lower operating costs while delivering higher-quality care and improved patient outcomes. |
| • |
|
Driving industry transformation in collaborative care, Philips and salesforce.com announced an alliance to deliver a cloud-based health care platform. The platform leverages Philips’ leadership in medical
technology, clinical applications and clinical informatics, to enhance clinical decision making and enable patients to manage their personal health. |
| • |
|
Leveraging its deep clinical knowledge and strong base in clinical informatics, Philips will supply the National Taiwan University Hospital’s cardiovascular center, the largest in Asia, with Xper information
management and Xcelera image management systems. |
| • |
|
Advancing affordable, high-quality diagnostic imaging worldwide, Philips introduced VISIQ, its first ultra-mobile ultrasound system, in Africa and India. Featuring a tablet-and-transducer design, VISIQ makes ultrasound
available for patients in a wide range of environments. |
Financial performance
| • |
|
Currency-comparable equipment orders showed a low-single-digit decline year-on-year. Imaging Systems posted low-single-digit growth, while Patient Care & Clinical Informatics recorded a double-digit decline.
|
| • |
|
Equipment order intake in growth geographies showed a high-single-digit increase, with strong growth in Latin America and Russia & Central Asia, while China posted mid-single-digit growth. Western Europe
recorded high-single-digit growth and other mature geographies showed low-single-digit growth, while North America posted a double-digit decline.
|
|
|
|
| 10 |
|
Q2 2014 Quarterly report and Semi-annual report |
| • |
|
Healthcare comparable sales showed a 4% decrease year-on-year. Home Healthcare Solutions posted mid-single-digit growth, Customer Services achieved low-single-digit growth, while Patient Care & Clinical
Informatics showed a mid-single-digit decline. Imaging Systems recorded a double-digit decline. |
| • |
|
Comparable sales in Western Europe were flat and other mature geographies showed low-single-digit growth, while North America recorded a high-single-digit decline. Growth geographies recorded a low-single-digit decline.
|
| • |
|
EBITA amounted to EUR 225 million, or 10.5% of sales, compared to EUR 420 million, or 17.8% of sales, in Q2 2013. Q2 2013 included a EUR 61 million past-service pension cost gain in the US and a
EUR 21 million gain on the sale of a business. |
| • |
|
Excluding restructuring and acquisition-related charges and other gains, EBITA amounted to EUR 224 million, or 10.5% of sales, compared to EUR 338 million, or 14.3% of sales, in Q2 2013. The year-on-year
decline was mainly due to negative currency impact and the voluntary production suspension at the Cleveland facility. |
| • |
|
Net operating capital, excluding a negative currency translation effect of EUR 330 million, increased by EUR 103 million. The increase was largely driven by higher working capital, which was partly offset by
lower fixed assets. |
| • |
|
Inventories as a percentage of sales increased by 0.9 percentage points year-on-year. The increase was mainly due to the voluntary production suspension at the Cleveland facility. |
| • |
|
Compared to Q2 2013, the number of employees decreased by 113. This decrease was due to overhead reduction, industrial footprint rationalization and divestments, offset by investments in growth geographies. Compared to
Q1 2014, the number of employees increased by 651, mainly due to investments in growth geographies. |
Miscellaneous
| • |
|
Restructuring and acquisition-related charges in Q3 2014 are expected to total approximately EUR 20 million.
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
11 |
| • |
|
As announced on January 28, 2014, Philips voluntarily suspended production at the Cleveland, Ohio facility. Philips is taking comprehensive measures to raise the efficacy of the quality management system within the
Healthcare sector to Philips Excellence standards in close collaboration with industry experts. The business impact on sector EBITA, due to lower sales and extra costs, is expected to be EUR 60 to 70 million for the year. The remediation
process and mitigation plans are progressing according to plan and the factory is expected to gradually resume production in the course of the third quarter. |
| • |
|
As announced on July 8, 2014, Philips is implementing a new management structure in the Healthcare sector to improve performance and allow it to respond better to evolving customer demands in a changing health care
landscape. In this new model, the Healthcare business groups will report directly to Philips Chief Executive Officer Frans van Houten, thereby removing one management layer.
|
|
|
|
| 12 |
|
Q2 2014 Quarterly report and Semi-annual report |
Consumer Lifestyle
Key data
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
| |
|
Q2 |
|
|
Q2 |
|
| |
|
2013 |
|
|
2014 |
|
|
|
|
| Sales |
|
|
1,083 |
|
|
|
1,073 |
|
| Sales growth |
|
|
|
|
|
|
|
|
| % nominal |
|
|
13 |
|
|
|
(1 |
) |
| % comparable |
|
|
13 |
|
|
|
7 |
|
| EBITA |
|
|
82 |
|
|
|
100 |
|
| as a % of sales |
|
|
7.6 |
|
|
|
9.3 |
|
| EBIT |
|
|
69 |
|
|
|
86 |
|
| as a % of sales |
|
|
6.4 |
|
|
|
8.0 |
|
| Net operating capital (NOC) |
|
|
1,182 |
|
|
|
1,271 |
|
| Number of employees (FTEs)1) |
|
|
16,544 |
|
|
|
16,886 |
|
| 1) |
Number of employees includes 3,953 third-party workers in Q2 2014 (Q2 2013: 3,261). |
Sales
in millions of euros
EBITA
Business highlights
| • |
|
Award-winning designs and superior technology further strengthened Philips’ leadership position in the Chinese Air Purification market, with consumers responding to innovations such as the VitaShield Intelligent
Purification System, which removes indoor contaminants that can impact health and well-being. |
| • |
|
Professional endorsement and channel expansion are core to the growth momentum of Philips’ Mother & Childcare business (AVENT). In Germany, distribution was further extended in the drugstore channel, with
professional endorsement a key trigger for consumers. In China, distribution was expanded to more cities, with a continued focus to make Philips AVENT the brand that is most recommended by mothers. |
| • |
|
Delivering on its strategy to build the Philips brand in the beauty category, Philips introduced Philips VisaCare and Philips VisaPure Men. The latter is a device specifically designed for male skin cleansing, which is
a rapidly growing segment driven by Asian markets such as Korea. |
| • |
|
Philips Kitchen Appliances showed solid growth, led by the strong performance of global propositions such as Philips Airfryers, Blenders and Juicers. Extending the portfolio of locally relevant propositions, a Japanese
version of the Philips Noodle Maker was successfully launched. |
| • |
|
The success of established propositions like the Philips Sonicare DiamondClean and the Philips Sonicare AirFloss, along with new introductions like Philips Sonicare for Kids, drove continued growth across the world, in
particular in China, Japan, Germany and North America. |
Financial performance
| • |
|
Consumer Lifestyle comparable sales increased by 7%. Double-digit comparable sales growth was seen at Health & Wellness, and Domestic Appliances recorded high-single-digit growth. Sales were flat at Personal
Care. |
| • |
|
Comparable sales showed double-digit growth in growth geographies. Western Europe and North America showed low-single-digit growth. |
| • |
|
EBITA amounted to EUR 100 million, or 9.3% of sales, compared to EUR 82 million, or 7.6% of sales, in Q2 2013.
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
13 |
| • |
|
Excluding restructuring and acquisition-related charges and a EUR 1 million past-service pension cost gain in the US in Q2 2013, EBITA was EUR 101 million, or 9.4% of sales, compared to EUR 84 million, or
7.8% of sales, in Q2 2013. The improvement was largely attributable to higher gross margins across all businesses. |
| • |
|
EBITA included EUR 3 million of net costs formerly reported in the Audio, Video, Multimedia and Accessories business (Q2 2013: EUR 7 million). |
| • |
|
Net operating capital, excluding a negative currency translation effect of EUR 10 million, increased by EUR 99 million year-on-year. The increase was largely driven by higher working capital, mainly accounts
receivable, and a reduction in provisions. |
| • |
|
Inventories as a percentage of sales decreased by 0.5 percentage points year-on-year. |
| • |
|
Compared to Q2 2013, the number of employees increased by 342 year-on-year, mainly driven by an increase at Domestic Appliances in Europe. Compared to Q1 2014, the number of employees decreased by 217, with the majority
in North America. |
Miscellaneous
| • |
|
Restructuring and acquisition-related charges in Q3 2014 are expected to total approximately EUR 5 million.
|
|
|
|
| 14 |
|
Q2 2014 Quarterly report and Semi-annual report |
Lighting
Key data
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
| |
|
Q2
2013 |
|
|
Q2
2014 |
|
|
|
|
| Sales |
|
|
2,048 |
|
|
|
1,943 |
|
| Sales growth |
|
|
|
|
|
|
|
|
| % nominal |
|
|
1 |
|
|
|
(5 |
) |
| % comparable |
|
|
2 |
|
|
|
1 |
|
| EBITA |
|
|
153 |
|
|
|
138 |
|
| as a % of sales |
|
|
7.5 |
|
|
|
7.1 |
|
| EBIT |
|
|
115 |
|
|
|
111 |
|
| as a % of sales |
|
|
5.6 |
|
|
|
5.7 |
|
| Net operating capital (NOC) |
|
|
4,732 |
|
|
|
4,558 |
|
| Number of employees (FTEs)1) |
|
|
49,148 |
|
|
|
45,447 |
|
| 1) |
Number of employees includes 5,137 third-party workers in Q2 2014 (Q2 2013: 5,883). |
Sales
in millions of euros
EBITA
Business highlights
| • |
|
Philips became the official lighting partner of the Allianz Arena, home to FC Bayern Munich. The Arena will be the largest stadium in Europe to feature a connected LED lighting system which will turn the façade
into a dynamic colored light display. |
| • |
|
Driving innovation in professional systems and services, Philips is lighting the media façade of Moscow’s VEGAS Crocus City shopping entertainment mall. This represents Philips’ largest project realized
using connected architectural lighting technology. |
| • |
|
Philips introduced the SlimStyle LED home floodlight bulb in the US. The innovative flat-head design enabled the elimination of the bulb’s heat sink, thereby reducing its cost. |
| • |
|
Philips implemented a horticultural LED lighting system for Green Sense Farms in Chicago. Using tailored LED grow lights, herbs and greens are organically grown indoors all year round. Crop yields and quality increase,
while using 85% less energy than conventional lighting. |
| • |
|
In partnership with Philips, all newly-built and renovated Tim Hortons restaurants across North America will benefit from high-quality energy-efficient Philips LED fixtures that enhance the guest experience.
|
Financial performance
| • |
|
Lighting comparable sales showed a 1% increase year-on-year. Lumileds and Automotive achieved double-digit growth, Professional Lighting Solutions recorded low-single-digit growth, while Light Sources &
Electronics and Consumer Luminaires posted a mid-single-digit decline. |
| • |
|
Excluding OEM Lumileds and Automotive, comparable sales showed a low-single-digit decline, with a mid-single-digit decline in growth geographies and a low-single-digit decline in mature geographies. |
| • |
|
LED-based sales grew 43% compared to Q2 2013, and now represent 36% of total Lighting sales, compared to 25% in Q2 2013. |
| • |
|
EBITA amounted to EUR 138 million, or 7.1% of sales, compared to EUR 153 million, or 7.5% of sales, in Q2 2013.
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
15 |
| • |
|
EBITA, excluding restructuring and acquisition-related charges and a EUR 10 million past-service pension cost gain in the US in 2013, was EUR 168 million, or 8.6% of sales, compared to EUR 166 million, or
8.1% of sales, in Q2 2013. The year-on-year EBITA increase was driven by higher gross margins. |
| • |
|
Net operating capital, excluding a negative currency translation effect of EUR 187 million, was flat year-on-year. |
| • |
|
Inventories as a percentage of sales increased by 0.4 percentage points year-on-year. |
| • |
|
Compared to Q2 2013, the number of employees decreased by 3,701, mainly due to rationalization of the industrial footprint. The number of employees decreased by 212 compared to Q1 2014. |
Miscellaneous
| • |
|
Restructuring and acquisition-related charges are expected to total approximately EUR 25 million in Q3 and EUR 145 million in Q4 2014. |
| • |
|
As announced on June 30, 2014, Philips has started the process to combine its Lumileds (LED components) and Automotive lighting businesses into a stand-alone company within Philips. Philips will explore strategic
options to attract capital from third-party investors for this business. Philips intends to remain a shareholder and customer of the new company, and will continue the existing innovation collaboration. Costs associated with setting up the combined
business are expected to amount to EUR 15 million in both Q3 and Q4 2014. |
|
|
|
| 16 |
|
Q2 2014 Quarterly report and Semi-annual report |
Innovation, Group & Services
Key data
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
| |
|
Q2
2013 |
|
|
Q2
2014 |
|
|
|
|
| Sales |
|
|
139 |
|
|
|
140 |
|
| Sales growth |
|
|
|
|
|
|
|
|
| % nominal |
|
|
(6 |
) |
|
|
1 |
|
| % comparable |
|
|
(14 |
) |
|
|
3 |
|
| EBITA of: |
|
|
|
|
|
|
|
|
| Group Innovation |
|
|
(34 |
) |
|
|
(47 |
) |
| IP Royalties |
|
|
56 |
|
|
|
62 |
|
| Group and Regional Costs |
|
|
(33 |
) |
|
|
(37 |
) |
| Accelerate! investment |
|
|
(40 |
) |
|
|
(32 |
) |
| Pensions |
|
|
(1 |
) |
|
|
(3 |
) |
| Service Units and Other |
|
|
(2 |
) |
|
|
9 |
|
|
|
|
|
|
|
|
|
|
| EBITA |
|
|
(54 |
) |
|
|
(48 |
) |
| EBIT |
|
|
(56 |
) |
|
|
(51 |
) |
| Net operating capital (NOC) |
|
|
(3,414 |
) |
|
|
(2,786 |
) |
| Number of employees (FTEs)1) |
|
|
12,162 |
|
|
|
13,344 |
|
| 1) |
Number of employees includes 1,375 third-party workers in Q2 2014 (Q2 2013: 614). |
Sales
in millions of euros
EBITA
in millions of
euros
Business highlights
| • |
|
Highlighting Philips’ commitment to Green Innovation, Philips was the fastest-rising technology brand in Interbrand’s annual ranking of the top 50 Best Global Green Brands. Advancing nine places, Philips now
holds the 14th position. |
| • |
|
The US Environmental Protection Agency named Philips ‘ENERGY STAR Partner of the Year’ for the second year running. Philips released a total of 374 ENERGY STAR-qualified products in 2013, up 40% over the prior
year. |
| • |
|
Philips received three 2014 International Design Excellence Awards for the VISIQ Portable Ultrasound System, the Ambient Experience PET CT Suite (Sparks) and the EPIQ Premium Ultrasound System. This award program is
organized by the Industrial Designers Society of America. |
| • |
|
Philips welcomed the 430th licensee to its LED Luminaires and Retrofit Bulbs Licensing Program, an increase of 100 licensees since May last year. With this program, Philips is fostering LED industry growth by offering
companies access to its wide portfolio of patented LED system technologies and solutions. |
| • |
|
Philips and Eindhoven University of Technology (TU/e) announced a strategic cooperation aimed at accelerating the exploration and development of digital innovations in health care, lighting and data science.
|
Financial performance
| • |
|
Sales were in line with Q2 2013. Higher IP royalties were offset by lower Group Innovation income. |
| • |
|
EBITA amounted to a net cost of EUR 48 million, including EUR 4 million of net restructuring charges. The EBITA net cost of EUR 54 million in Q2 2013 included a EUR 6 million past-service pension
cost gain in the US. Net restructuring charges in Q2 2013 were close to zero. |
| • |
|
Excluding restructuring charges and past-service pension cost gains, EBITA was a net cost of EUR 44 million, compared to a net cost of EUR 60 million in Q2 2013. The improvement was mainly due to lower costs
in the IT Service Units and higher IP royalties, partly offset by higher investments by Group Innovation in emerging business areas. |
| • |
|
EBITA of Service Units and Other included EUR 8 million of net costs formerly reported in the Audio, Video, Multimedia and Accessories business (Q2 2013: EUR 15 million).
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
17 |
| • |
|
Net operating capital, excluding a positive currency translation effect of EUR 83 million, increased by EUR 545 million year-on-year, mainly due to a decrease in pension liabilities and an increase in the
value of currency hedges. |
| • |
|
Compared to Q2 2013, the number of employees increased by 1,182, primarily driven by a shift of employees from the sectors to the Enterprise Information Management Service Unit, an increase in temporary workers in the
IT Service Units as well as an increase in Group Innovation. The number of employees increased by 539 compared to Q1 2014. |
Miscellaneous
| • |
|
Restructuring charges in Q3 2014 are expected to total approximately EUR 10 million.
|
|
|
|
| 18 |
|
Q2 2014 Quarterly report and Semi-annual report |
Additional information on Audio, Video, Multimedia and Accessories business
AVM&A results reconciliation
|
|
|
|
|
|
|
|
|
| |
|
Q2
2013 |
|
|
Q2
2014 |
|
|
|
|
| EBITA |
|
|
(10 |
) |
|
|
— |
|
|
|
|
| Disentanglement costs |
|
|
(7 |
) |
|
|
(8 |
) |
|
|
|
| Former AVM&A net costs allocated to Consumer Lifestyle |
|
|
7 |
|
|
|
3 |
|
| Former AVM&A net costs allocated to IG&S |
|
|
15 |
|
|
|
8 |
|
|
|
|
| EBIT discontinued operations |
|
|
5 |
|
|
|
3 |
|
| Gain on sale of business |
|
|
— |
|
|
|
5 |
|
| Operational result |
|
|
5 |
|
|
|
(2 |
) |
| Financial income and expenses |
|
|
(1 |
) |
|
|
(2 |
) |
| Income taxes |
|
|
(1 |
) |
|
|
12 |
|
| Deal result related income tax |
|
|
— |
|
|
|
12 |
|
| Operational income tax |
|
|
(1 |
) |
|
|
— |
|
|
|
|
| Net income from discontinued operations |
|
|
3 |
|
|
|
13 |
|
|
|
|
| Number of employees (FTEs) |
|
|
2,245 |
|
|
|
2,096 |
1) |
| 1) |
Divested as of June 29, 2014
|
The Audio, Video, Multimedia and Accessories (AVM&A) business is reported as discontinued operations in the
Consolidated statements of income and Consolidated statements of cash flows. The applicable assets and liabilities of this business were, prior to divestment, reported under Assets and Liabilities classified as held for sale in the Consolidated
balance sheet.
In November 2013, Philips separated the AVM&A business into a stand-alone legal entity under the name WOOX Innovations. On
June 29, 2014, WOOX Innovations was divested to Gibson Brands, Inc.
The net income of discontinued operations attributable to the AVM&A business
improved from EUR 3 million in Q2 2013 to EUR 13 million in Q2 2014. In Q2 2014, Philips recorded a gain on the sale of the business to Gibson Brands of EUR 17 million, which included an income tax benefit of EUR 12 million.
The Q2 2014 EBITA of Consumer Lifestyle includes net costs of EUR 3 million formerly reported as part of the results of this business, compared to EUR
7 million in Q2 2013. The EBITA of Innovation, Group & Services includes net costs of EUR 8 million formerly reported as part of this business.
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
19 |
Philips quarterly statistics
all amounts in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2013 |
|
|
2014 |
| |
|
1st quarter |
|
|
2nd quarter |
|
|
3rd quarter |
|
|
4th quarter |
|
|
1st quarter |
|
|
2nd quarter |
|
|
3rd quarter |
|
4th quarter |
|
|
|
|
|
|
|
|
|
| Sales |
|
|
5,245 |
|
|
|
5,632 |
|
|
|
5,595 |
|
|
|
6,785 |
|
|
|
5,013 |
|
|
|
5,293 |
|
|
|
|
|
| comparable sales growth % |
|
|
1 |
|
|
|
3 |
|
|
|
3 |
|
|
|
7 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin |
|
|
2,124 |
|
|
|
2,363 |
|
|
|
2,369 |
|
|
|
2,891 |
|
|
|
2,018 |
|
|
|
2,180 |
|
|
|
|
|
| as a % of sales |
|
|
40.5 |
|
|
|
42.0 |
|
|
|
42.3 |
|
|
|
42.6 |
|
|
|
40.3 |
|
|
|
41.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling expenses |
|
|
(1,214 |
) |
|
|
(1,274 |
) |
|
|
(1,245 |
) |
|
|
(1,460 |
) |
|
|
(1,195 |
) |
|
|
(1,248 |
) |
|
|
|
|
| as a % of sales |
|
|
(23.1 |
) |
|
|
(22.6 |
) |
|
|
(22.3 |
) |
|
|
(21.5 |
) |
|
|
(23.8 |
) |
|
|
(23.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| G&A expenses |
|
|
(188 |
) |
|
|
(208 |
) |
|
|
(221 |
) |
|
|
(231 |
) |
|
|
(177 |
) |
|
|
(181 |
) |
|
|
|
|
| as a % of sales |
|
|
(3.6 |
) |
|
|
(3.7 |
) |
|
|
(3.9 |
) |
|
|
(3.4 |
) |
|
|
(3.5 |
) |
|
|
(3.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| R&D expenses |
|
|
(434 |
) |
|
|
(426 |
) |
|
|
(449 |
) |
|
|
(468 |
) |
|
|
(420 |
) |
|
|
(426 |
) |
|
|
|
|
| as a % of sales |
|
|
(8.3 |
) |
|
|
(7.6 |
) |
|
|
(8.0 |
) |
|
|
(6.9 |
) |
|
|
(8.4 |
) |
|
|
(8.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| EBIT |
|
|
306 |
|
|
|
507 |
|
|
|
466 |
|
|
|
710 |
|
|
|
227 |
|
|
|
332 |
|
|
|
|
|
| as a % of sales |
|
|
5.8 |
|
|
|
9.0 |
|
|
|
8.3 |
|
|
|
10.5 |
|
|
|
4.5 |
|
|
|
6.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EBITA |
|
|
403 |
|
|
|
601 |
|
|
|
564 |
|
|
|
881 |
|
|
|
315 |
|
|
|
415 |
|
|
|
|
|
| as a % of sales |
|
|
7.7 |
|
|
|
10.7 |
|
|
|
10.1 |
|
|
|
13.0 |
|
|
|
6.3 |
|
|
|
7.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
162 |
|
|
|
317 |
|
|
|
281 |
|
|
|
412 |
|
|
|
137 |
|
|
|
243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to shareholders |
|
|
161 |
|
|
|
317 |
|
|
|
282 |
|
|
|
409 |
|
|
|
138 |
|
|
|
242 |
|
|
|
|
|
| Net income - shareholders per common share in euros - diluted |
|
|
0.17 |
|
|
|
0.35 |
|
|
|
0.31 |
|
|
|
0.44 |
|
|
|
0.15 |
|
|
|
0.26 |
|
|
|
|
|
|
|
|
| 20 |
|
Q2 2014 Quarterly report and Semi-annual report |
Philips quarterly statistics (continued)
all amounts in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2013 |
|
|
2014 |
| |
|
January-
March |
|
|
January-
June |
|
|
January-
September |
|
|
January-
December |
|
|
January-
March |
|
|
January-
June |
|
|
January-
September |
|
January-
December |
|
|
|
|
|
|
|
|
|
| Sales |
|
|
5,245 |
|
|
|
10,877 |
|
|
|
16,472 |
|
|
|
23,257 |
|
|
|
5,013 |
|
|
|
10,306 |
|
|
|
|
|
| comparable sales growth % |
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin |
|
|
2,124 |
|
|
|
4,487 |
|
|
|
6,856 |
|
|
|
9,747 |
|
|
|
2,018 |
|
|
|
4,198 |
|
|
|
|
|
| as a % of sales |
|
|
40.5 |
|
|
|
41.3 |
|
|
|
41.6 |
|
|
|
41.9 |
|
|
|
40.3 |
|
|
|
40.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling expenses |
|
|
(1,214 |
) |
|
|
(2,488 |
) |
|
|
(3,733 |
) |
|
|
(5,193 |
) |
|
|
(1,195 |
) |
|
|
(2,443 |
) |
|
|
|
|
| as a % of sales |
|
|
(23.1 |
) |
|
|
(22.9 |
) |
|
|
(22.7 |
) |
|
|
(22.3 |
) |
|
|
(23.8 |
) |
|
|
(23.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| G&A expenses |
|
|
(188 |
) |
|
|
(396 |
) |
|
|
(617 |
) |
|
|
(848 |
) |
|
|
(177 |
) |
|
|
(358 |
) |
|
|
|
|
| as a % of sales |
|
|
(3.6 |
) |
|
|
(3.6 |
) |
|
|
(3.7 |
) |
|
|
(3.6 |
) |
|
|
(3.5 |
) |
|
|
(3.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| R&D expenses |
|
|
(434 |
) |
|
|
(860 |
) |
|
|
(1,309 |
) |
|
|
(1,777 |
) |
|
|
(420 |
) |
|
|
(846 |
) |
|
|
|
|
| as a % sales |
|
|
(8.3 |
) |
|
|
(7.9 |
) |
|
|
(7.9 |
) |
|
|
(7.6 |
) |
|
|
(8.4 |
) |
|
|
(8.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| EBIT |
|
|
306 |
|
|
|
813 |
|
|
|
1,279 |
|
|
|
1,989 |
|
|
|
227 |
|
|
|
559 |
|
|
|
|
|
| as a % of sales |
|
|
5.8 |
|
|
|
7.5 |
|
|
|
7.8 |
|
|
|
8.6 |
|
|
|
4.5 |
|
|
|
5.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EBITA |
|
|
403 |
|
|
|
1,004 |
|
|
|
1,568 |
|
|
|
2,449 |
|
|
|
315 |
|
|
|
730 |
|
|
|
|
|
| as a % of sales |
|
|
7.7 |
|
|
|
9.2 |
|
|
|
9.5 |
|
|
|
10.5 |
|
|
|
6.3 |
|
|
|
7.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
162 |
|
|
|
479 |
|
|
|
760 |
|
|
|
1,172 |
|
|
|
137 |
|
|
|
380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to shareholders |
|
|
161 |
|
|
|
478 |
|
|
|
760 |
|
|
|
1,169 |
|
|
|
138 |
|
|
|
380 |
|
|
|
|
|
| Net income - shareholders per common share in euros - diluted |
|
|
0.17 |
|
|
|
0.52 |
|
|
|
0.83 |
|
|
|
1.27 |
|
|
|
0.15 |
|
|
|
0.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from continuing operations as a % of shareholders’ equity |
|
|
5.9 |
|
|
|
9.0 |
|
|
|
9.4 |
|
|
|
10.6 |
|
|
|
5.8 |
|
|
|
7.2 |
|
|
|
|
|
|
|
|
| |
|
period ended 2013 |
|
|
period ended 2014 |
|
|
|
|
|
|
|
|
|
| Number of common shares outstanding (after deduction of treasury shares) at the end of period (in thousands) |
|
|
905,381 |
|
|
|
913,874 |
|
|
|
915,095 |
|
|
|
913,338 |
|
|
|
913,485 |
|
|
|
923,933 |
|
|
|
|
|
| Shareholders’ equity per common share in euros |
|
|
12.33 |
|
|
|
11.78 |
|
|
|
11.93 |
|
|
|
12.28 |
|
|
|
12.06 |
|
|
|
11.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Inventories as a % of sales1) |
|
|
15.5 |
|
|
|
15.7 |
|
|
|
16.4 |
|
|
|
13.9 |
|
|
|
14.9 |
|
|
|
16.0 |
|
|
|
|
|
| Inventories excluding discontinued operations |
|
|
3,616 |
|
|
|
3,680 |
|
|
|
3,815 |
|
|
|
3,226 |
|
|
|
3,433 |
|
|
|
3,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net debt : group equity ratio |
|
|
12:88 |
|
|
|
16:84 |
|
|
|
16:84 |
|
|
|
11:89 |
|
|
|
15:85 |
|
|
|
18:82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net operating capital |
|
|
9,969 |
|
|
|
10,184 |
|
|
|
10,249 |
|
|
|
10,238 |
|
|
|
10,381 |
|
|
|
10,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total employees2) |
|
|
118,085 |
|
|
|
117,369 |
|
|
|
115,858 |
|
|
|
116,082 |
|
|
|
114,268 |
|
|
|
112,834 |
|
|
|
|
|
| of which discontinued operations |
|
|
2,355 |
|
|
|
2,245 |
|
|
|
2,187 |
|
|
|
2,226 |
|
|
|
2,195 |
|
|
|
— |
|
|
|
|
|
| 1) |
Sales is calculated over the preceding 12 months |
| 2) |
Number of employees includes third-party workers |
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
21 |
Reconciliation of non-GAAP performance measures
in millions of euros unless otherwise stated
Certain non-GAAP
financial measures are presented when discussing the Philips Group’s performance. In the following tables, reconciliations to the most directly comparable IFRS measures are presented.
Sales growth composition (in %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
|
January to June |
|
| |
|
comparable
growth |
|
|
currency
effects |
|
|
consolidation
changes |
|
|
nominal
growth |
|
|
comparable
growth |
|
|
currency
effects |
|
|
consolidation
changes |
|
|
nominal
growth |
|
|
|
|
|
|
|
|
|
|
| 2014 versus 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Healthcare |
|
|
(3.8 |
) |
|
|
(5.4 |
) |
|
|
(0.3 |
) |
|
|
(9.5 |
) |
|
|
(3.0 |
) |
|
|
(5.2 |
) |
|
|
(0.4 |
) |
|
|
(8.6 |
) |
| Consumer Lifestyle |
|
|
6.5 |
|
|
|
(7.4 |
) |
|
|
0.0 |
|
|
|
(0.9 |
) |
|
|
6.5 |
|
|
|
(6.4 |
) |
|
|
0.0 |
|
|
|
0.1 |
|
| Lighting |
|
|
1.2 |
|
|
|
(6.3 |
) |
|
|
0.0 |
|
|
|
(5.1 |
) |
|
|
0.8 |
|
|
|
(5.5 |
) |
|
|
0.0 |
|
|
|
(4.7 |
) |
| IG&S |
|
|
2.8 |
|
|
|
(2.1 |
) |
|
|
0.0 |
|
|
|
0.7 |
|
|
|
(2.2 |
) |
|
|
(1.2 |
) |
|
|
3.4 |
|
|
|
0.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
0.2 |
|
|
|
(6.1 |
) |
|
|
(0.1 |
) |
|
|
(6.0 |
) |
|
|
0.3 |
|
|
|
(5.4 |
) |
|
|
(0.1 |
) |
|
|
(5.2 |
) |
EBITA excluding restructuring and acquisition-related charges and other items to Income from operations (or EBIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
|
January to June |
|
| |
|
Philips
Group |
|
|
Healthcare |
|
|
Consumer
Lifestyle |
|
|
Lighting |
|
|
Innovation,
Group &
Services |
|
|
Philips
Group |
|
|
Healthcare |
|
|
Consumer
Lifestyle |
|
|
Lighting |
|
|
Innovation,
Group &
Services |
|
|
|
|
|
|
|
|
|
|
|
|
| 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EBITA excluding restructuring and acquisition-related charges and other items |
|
|
449 |
|
|
|
224 |
|
|
|
101 |
|
|
|
168 |
|
|
|
(44 |
) |
|
|
818 |
|
|
|
397 |
|
|
|
209 |
|
|
|
339 |
|
|
|
(127 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Restructuring and acquisition-related charges |
|
|
(34 |
) |
|
|
1 |
|
|
|
(1 |
) |
|
|
(30 |
) |
|
|
(4 |
) |
|
|
(88 |
) |
|
|
(20 |
) |
|
|
(1 |
) |
|
|
(63 |
) |
|
|
(4 |
) |
| EBITA (or Adjusted income from operations) |
|
|
415 |
|
|
|
225 |
|
|
|
100 |
|
|
|
138 |
|
|
|
(48 |
) |
|
|
730 |
|
|
|
377 |
|
|
|
208 |
|
|
|
276 |
|
|
|
(131 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization of intangibles1) |
|
|
(83 |
) |
|
|
(39 |
) |
|
|
(14 |
) |
|
|
(27 |
) |
|
|
(3 |
) |
|
|
(168 |
) |
|
|
(81 |
) |
|
|
(26 |
) |
|
|
(55 |
) |
|
|
(6 |
) |
| Impairment of goodwill |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from operations (or EBIT) |
|
|
332 |
|
|
|
186 |
|
|
|
86 |
|
|
|
111 |
|
|
|
(51 |
) |
|
|
559 |
|
|
|
295 |
|
|
|
182 |
|
|
|
219 |
|
|
|
(137 |
) |
|
|
|
|
|
|
|
|
|
|
|
| 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EBITA excluding restructuring and acquisition-related charges and other items |
|
|
528 |
|
|
|
338 |
|
|
|
84 |
|
|
|
166 |
|
|
|
(60 |
) |
|
|
950 |
|
|
|
562 |
|
|
|
183 |
|
|
|
332 |
|
|
|
(127 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other items |
|
|
99 |
|
|
|
82 |
|
|
|
1 |
|
|
|
10 |
|
|
|
6 |
|
|
|
99 |
|
|
|
82 |
|
|
|
1 |
|
|
|
10 |
|
|
|
6 |
|
| Restructuring and acquisition-related charges |
|
|
(26 |
) |
|
|
— |
|
|
|
(3 |
) |
|
|
(23 |
) |
|
|
— |
|
|
|
(45 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
|
|
(42 |
) |
|
|
3 |
|
| EBITA (or adjusted income from operations) |
|
|
601 |
|
|
|
420 |
|
|
|
82 |
|
|
|
153 |
|
|
|
(54 |
) |
|
|
1,004 |
|
|
|
642 |
|
|
|
180 |
|
|
|
300 |
|
|
|
(118 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization of intangibles1) |
|
|
(94 |
) |
|
|
(41 |
) |
|
|
(13 |
) |
|
|
(38 |
) |
|
|
(2 |
) |
|
|
(191 |
) |
|
|
(87 |
) |
|
|
(27 |
) |
|
|
(75 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from operations (or EBIT) |
|
|
507 |
|
|
|
379 |
|
|
|
69 |
|
|
|
115 |
|
|
|
(56 |
) |
|
|
813 |
|
|
|
555 |
|
|
|
153 |
|
|
|
225 |
|
|
|
(120 |
) |
| 1) |
Excluding amortization of software and product development |
|
|
|
| 22 |
|
Q2 2014 Quarterly report and Semi-annual report |
Reconciliation of non-GAAP performance measures (continued)
all amounts in millions of euros
Net operating capital to total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Philips Group |
|
|
Healthcare |
|
|
Consumer
Lifestyle |
|
|
Lighting |
|
|
IG&S |
|
|
|
|
|
|
|
| June 29, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net operating capital (NOC) |
|
|
10,500 |
|
|
|
7,457 |
|
|
|
1,271 |
|
|
|
4,558 |
|
|
|
(2,786 |
) |
| Exclude liabilities comprised in NOC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - payables/liabilities |
|
|
8,527 |
|
|
|
2,585 |
|
|
|
1,392 |
|
|
|
1,761 |
|
|
|
2,789 |
|
| - intercompany accounts |
|
|
— |
|
|
|
117 |
|
|
|
64 |
|
|
|
66 |
|
|
|
(247 |
) |
| - provisions |
|
|
2,495 |
|
|
|
285 |
|
|
|
181 |
|
|
|
428 |
|
|
|
1,601 |
|
| Include assets not comprised in NOC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - investments in associates |
|
|
171 |
|
|
|
75 |
|
|
|
— |
|
|
|
19 |
|
|
|
77 |
|
| - other current financial assets |
|
|
125 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
125 |
|
| - other non-current financial assets |
|
|
438 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
438 |
|
| - deferred tax assets |
|
|
1,832 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,832 |
|
| - cash and cash equivalents |
|
|
1,435 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,523 |
|
|
|
10,519 |
|
|
|
2,908 |
|
|
|
6,832 |
|
|
|
5,264 |
|
| Assets classified as held for sale |
|
|
136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
25,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net operating capital (NOC) |
|
|
10,238 |
|
|
|
7,437 |
|
|
|
1,261 |
|
|
|
4,462 |
|
|
|
(2,922 |
) |
| Exclude liabilities comprised in NOC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - payables/liabilities |
|
|
8,453 |
|
|
|
2,541 |
|
|
|
1,275 |
|
|
|
1,672 |
|
|
|
2,965 |
|
| - intercompany accounts |
|
|
— |
|
|
|
124 |
|
|
|
75 |
|
|
|
105 |
|
|
|
(304 |
) |
| - provisions |
|
|
2,554 |
|
|
|
278 |
|
|
|
221 |
|
|
|
452 |
|
|
|
1,603 |
|
| Include assets not comprised in NOC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - investments in associates |
|
|
161 |
|
|
|
85 |
|
|
|
— |
|
|
|
20 |
|
|
|
56 |
|
| - other current financial assets |
|
|
10 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10 |
|
| - other non-current financial assets |
|
|
496 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
496 |
|
| - deferred tax assets |
|
|
1,675 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,675 |
|
| - cash and cash equivalents |
|
|
2,465 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,052 |
|
|
|
10,465 |
|
|
|
2,832 |
|
|
|
6,711 |
|
|
|
6,044 |
|
| Assets classified as held for sale |
|
|
507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
26,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net operating capital (NOC) |
|
|
10,184 |
|
|
|
7,684 |
|
|
|
1,182 |
|
|
|
4,732 |
|
|
|
(3,414 |
) |
| Exclude liabilities comprised in NOC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - payables/liabilities |
|
|
9,371 |
|
|
|
2,751 |
|
|
|
1,424 |
|
|
|
1,781 |
|
|
|
3,415 |
|
| - intercompany accounts |
|
|
— |
|
|
|
122 |
|
|
|
71 |
|
|
|
105 |
|
|
|
(298 |
) |
| - provisions |
|
|
2,699 |
|
|
|
307 |
|
|
|
220 |
|
|
|
526 |
|
|
|
1,646 |
|
| Include assets not comprised in NOC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - investments in associates |
|
|
164 |
|
|
|
81 |
|
|
|
— |
|
|
|
21 |
|
|
|
62 |
|
| - other current financial assets |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
| - other non-current financial assets |
|
|
567 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
567 |
|
| - deferred tax assets |
|
|
1,886 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,886 |
|
| - cash and cash equivalents |
|
|
2,307 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,179 |
|
|
|
10,945 |
|
|
|
2,897 |
|
|
|
7,165 |
|
|
|
6,172 |
|
| Assets classified as held for sale |
|
|
446 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
27,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
23 |
Reconciliation of non-GAAP performance measures (continued)
all amounts in millions of euros
Composition of net debt to group equity
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
June 30,
2013 |
|
|
December 31,
2013 |
|
|
June 29,
2014 |
|
|
|
|
|
| Long-term debt |
|
|
3,501 |
|
|
|
3,309 |
|
|
|
3,336 |
|
| Short-term debt |
|
|
910 |
|
|
|
592 |
|
|
|
432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total debt |
|
|
4,411 |
|
|
|
3,901 |
|
|
|
3,768 |
|
| Cash and cash equivalents |
|
|
2,307 |
|
|
|
2,465 |
|
|
|
1,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net debt (cash) (total debt less cash and cash equivalents) |
|
|
2,104 |
|
|
|
1,436 |
|
|
|
2,333 |
|
|
|
|
|
| Shareholders’ equity |
|
|
10,763 |
|
|
|
11,214 |
|
|
|
10,747 |
|
| Non-controlling interests |
|
|
39 |
|
|
|
13 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Group equity |
|
|
10,802 |
|
|
|
11,227 |
|
|
|
10,758 |
|
|
|
|
|
| Net debt and group equity |
|
|
12,906 |
|
|
|
12,663 |
|
|
|
13,091 |
|
|
|
|
|
| Net debt divided by net debt and group equity (in %) |
|
|
16 |
|
|
|
11 |
|
|
|
18 |
|
| Group equity divided by net debt and group equity (in %) |
|
|
84 |
|
|
|
89 |
|
|
|
82 |
|
Composition of cash flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
| Cash flows provided by (used for) operating activities |
|
|
141 |
|
|
|
487 |
|
|
|
(86 |
) |
|
|
310 |
|
| Cash flows used for investing activities |
|
|
(157 |
) |
|
|
(355 |
) |
|
|
(442 |
) |
|
|
(546 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash flows before financing activities |
|
|
(16 |
) |
|
|
132 |
|
|
|
(528 |
) |
|
|
(236 |
) |
|
|
|
|
|
| Cash flows provided by (used for) operating activities |
|
|
141 |
|
|
|
487 |
|
|
|
(86 |
) |
|
|
310 |
|
| Net capital expenditures: |
|
|
(246 |
) |
|
|
(226 |
) |
|
|
(450 |
) |
|
|
(399 |
) |
| Purchase of intangible assets |
|
|
(6 |
) |
|
|
(21 |
) |
|
|
(8 |
) |
|
|
(32 |
) |
| Expenditures on development assets |
|
|
(100 |
) |
|
|
(82 |
) |
|
|
(180 |
) |
|
|
(156 |
) |
| Capital expenditures on property, plant and equipment |
|
|
(145 |
) |
|
|
(128 |
) |
|
|
(270 |
) |
|
|
(221 |
) |
| Proceeds from sale of property, plant and equipment |
|
|
5 |
|
|
|
5 |
|
|
|
8 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Free cash flows |
|
|
(105 |
) |
|
|
261 |
|
|
|
(536 |
) |
|
|
(89 |
) |
|
|
|
| 24 |
|
Q2 2014 Quarterly report and Semi-annual report |
Forward-looking statements
Forward-looking statements
This document and the related oral presentation, including responses to questions following the presentation, contain certain forward-looking statements with
respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items. Examples of forward-looking statements include statements made about the strategy,
estimates of sales growth, future EBITA and future developments in Philips’ organic business. By their nature, these statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that
could cause actual results and developments to differ materially from those expressed or implied by these statements.
These factors include but are not
limited to domestic and global economic and business conditions, developments within the euro zone, the successful implementation of Philips’ strategy and the ability to realize the benefits of this strategy, the ability to develop and market
new products, changes in legislation, legal claims, changes in exchange and interest rates, changes in tax rates, pension costs and actuarial assumptions, raw materials and employee costs, the ability to identify and complete successful acquisitions
and to integrate those acquisitions into the business, the ability to successfully exit certain businesses or restructure operations, the rate of technological changes, political, economic and other developments in countries where Philips operates,
industry consolidation and competition. As a result, Philips’ actual future results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. For a discussion of factors that could cause future
results to differ from such forward-looking statements, see the Risk management chapter included in the Annual Report 2013.
Third-party market share
data
Statements regarding market share, including those regarding Philips’ competitive position, contained in this document are based on outside
sources such as research institutes, industry and dealer panels in combination with management estimates. Where information is not yet available to Philips, those statements may also be based on estimates and projections prepared by outside sources
or management. Rankings are based on sales unless otherwise stated.
Use of non-GAAP information
In presenting and discussing the Philips financial position, operating results and cash flows, management uses certain non-GAAP financial measures. These
non-GAAP financial measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used in conjunction with the most directly comparable IFRS measures. A reconciliation of these non-GAAP measures to the most
directly comparable IFRS measures is contained in this document. Further information on non-GAAP measures can be found in the Annual Report 2013.
Use
of fair-value measurements
In presenting the Philips financial position, fair values are used for the measurement of various items in accordance with
the applicable accounting standards. These fair values are based on market prices, where available, and are obtained from sources that are deemed to be reliable. Readers are cautioned that these values are subject to changes over time and are only
valid at the balance sheet date. When quoted prices or observable market data are not readily available, fair values are estimated using appropriate valuation models and unobservable inputs. Such fair value estimates require management to make
significant assumptions with respect to future developments, which are inherently uncertain and may therefore deviate from actual developments. Critical assumptions used are disclosed in the Annual Report 2013. Independent valuations may have been
obtained to support management’s determination of fair values.
All amounts are in millions of euros unless otherwise stated. All reported data is
unaudited. This interim financial report is prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union and the accounting policies are the same as stated in the Annual Report 2013, unless otherwise stated.
Prior-period financial statements have been restated to reflect two voluntary accounting policy changes and a change in the divestment of the AVM&A
business. For more details see note 1, Significant accounting policies, section Other changes.
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
25 |
Semi-annual report
Introduction
This report contains the semi-annual report of Koninklijke Philips N.V. (‘the Company’), a company with limited liability, headquartered in
Amsterdam, the Netherlands. The principal activities of the Company and its group companies (the Group) are described in note 5, Segment information.
The
semi-annual report for the six months ended June 29, 2014 consists of the semi-annual condensed consolidated financial statements, the semi-annual management report and responsibility statement by the Company’s Board of Management. The
information in this semi-annual report is unaudited.
The semi-annual condensed consolidated financial statements do not include all the information and
disclosures required in the annual financial statements, and should be read in conjunction with the Company’s consolidated IFRS financial statements for the year ended December 31, 2013.
Responsibility statement
The Board of Management of the Company hereby declares that to the best of their knowledge, the semi-annual report for the six month period ended 29 June
2014, which has been prepared in accordance with IAS 34 Interim Financial Reporting, gives 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 the semi-annual management report for the six month period ended 29 June 2014 gives a fair view of the information required pursuant to article 5:25d paragraph 8 and 9 of the Dutch Financial Markets Supervision Act (Wet op het
Financieel toezicht).
Amsterdam, July 21, 2014
Board
of Management
|
|
|
| Frans van Houten |
|
Ron Wirahadiraksa |
Pieter Nota
|
|
|
| 26 |
|
Q2 2014 Quarterly report and Semi-annual report |
Management report
The first six months of 2014
| • |
|
Group sales amounted to EUR 10.3 billion, flat on a comparable basis year-on-year. |
| • |
|
Mid-single-digit comparable sales increase in growth geographies, while mature geographies posted a low-single-digit decline. |
| • |
|
Group EBITA declined by EUR 274 million compared to the first half of 2013. 2014 included EUR 88 million of restructuring and acquisition-related charges, compared to EUR 45 million in 2013. 2013 also
included EUR 99 million of other items. |
| • |
|
Net income, at EUR 380 million, was EUR 99 million lower than in the first half of 2013. |
| • |
|
Cash flow from operating activities was an inflow of EUR 310 million, compared to an outflow of EUR 86 million in the first half of 2013. |
Net income
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
| |
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
|
|
|
| Sales |
|
|
10,877 |
|
|
|
10,306 |
|
| EBITA |
|
|
1,004 |
|
|
|
730 |
|
| as a % of sales |
|
|
9.2 |
|
|
|
7.1 |
|
| EBIT |
|
|
813 |
|
|
|
559 |
|
| as a % of sales |
|
|
7.5 |
|
|
|
5.4 |
|
| Financial income and expenses |
|
|
(161 |
) |
|
|
(143 |
) |
| Income taxes |
|
|
(190 |
) |
|
|
(80 |
) |
| Results investments in associates |
|
|
15 |
|
|
|
23 |
|
| Net income from continuing operations |
|
|
477 |
|
|
|
359 |
|
| Discontinued operations |
|
|
2 |
|
|
|
21 |
|
| Net income |
|
|
479 |
|
|
|
380 |
|
|
|
|
| Net income attributable to shareholders per common share (in euros) - diluted |
|
|
0.52 |
|
|
|
0.41 |
|
Performance of the Group
| • |
|
Group sales amounted to EUR 10.3 billion, EUR 571 million below the level of the first half of 2013. Adjusted for currency impacts and consolidation changes, sales were flat year-on-year. Consumer Lifestyle
achieved high-single-digit growth, Lighting posted low-single-digit growth, while Healthcare recorded a low-single-digit decline. |
| • |
|
Group EBITA amounted to EUR 730 million, or 7.1% of sales, a decrease of EUR 274 million compared to the first half of 2013.The first half of 2014 included EUR 88 million of restructuring and
acquisition-related charges. The first half of 2013 included EUR 45 million of restructuring and acquisition-related charges, a EUR 78 million gain related to past-service pension costs in the US, and a EUR 21 million gain on the
sale of a business at Healthcare. |
| • |
|
Excluding the impact of restructuring and acquisition-related charges and other items, EBITA declined by EUR 132 million compared to the first half of 2013. The year-on-year decline was mainly driven by
negative currency impact and the voluntary production suspension at the Cleveland facility in Healthcare. |
| • |
|
Net income of EUR 380 million was EUR 99 million lower year-on-year, mainly as a result of lower results at Healthcare, lower gains on pensions and divestments, higher restructuring and acquisition-related
charges compared to the first half of 2013, and a lower tax expense. The lower tax expense was largely due to lower earnings and the impact of the application of the Dutch Innovation Box tax rule, which has been retroactively applied since 2013.
|
| • |
|
Cash flow from operating activities was an inflow of EUR 310 million, compared to an outflow of EUR 86 million in the first half of 2013. The cash flow in the first half of 2014 included a working
capital decrease of EUR 10 million, compared to an increase of EUR 837 million in the first half of 2013. The higher working capital in 2013 was mainly related to the EUR 509 million CRT fine payment.
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
27 |
Sales by sector
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
January to June |
|
|
% change |
|
| |
|
2013 |
|
|
2014 |
|
|
nominal |
|
|
comparable |
|
|
|
|
|
|
| Healthcare |
|
|
4,489 |
|
|
|
4,103 |
|
|
|
(9 |
) |
|
|
(3 |
) |
| Consumer Lifestyle |
|
|
2,086 |
|
|
|
2,089 |
|
|
|
0 |
|
|
|
7 |
|
| Lighting |
|
|
4,023 |
|
|
|
3,835 |
|
|
|
(5 |
) |
|
|
1 |
|
| Innovation, Group & Services |
|
|
279 |
|
|
|
279 |
|
|
|
0 |
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
10,877 |
|
|
|
10,306 |
|
|
|
(5 |
) |
|
|
0 |
|
EBITA
in millions of
euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
| |
|
amount |
|
|
as a % of
sales |
|
|
amount |
|
|
as a % of
sales |
|
|
|
|
|
|
| Healthcare |
|
|
642 |
|
|
|
14.3 |
|
|
|
377 |
|
|
|
9.2 |
|
| Consumer Lifestyle |
|
|
180 |
|
|
|
8.6 |
|
|
|
208 |
|
|
|
10 |
|
| Lighting |
|
|
300 |
|
|
|
7.5 |
|
|
|
276 |
|
|
|
7.2 |
|
| Innovation, Group & Services |
|
|
(118 |
) |
|
|
— |
|
|
|
(131 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
1,004 |
|
|
|
9.2 |
|
|
|
730 |
|
|
|
7.1 |
|
EBITA excluding restructuring and acquisition-related charges and other items
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
| |
|
amount |
|
|
as a % of
sales |
|
|
amount |
|
|
as a % of
sales |
|
|
|
|
|
|
| Healthcare |
|
|
562 |
|
|
|
12.5 |
|
|
|
397 |
|
|
|
9.7 |
|
| Consumer Lifestyle |
|
|
183 |
|
|
|
8.8 |
|
|
|
209 |
|
|
|
10 |
|
| Lighting |
|
|
332 |
|
|
|
8.3 |
|
|
|
339 |
|
|
|
8.8 |
|
| Innovation, Group & Services |
|
|
(127 |
) |
|
|
— |
|
|
|
(127 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
950 |
|
|
|
8.7 |
|
|
|
818 |
|
|
|
7.9 |
|
Philips sectors
Healthcare
| • |
|
Equipment order intake at Healthcare declined 1% compared to the first half of 2013, with low-single-digit growth at Patient Care & Clinical Informatics and Imaging Systems. North America equipment order intake
showed a high-single-digit decline year-on-year, while total mature geographies showed a mid-single-digit decline. Growth geographies reported mid-single-digit growth. |
| • |
|
Sales amounted to EUR 4,103 million. Excluding currency effects and portfolio changes, comparable sales decreased by 3% year-on-year. Customer Services achieved low-single-digit growth, and Home Healthcare Solution
posted mid-single-digit growth, while Patient Care & Clinical Informatics recorded a low-single-digit decline. Imaging Systems recorded a double-digit decline. From a geographical perspective, comparable sales in growth geographies showed a
mid-single-digit decline and mature geographies reported a low-single-digit decline. |
| • |
|
EBITA amounted to EUR 377 million, or 9.2% of sales, compared to EUR 642 million, or 14.3% of sales, in Q2 2013. EBITA in the first half of 2013 included a EUR 61 million gain related to past-service
pension costs in the US, a EUR 21 million gain on the sale of a business and EUR 2 million of restructuring and acquisition-related charges. The first half of 2014 included EUR 20 million of restructuring and acquisition-related
charges. EBITA, excluding restructuring and acquisition-related charges and other items, amounted to EUR 397 million, which was EUR 165 million lower than in the first half of 2013. |
Consumer Lifestyle
| • |
|
Sales amounted to EUR 2,089 million. Excluding currency effects and portfolio changes, comparable sales increased by 7% year-on-year. Double-digit comparable sales growth was seen at Health & Wellness, Domestic
Appliances recorded high-single-digit growth, while Personal Care showed low-single-digit growth. From a geographical perspective, a double-digit comparable sales increase in growth geographies was tempered by low-single-digit growth in mature
geographies. |
| • |
|
EBITA amounted to EUR 208 million, or 10.0% of sales, a year-on-year increase of EUR 28 million. EBITA included restructuring and acquisition-related charges of EUR 1 million, compared to EUR
4 million in the first half of 2013. EBITA, excluding restructuring and acquisition-related charges and past-service pension cost gains, showed a year-on-year increase of EUR 26 million, driven by higher sales and gross margin
improvements across all businesses. |
|
|
|
| 28 |
|
Q2 2014 Quarterly report and Semi-annual report |
Lighting
| • |
|
Sales amounted to EUR 3,835 million, a year-on-year decrease of EUR 188 million. Excluding currency effects and portfolio changes, comparable sales increased 1% year-on-year. Lumileds and Automotive achieved
double-digit growth. Both Light Sources & Electronics and Consumer Luminaires recorded a mid-single-digit decline, while Professional Lighting Solutions was flat year-on-year. From a geographical perspective, comparable sales showed a 5%
increase in growth geographies (flat excluding the OEM Lumileds sales), which was partly offset by a low-single-digit decline in mature geographies. |
| • |
|
EBITA amounted to EUR 276 million, or 7.2% of sales, a year-on-year decrease of EUR 24 million. EBITA included restructuring and acquisition-related charges of EUR 63 million, compared to EUR 42 million
in the first half of 2013. EBITA, excluding restructuring and acquisition-related charges and past-service pension cost gains, amounted to EUR 339 million, slightly above the first half of 2013. |
Innovation, Group & Services
| • |
|
EBITA amounted to a net cost of EUR 131 million, including EUR 4 million of net restructuring charges. EBITA in the first half of 2013 included a EUR 3 million net release of restructuring provisions and
a EUR 6 million past-service pension cost gain in the US. EBITA, excluding restructuring charges, release of restructuring provisions and past-service pension cost gains, amounted to EUR 127 million, in line with the first half of 2013.
|
Risks and uncertainties
| • |
|
In the Annual Report 2013, certain risk categories and risks were described which could have a material adverse effect on Philips’ financial position and results. Those risk categories and risks remain valid and
should be read in conjunction with this semi-annual report. |
| • |
|
Looking ahead to the second half of 2014, Philips remains concerned about economic uncertainties around the world.
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
29 |
| • |
|
Also, Philips operates in a highly regulated product safety and quality environment and Philips products are subject to regulation by various government agencies. Philips is taking comprehensive measures to raise the
efficacy of the quality management system within the Healthcare sector to Philips Excellence standards in close collaboration with industry experts. As announced on January 28, 2014, Philips voluntarily suspended production at the Cleveland,
Ohio facility. The remediation process and mitigation plans so far have been progressing according to plan and the factory is expected to gradually resume production in the course of the third quarter. However, unexpected difficulties could occur
which may result in a delay or an inability to resume production as planned. Such event could have a material adverse effect on the business and results. |
| • |
|
Additional risks not known to Philips, or currently believed not to be material, could later turn out to have a material impact on Philips’ businesses, objectives, revenues, income, assets, liquidity or capital
resources. |
|
|
|
| 30 |
|
Q2 2014 Quarterly report and Semi-annual report |
Condensed consolidated statements of income
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
| Sales |
|
|
5,632 |
|
|
|
5,293 |
|
|
|
10,877 |
|
|
|
10,306 |
|
| Cost of sales |
|
|
(3,269 |
) |
|
|
(3,113 |
) |
|
|
(6,390 |
) |
|
|
(6,108 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin |
|
|
2,363 |
|
|
|
2,180 |
|
|
|
4,487 |
|
|
|
4,198 |
|
|
|
|
|
|
| Selling expenses |
|
|
(1,274 |
) |
|
|
(1,248 |
) |
|
|
(2,488 |
) |
|
|
(2,443 |
) |
| General and administrative expenses |
|
|
(208 |
) |
|
|
(181 |
) |
|
|
(396 |
) |
|
|
(358 |
) |
| Research and development expenses |
|
|
(426 |
) |
|
|
(426 |
) |
|
|
(860 |
) |
|
|
(846 |
) |
| Impairment of goodwill |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3 |
) |
| Other business income |
|
|
56 |
|
|
|
9 |
|
|
|
82 |
|
|
|
19 |
|
| Other business expenses |
|
|
(4 |
) |
|
|
(2 |
) |
|
|
(12 |
) |
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from operations |
|
|
507 |
|
|
|
332 |
|
|
|
813 |
|
|
|
559 |
|
|
|
|
|
|
| Financial income |
|
|
18 |
|
|
|
15 |
|
|
|
36 |
|
|
|
31 |
|
| Financial expenses |
|
|
(96 |
) |
|
|
(89 |
) |
|
|
(197 |
) |
|
|
(174 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before taxes |
|
|
429 |
|
|
|
258 |
|
|
|
652 |
|
|
|
416 |
|
|
|
|
|
|
| Income tax expense |
|
|
(121 |
) |
|
|
(40 |
) |
|
|
(190 |
) |
|
|
(80 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income after taxes |
|
|
308 |
|
|
|
218 |
|
|
|
462 |
|
|
|
336 |
|
|
|
|
|
|
| Results relating to investments in associates |
|
|
14 |
|
|
|
2 |
|
|
|
15 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from continuing operations |
|
|
322 |
|
|
|
220 |
|
|
|
477 |
|
|
|
359 |
|
|
|
|
|
|
| Discontinued operations - net of income tax |
|
|
(5 |
) |
|
|
23 |
|
|
|
2 |
|
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
317 |
|
|
|
243 |
|
|
|
479 |
|
|
|
380 |
|
|
|
|
|
|
| Attribution of net income for the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to shareholders |
|
|
317 |
|
|
|
242 |
|
|
|
478 |
|
|
|
380 |
|
| Net income attributable to non-controlling interests |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
|
|
|
| Earnings per common share attributable to shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of common shares outstanding (after deduction of treasury shares) during the period (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - basic |
|
|
906,446 |
|
|
|
908,343 |
|
|
|
911,622 |
|
|
|
911,166 |
|
| - diluted |
|
|
916,345 |
|
|
|
916,511 |
|
|
|
921,941 |
|
|
|
920,433 |
|
|
|
|
|
|
| Net income attributable to shareholders per common share in euros: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - basic |
|
|
0.35 |
|
|
|
0.27 |
|
|
|
0.52 |
|
|
|
0.42 |
|
| - diluted |
|
|
0.35 |
|
|
|
0.26 |
|
|
|
0.52 |
|
|
|
0.41 |
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
31 |
Consolidated statements of comprehensive income
all amounts in millions of euros
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
| Net income for the period |
|
|
317 |
|
|
|
243 |
|
|
|
479 |
|
|
|
380 |
|
|
|
|
|
|
| Other comprehensive income items that will not be reclassified to profit or loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pensions and other post-employment plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Remeasurement |
|
|
(11 |
) |
|
|
(82 |
) |
|
|
(26 |
) |
|
|
(367 |
) |
| Income tax effect on remeasurements |
|
|
3 |
|
|
|
20 |
|
|
|
7 |
|
|
|
92 |
|
| Revaluation reserve: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Release revaluation reserve |
|
|
(4 |
) |
|
|
(3 |
) |
|
|
(8 |
) |
|
|
(5 |
) |
| Reclassification directly into retained earnings |
|
|
4 |
|
|
|
3 |
|
|
|
8 |
|
|
|
5 |
|
| Total of items that will not be reclassified to profit or loss |
|
|
(8 |
) |
|
|
(62 |
) |
|
|
(19 |
) |
|
|
(275 |
) |
|
|
|
|
|
| Other comprehensive income items that are or may be reclassified to profit or loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Currency translation differences: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net current period change, before tax |
|
|
(151 |
) |
|
|
84 |
|
|
|
(97 |
) |
|
|
66 |
|
| Income tax effect |
|
|
10 |
|
|
|
16 |
|
|
|
4 |
|
|
|
18 |
|
| Reclassification adjustment for gain realized |
|
|
(8 |
) |
|
|
(4 |
) |
|
|
(8 |
) |
|
|
(4 |
) |
| Available-for-sale financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net current period change, before tax |
|
|
(15 |
) |
|
|
13 |
|
|
|
(5 |
) |
|
|
2 |
|
| Income tax effect |
|
|
3 |
|
|
|
(3 |
) |
|
|
— |
|
|
|
(2 |
) |
| Reclassification adjustment for loss realized |
|
|
1 |
|
|
|
0 |
|
|
|
2 |
|
|
|
8 |
|
| Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net current period change, before tax |
|
|
23 |
|
|
|
(14 |
) |
|
|
32 |
|
|
|
(19 |
) |
| Income tax effect |
|
|
— |
|
|
|
4 |
|
|
|
(2 |
) |
|
|
8 |
|
| Reclassification adjustment for gain realized |
|
|
(25 |
) |
|
|
(5 |
) |
|
|
(31 |
) |
|
|
(13 |
) |
| Total of items that are or may be reclassified to profit or loss |
|
|
(162 |
) |
|
|
91 |
|
|
|
(105 |
) |
|
|
64 |
|
|
|
|
|
|
| Other comprehensive income (loss) for the period |
|
|
(170 |
) |
|
|
29 |
|
|
|
(124 |
) |
|
|
(211 |
) |
|
|
|
|
|
| Total comprehensive income for the period |
|
|
147 |
|
|
|
272 |
|
|
|
355 |
|
|
|
169 |
|
|
|
|
|
|
| Total comprehensive income attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders |
|
|
147 |
|
|
|
271 |
|
|
|
354 |
|
|
|
169 |
|
| Non-controlling interests |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
|
| 32 |
|
Q2 2014 Quarterly report and Semi-annual report |
Condensed consolidated balance sheets
in millions of euros unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
June 30, |
|
|
December 31, |
|
|
June 29, |
|
| |
|
2013 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
| Non-current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment |
|
|
2,902 |
|
|
|
2,780 |
|
|
|
2,708 |
|
| Goodwill |
|
|
6,878 |
|
|
|
6,504 |
|
|
|
6,579 |
|
| Intangible assets excluding goodwill |
|
|
3,567 |
|
|
|
3,262 |
|
|
|
3,157 |
|
| Non-current receivables |
|
|
172 |
|
|
|
144 |
|
|
|
186 |
|
| Investments in associates |
|
|
164 |
|
|
|
161 |
|
|
|
171 |
|
| Other non-current financial assets |
|
|
567 |
|
|
|
496 |
|
|
|
438 |
|
| Deferred tax assets |
|
|
1,886 |
|
|
|
1,675 |
|
|
|
1,832 |
|
| Other non-current assets |
|
|
71 |
|
|
|
63 |
|
|
|
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total non-current assets |
|
|
16,207 |
|
|
|
15,085 |
|
|
|
15,131 |
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| Inventories |
|
|
3,699 |
|
|
|
3,240 |
|
|
|
3,638 |
|
| Other current financial assets |
|
|
1 |
|
|
|
10 |
|
|
|
125 |
|
| Other current assets |
|
|
446 |
|
|
|
354 |
|
|
|
448 |
|
| Derivative financial assets |
|
|
157 |
|
|
|
150 |
|
|
|
76 |
|
| Income tax receivable |
|
|
82 |
|
|
|
70 |
|
|
|
121 |
|
| Receivables |
|
|
4,280 |
|
|
|
4,678 |
|
|
|
4,549 |
|
| Assets classified as held for sale |
|
|
446 |
|
|
|
507 |
|
|
|
136 |
|
| Cash and cash equivalents |
|
|
2,307 |
|
|
|
2,465 |
|
|
|
1,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
|
11,418 |
|
|
|
11,474 |
|
|
|
10,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
27,625 |
|
|
|
26,559 |
|
|
|
25,659 |
|
| Shareholders’ equity |
|
|
10,763 |
|
|
|
11,214 |
|
|
|
10,747 |
|
| Non-controlling interests |
|
|
39 |
|
|
|
13 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Group equity |
|
|
10,802 |
|
|
|
11,227 |
|
|
|
10,758 |
|
|
|
|
|
| Non-current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Long-term debt |
|
|
3,501 |
|
|
|
3,309 |
|
|
|
3,336 |
|
| Long-term provisions |
|
|
2,015 |
|
|
|
1,903 |
|
|
|
1,773 |
|
| Deferred tax liabilities |
|
|
62 |
|
|
|
76 |
|
|
|
62 |
|
| Other non-current liabilities |
|
|
1,829 |
|
|
|
1,568 |
|
|
|
1,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total non-current liabilities |
|
|
7,407 |
|
|
|
6,856 |
|
|
|
6,662 |
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term debt |
|
|
910 |
|
|
|
592 |
|
|
|
432 |
|
| Derivative financial liabilities |
|
|
505 |
|
|
|
368 |
|
|
|
382 |
|
| Income tax payable |
|
|
165 |
|
|
|
143 |
|
|
|
92 |
|
| Accounts and notes payable |
|
|
2,716 |
|
|
|
2,462 |
|
|
|
2,827 |
|
| Accrued liabilities |
|
|
3,049 |
|
|
|
2,830 |
|
|
|
2,643 |
|
| Short-term provisions |
|
|
684 |
|
|
|
651 |
|
|
|
722 |
|
| Dividend payable |
|
|
42 |
|
|
|
— |
|
|
|
45 |
|
| Liabilities directly associated with assets held for sale |
|
|
238 |
|
|
|
348 |
|
|
|
4 |
|
| Other current liabilities |
|
|
1,107 |
|
|
|
1,082 |
|
|
|
1,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current liabilities |
|
|
9,416 |
|
|
|
8,476 |
|
|
|
8,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities and group equity |
|
|
27,625 |
|
|
|
26,559 |
|
|
|
25,659 |
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
33 |
Condensed consolidated statements of cash flows
in millions of euros
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
| Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
317 |
|
|
|
243 |
|
|
|
479 |
|
|
|
380 |
|
| Result of discontinued operations - net of income tax |
|
|
5 |
|
|
|
(23 |
) |
|
|
(2 |
) |
|
|
(21 |
) |
| Adjustments to reconcile net income to net cash provided by (used for) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation, amortization, and impairments of fixed assets |
|
|
311 |
|
|
|
298 |
|
|
|
616 |
|
|
|
598 |
|
| Impairment of goodwill and other non-current financial assets |
|
|
2 |
|
|
|
4 |
|
|
|
3 |
|
|
|
17 |
|
| Net gain on sale of assets |
|
|
(36 |
) |
|
|
(3 |
) |
|
|
(40 |
) |
|
|
(9 |
) |
| Interest income |
|
|
(11 |
) |
|
|
(12 |
) |
|
|
(21 |
) |
|
|
(20 |
) |
| Interest expense on debt, borrowings and other liabilities |
|
|
66 |
|
|
|
56 |
|
|
|
132 |
|
|
|
107 |
|
| Income tax expense |
|
|
121 |
|
|
|
40 |
|
|
|
190 |
|
|
|
80 |
|
| Income from investments in associates |
|
|
(13 |
) |
|
|
(2 |
) |
|
|
(15 |
) |
|
|
(23 |
) |
| (Increase) decrease in working capital: |
|
|
(440 |
) |
|
|
140 |
|
|
|
(837 |
) |
|
|
10 |
|
| (Increase) decrease in receivables and other current assets |
|
|
(115 |
) |
|
|
143 |
|
|
|
12 |
|
|
|
172 |
|
| Increase in inventories |
|
|
(188 |
) |
|
|
(168 |
) |
|
|
(394 |
) |
|
|
(406 |
) |
| (Decrease) increase in accounts payable, accrued and other liabilities |
|
|
(137 |
) |
|
|
165 |
|
|
|
(455 |
) |
|
|
244 |
|
| Increase in non-current receivables, other assets and other liabilities |
|
|
(85 |
) |
|
|
(101 |
) |
|
|
(121 |
) |
|
|
(472 |
) |
| Decrease in provisions |
|
|
(69 |
) |
|
|
(46 |
) |
|
|
(167 |
) |
|
|
(64 |
) |
| Other items |
|
|
89 |
|
|
|
(5 |
) |
|
|
49 |
|
|
|
17 |
|
| Interest paid |
|
|
(37 |
) |
|
|
(25 |
) |
|
|
(139 |
) |
|
|
(114 |
) |
| Interest received |
|
|
11 |
|
|
|
11 |
|
|
|
20 |
|
|
|
19 |
|
| Dividends received from investments in associates |
|
|
6 |
|
|
|
14 |
|
|
|
6 |
|
|
|
14 |
|
| Income taxes paid |
|
|
(96 |
) |
|
|
(102 |
) |
|
|
(239 |
) |
|
|
(209 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash provided by (used for) operating activities |
|
|
141 |
|
|
|
487 |
|
|
|
(86 |
) |
|
|
310 |
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net capital expenditures |
|
|
(246 |
) |
|
|
(226 |
) |
|
|
(450 |
) |
|
|
(399 |
) |
| Purchase of intangible assets |
|
|
(6 |
) |
|
|
(21 |
) |
|
|
(8 |
) |
|
|
(32 |
) |
| Expenditures on development assets |
|
|
(100 |
) |
|
|
(82 |
) |
|
|
(180 |
) |
|
|
(156 |
) |
| Capital expenditures on property, plant and equipment |
|
|
(145 |
) |
|
|
(128 |
) |
|
|
(270 |
) |
|
|
(221 |
) |
| Proceeds from sale of property, plant and equipment |
|
|
5 |
|
|
|
5 |
|
|
|
8 |
|
|
|
10 |
|
| Cash to derivatives and current financial assets |
|
|
(10 |
) |
|
|
(4 |
) |
|
|
(82 |
) |
|
|
(2 |
) |
| Purchase of other non-current financial assets |
|
|
(4 |
) |
|
|
(68 |
) |
|
|
(4 |
) |
|
|
(72 |
) |
| Proceeds from other non-current financial assets |
|
|
7 |
|
|
|
— |
|
|
|
9 |
|
|
|
2 |
|
| Purchase of businesses, net of cash acquired |
|
|
4 |
|
|
|
(2 |
) |
|
|
(6 |
) |
|
|
(19 |
) |
| Net proceeds from (used for) sale of interest in businesses |
|
|
92 |
|
|
|
(55 |
) |
|
|
91 |
|
|
|
(56 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash used for investing activities |
|
|
(157 |
) |
|
|
(355 |
) |
|
|
(442 |
) |
|
|
(546 |
) |
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from issuance (payments) of short-term debt |
|
|
(108 |
) |
|
|
18 |
|
|
|
(127 |
) |
|
|
96 |
|
| Principal payments on long-term debt |
|
|
(19 |
) |
|
|
(20 |
) |
|
|
(41 |
) |
|
|
(293 |
) |
| Proceeds from issuance of long-term debt |
|
|
17 |
|
|
|
12 |
|
|
|
34 |
|
|
|
26 |
|
| Treasury shares transactions |
|
|
(265 |
) |
|
|
(235 |
) |
|
|
(487 |
) |
|
|
(342 |
) |
| Dividend paid |
|
|
(231 |
) |
|
|
(248 |
) |
|
|
(231 |
) |
|
|
(248 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash used for financing activities |
|
|
(606 |
) |
|
|
(473 |
) |
|
|
(852 |
) |
|
|
(761 |
) |
|
|
|
|
|
| Net cash used for continuing operations |
|
|
(622 |
) |
|
|
(341 |
) |
|
|
(1,380 |
) |
|
|
(997 |
) |
|
|
|
| 34 |
|
Q2 2014 Quarterly report and Semi-annual report |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
| Cash flows from discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash used for operating activities |
|
|
(99 |
) |
|
|
(40 |
) |
|
|
(149 |
) |
|
|
(104 |
) |
| Net cash (used for) provided by investing activities |
|
|
(11 |
) |
|
|
99 |
|
|
|
(11 |
) |
|
|
99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash (used for) provided by discontinued operations |
|
|
(110 |
) |
|
|
59 |
|
|
|
(160 |
) |
|
|
(5 |
) |
|
|
|
|
|
| Net cash used for continuing and discontinued operations |
|
|
(732 |
) |
|
|
(282 |
) |
|
|
(1,540 |
) |
|
|
(1,002 |
) |
|
|
|
|
|
| Effect of change in exchange rates on cash and cash equivalents |
|
|
(27 |
) |
|
|
(10 |
) |
|
|
13 |
|
|
|
(28 |
) |
| Cash and cash equivalents at the beginning of the period |
|
|
3,066 |
|
|
|
1,727 |
|
|
|
3,834 |
|
|
|
2,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents at the end of the period |
|
|
2,307 |
|
|
|
1,435 |
|
|
|
2,307 |
|
|
|
1,435 |
|
For a number of reasons, principally the effects of translation differences, certain items in the statements of cash flows do
not correspond to the differences between the balance sheet amounts for the respective items.
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
35 |
Condensed consolidated statement of changes in equity
in millions of euros
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
common
shares |
|
|
capital
in
excess
of par
value |
|
|
retained
earnings |
|
|
revaluation
reserve |
|
|
currency
translation
differences |
|
|
available-
for-sale
financial
assets |
|
|
cash
flow
hedges |
|
|
treasury
shares
at cost |
|
|
total
shareholders’
equity |
|
|
non-
controlling
interests |
|
|
total
equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
| January-June 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of December 31, 2013 |
|
|
188 |
|
|
|
1,796 |
|
|
|
10,415 |
|
|
|
23 |
|
|
|
(569 |
) |
|
|
55 |
|
|
|
24 |
|
|
|
(718 |
) |
|
|
11,214 |
|
|
|
13 |
|
|
|
11,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
110 |
|
|
|
(5 |
) |
|
|
80 |
|
|
|
8 |
|
|
|
(24 |
) |
|
|
|
|
|
|
169 |
|
|
|
— |
|
|
|
169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividend distributed |
|
|
3 |
|
|
|
433 |
|
|
|
(729 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(293 |
) |
|
|
|
|
|
|
(293 |
) |
| Movement non-controlling interest |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(2 |
) |
|
|
(2 |
) |
| Purchase of treasury shares |
|
|
|
|
|
|
|
|
|
|
(26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(440 |
) |
|
|
(466 |
) |
|
|
|
|
|
|
(466 |
) |
| Re-issuance of treasury shares |
|
|
|
|
|
|
(124 |
) |
|
|
(69 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
289 |
|
|
|
96 |
|
|
|
|
|
|
|
96 |
|
| Share-based compensation plans |
|
|
|
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 |
|
|
|
|
|
|
|
39 |
|
| Income tax share-based compensation plans |
|
|
|
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12 |
) |
|
|
|
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total other equity movements |
|
|
3 |
|
|
|
336 |
|
|
|
(824 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(151 |
) |
|
|
(636 |
) |
|
|
(2 |
) |
|
|
(638 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of June 29, 2014 |
|
|
191 |
|
|
|
2,132 |
|
|
|
9,701 |
|
|
|
18 |
|
|
|
(489 |
) |
|
|
63 |
|
|
|
0 |
|
|
|
(869 |
) |
|
|
10,747 |
|
|
|
11 |
|
|
|
10,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| January-June 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of December, 2012 |
|
|
191 |
|
|
|
1,304 |
|
|
|
10,724 |
|
|
|
54 |
|
|
|
(93 |
) |
|
|
54 |
|
|
|
20 |
|
|
|
(1,103 |
) |
|
|
11,151 |
|
|
|
34 |
|
|
|
11,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
467 |
|
|
|
(8 |
) |
|
|
(101 |
) |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
|
|
|
|
354 |
|
|
|
1 |
|
|
|
355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividend distributed |
|
|
4 |
|
|
|
402 |
|
|
|
(678 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(272 |
) |
|
|
|
|
|
|
(272 |
) |
| Movement non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
4 |
|
|
|
4 |
|
| Purchase of treasury shares |
|
|
|
|
|
|
|
|
|
|
(38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(531 |
) |
|
|
(569 |
) |
|
|
|
|
|
|
(569 |
) |
| Re-issuance of treasury shares |
|
|
|
|
|
|
(37 |
) |
|
|
(46 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133 |
|
|
|
50 |
|
|
|
|
|
|
|
50 |
|
| Share-based compensation plans |
|
|
|
|
|
|
46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46 |
|
|
|
|
|
|
|
46 |
|
| Income tax share-based compensation plans |
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total other equity movements |
|
|
4 |
|
|
|
414 |
|
|
|
(762 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(398 |
) |
|
|
(742 |
) |
|
|
4 |
|
|
|
(738 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as of June 30, 2013 |
|
|
195 |
|
|
|
1,718 |
|
|
|
10,429 |
|
|
|
46 |
|
|
|
(194 |
) |
|
|
51 |
|
|
|
19 |
|
|
|
(1,501 |
) |
|
|
10,763 |
|
|
|
39 |
|
|
|
10,802 |
|
|
|
|
| 36 |
|
Q2 2014 Quarterly report and Semi-annual report |
Pension costs and cash flows
in millions of euros
Specification of pension costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
| |
|
2013 |
|
|
2014 |
|
| |
|
Netherlands |
|
|
other |
|
|
total |
|
|
Netherlands |
|
|
other |
|
|
total |
|
| Defined-benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pensions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current service cost |
|
|
48 |
|
|
|
21 |
|
|
|
69 |
|
|
|
47 |
|
|
|
17 |
|
|
|
64 |
|
| Past service cost (incl. curtailments) |
|
|
— |
|
|
|
(78 |
) |
|
|
(78 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Interest expense |
|
|
— |
|
|
|
16 |
|
|
|
16 |
|
|
|
— |
|
|
|
14 |
|
|
|
14 |
|
| Interest income |
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
47 |
|
|
|
(41 |
) |
|
|
6 |
|
|
|
46 |
|
|
|
31 |
|
|
|
77 |
|
| of which discontinued operations |
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
| Retiree Medical |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current service cost |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Interest expense |
|
|
— |
|
|
|
3 |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
— |
|
|
|
3 |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
|
|
3 |
|
| Defined-contribution plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost |
|
|
2 |
|
|
|
31 |
|
|
|
33 |
|
|
|
2 |
|
|
|
31 |
|
|
|
33 |
|
| of which discontinued operations |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
Specification of pension costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
| |
|
Netherlands |
|
|
other |
|
|
total |
|
|
Netherlands |
|
|
other |
|
|
total |
|
| Defined-benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pensions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current service cost |
|
|
96 |
|
|
|
41 |
|
|
|
137 |
|
|
|
92 |
|
|
|
35 |
|
|
|
127 |
|
| Past service cost (incl. curtailments) |
|
|
— |
|
|
|
(78 |
) |
|
|
(78 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Interest expense |
|
|
— |
|
|
|
32 |
|
|
|
32 |
|
|
|
— |
|
|
|
28 |
|
|
|
28 |
|
| Interest income |
|
|
(2 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
(5 |
) |
|
|
— |
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
94 |
|
|
|
(5 |
) |
|
|
89 |
|
|
|
87 |
|
|
|
63 |
|
|
|
150 |
|
| of which discontinued operations |
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
| Retiree Medical |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current service cost |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Interest expense |
|
|
— |
|
|
|
6 |
|
|
|
6 |
|
|
|
— |
|
|
|
6 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
— |
|
|
|
7 |
|
|
|
7 |
|
|
|
— |
|
|
|
6 |
|
|
|
6 |
|
| Defined-contribution plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Costs |
|
|
4 |
|
|
|
71 |
|
|
|
75 |
|
|
|
4 |
|
|
|
68 |
|
|
|
72 |
|
| of which discontinued operations |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
Pension cash flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
| Contributions and benefits paid by the Company |
|
|
(134 |
) |
|
|
(173 |
) |
|
|
(332 |
) |
|
|
(651 |
) |
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
37 |
Notes overview
Notes to the unaudited semi-annual condensed consolidated financial statements
|
|
|
| 38 |
|
Q2 2014 Quarterly report and Semi-annual report |
Notes to the unaudited semi-annual condensed consolidated financial statements
all amounts in millions of euros unless otherwise stated
This report contains the semi-annual report of Koninklijke Philips N.V. (‘the
Company’), a company with limited liability, headquartered in Amsterdam, the Netherlands. The principal activities of the Company and its group companies (the Philips Group) are described in note 5, Segment information.
The semi-annual condensed consolidated financial statements have been prepared in accordance with IAS 34 ‘Interim Financial
Reporting’ as adopted by the European Union.
|
Significant accounting policies |
The significant accounting
policies applied in these semi-annual condensed consolidated financial statements are consistent with those applied in the Company’s consolidated IFRS financial statements as at and for the year ended December 31, 2013, except for the
accounting policy changes following from the adoption of the new Standards and Amendments to Standards which are also expected to be reflected in the Company’s consolidated IFRS financial statements as at and for the year ending
December 31, 2014, and certain other changes. Those new and amended standards which may be the most relevant to the Company are set out below.
IFRIC 21 Levies
IFRIC 21 provides guidance on the accounting for certain outflows imposed on entities by governments in accordance with laws and/or
regulations (levies). The Interpretation identifies the obligating event for the recognition of a liability as the activity that triggers the payment of the levy in accordance with the relevant legislation. This Interpretation does not have a
material impact on these semi-annual condensed financial statements.
Changes to other standards, following from Amendments and the
Annual Improvement Cycles, do not have a material impact on the Company’s semi-annual condensed consolidated financial statements.
Other changes
Prior-period financial statements have been restated for two voluntary accounting policy changes applied as of January 1, 2014:
| |
• |
|
Reclassification of cost by function in the income statement. Company-wide overhead and indirect Business function costs will be brought more in line with the actual activities performed in Philips’ markets. This
change has no net effect on Income from operations. |
| |
• |
|
Change in the presentation in the cash flow statement. Up and until 2013 the cash flows related to interest, tax and pensions were presented in a table separate from the primary consolidated statement of cash flows. The
presentation change results in the separate presentation of the interest and tax cash flows in cash flow from operating activities. The pension cash flows are separately presented as part of the pension disclosures. The presentation change has no
impact on the net cash flows from operating activities nor the total net cash balance as these cash flows previously used to be part of other aggregated sub lines of the primary consolidated statement of cash flows. |
Following the completion of the divestment of the AVM&A business to Gibson Brands, Inc., on June 29, 2014, related remaining net
assets in IG&S have been transferred to discontinued operations in Q2 2014. As a consequence, prior results and cash flows have been adjusted accordingly as per the table below.
Restatement impact of transfers to discontinued operations
|
|
|
|
|
| |
|
January to June |
|
| |
|
2013 |
|
| Sales |
|
|
(35 |
) |
| Income from operations |
|
|
(1 |
) |
| Discontinued operations, net of tax |
|
|
1 |
|
|
|
| Cash flow from operating activities |
|
|
18 |
|
| Cash flow from investing activities |
|
|
(1 |
) |
| Cash flows from discontinued operations |
|
|
(17 |
) |
|
|
| Number of employees (FTEs) |
|
|
287 |
|
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
39 |
|
Information by sector and main countries |
all amounts in
millions of euros unless otherwise stated
Sales and income (loss) from operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2nd quarter |
|
| |
|
2013 |
|
|
2014 |
|
| |
|
sales
including
inter-
company |
|
|
sales |
|
|
income from operations |
|
|
sales
including
inter-
company |
|
|
sales |
|
|
income from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
amount |
|
|
as a % of
sales |
|
|
|
|
|
|
|
|
amount |
|
|
as a % of
sales |
|
|
|
|
|
|
|
|
|
|
| Healthcare |
|
|
2,369 |
|
|
|
2,362 |
|
|
|
379 |
|
|
|
16.0 |
|
|
|
2,142 |
|
|
|
2,137 |
|
|
|
186 |
|
|
|
8.7 |
|
| Consumer Lifestyle |
|
|
1,087 |
|
|
|
1,083 |
|
|
|
69 |
|
|
|
6.4 |
|
|
|
1,075 |
|
|
|
1,073 |
|
|
|
86 |
|
|
|
8.0 |
|
| Lighting |
|
|
2,053 |
|
|
|
2,048 |
|
|
|
115 |
|
|
|
5.6 |
|
|
|
1,949 |
|
|
|
1,943 |
|
|
|
111 |
|
|
|
5.7 |
|
| Innovation, Group & Services |
|
|
220 |
|
|
|
139 |
|
|
|
(56 |
) |
|
|
— |
|
|
|
219 |
|
|
|
140 |
|
|
|
(51 |
) |
|
|
— |
|
| Inter-sector eliminations |
|
|
(97 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(92 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
5,632 |
|
|
|
5,632 |
|
|
|
507 |
|
|
|
9.0 |
|
|
|
5,293 |
|
|
|
5,293 |
|
|
|
332 |
|
|
|
6.3 |
|
Sales and income (loss) from operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
| |
|
sales
including
inter-
company |
|
|
sales |
|
|
income from operations |
|
|
sales
including
inter-
company |
|
|
sales |
|
|
income from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
amount |
|
|
as a % of
sales |
|
|
|
|
|
|
|
|
amount |
|
|
as a % of
sales |
|
|
|
|
|
|
|
|
|
|
| Healthcare |
|
|
4,501 |
|
|
|
4,489 |
|
|
|
555 |
|
|
|
12.4 |
|
|
|
4,112 |
|
|
|
4,103 |
|
|
|
295 |
|
|
|
7.2 |
|
| Consumer Lifestyle |
|
|
2,093 |
|
|
|
2,086 |
|
|
|
153 |
|
|
|
7.3 |
|
|
|
2,093 |
|
|
|
2,089 |
|
|
|
182 |
|
|
|
8.7 |
|
| Lighting |
|
|
4,032 |
|
|
|
4,023 |
|
|
|
225 |
|
|
|
5.6 |
|
|
|
3,845 |
|
|
|
3,835 |
|
|
|
219 |
|
|
|
5.7 |
|
| Innovation, Group & Services |
|
|
433 |
|
|
|
279 |
|
|
|
(120 |
) |
|
|
— |
|
|
|
430 |
|
|
|
279 |
|
|
|
(137 |
) |
|
|
— |
|
| Inter-sector eliminations |
|
|
(182 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(174 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
10,877 |
|
|
|
10,877 |
|
|
|
813 |
|
|
|
7.5 |
|
|
|
10,306 |
|
|
|
10,306 |
|
|
|
559 |
|
|
|
5.4 |
|
Sales, total assets and total liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
sales |
|
|
total assets |
|
|
total liabilities excluding
debt |
|
| |
|
January to June |
|
|
June 30, |
|
|
June 29, |
|
|
June 30, |
|
|
June 29, |
|
| |
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
| Healthcare |
|
|
4,489 |
|
|
|
4,103 |
|
|
|
10,945 |
|
|
|
10,519 |
|
|
|
3,180 |
|
|
|
2,987 |
|
| Consumer Lifestyle |
|
|
2,086 |
|
|
|
2,089 |
|
|
|
2,897 |
|
|
|
2,908 |
|
|
|
1,715 |
|
|
|
1,637 |
|
| Lighting |
|
|
4,023 |
|
|
|
3,835 |
|
|
|
7,165 |
|
|
|
6,832 |
|
|
|
2,412 |
|
|
|
2,255 |
|
| Innovation, Group & Services |
|
|
279 |
|
|
|
279 |
|
|
|
6,172 |
|
|
|
5,264 |
|
|
|
4,867 |
|
|
|
4,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,179 |
|
|
|
25,523 |
|
|
|
12,174 |
|
|
|
11,129 |
|
| Assets classified as held for sale |
|
|
|
|
|
|
|
|
|
|
446 |
|
|
|
136 |
|
|
|
238 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
10,877 |
|
|
|
10,306 |
|
|
|
27,625 |
|
|
|
25,659 |
|
|
|
12,412 |
|
|
|
11,133 |
|
|
|
|
| 40 |
|
Q2 2014 Quarterly report and Semi-annual report |
Sales and tangible and intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
sales |
|
|
tangible and intangible assets1) |
|
| |
|
January to June |
|
|
June 30, |
|
|
June 29, |
|
| |
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
| Netherlands |
|
|
292 |
|
|
|
273 |
|
|
|
874 |
|
|
|
910 |
|
| United States |
|
|
3,136 |
|
|
|
2,865 |
|
|
|
7,932 |
|
|
|
7,286 |
|
| China |
|
|
1,328 |
|
|
|
1,307 |
|
|
|
1,127 |
|
|
|
1,047 |
|
| Germany |
|
|
608 |
|
|
|
612 |
|
|
|
279 |
|
|
|
287 |
|
| Japan |
|
|
527 |
|
|
|
478 |
|
|
|
463 |
|
|
|
413 |
|
| France |
|
|
420 |
|
|
|
391 |
|
|
|
85 |
|
|
|
75 |
|
| United Kingdom |
|
|
327 |
|
|
|
332 |
|
|
|
553 |
|
|
|
576 |
|
| Other countries |
|
|
4,239 |
|
|
|
4,048 |
|
|
|
2,034 |
|
|
|
1,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philips Group |
|
|
10,877 |
|
|
|
10,306 |
|
|
|
13,347 |
|
|
|
12,444 |
|
| 1) |
Includes property, plant and equipment, intangible assets excluding goodwill, and goodwill |
|
Estimates |
The preparation of the semi-annual condensed
consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ
from these estimates.
In preparing these semi-annual condensed consolidated financial statements, the significant estimates and
judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended December 31,
2013.
|
Financial risk management |
The Group’s financial risk
management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended December 31, 2013.
|
Segment information |
Philips’ activities are organized
on a sector basis, with operational sectors – Healthcare, Consumer Lifestyle and Lighting – each being responsible for the management of its business worldwide, and Innovation, Group & Services (IG&S).
Reportable segments for the purpose of the segmental disclosures required by IAS 34 Interim Financial Statements are: Healthcare, Consumer
Lifestyle and Lighting.
Significant segment information can be found in the Sectors and Reconciliation of non-GAAP
performance measures sections of this semi-annual report.
|
Seasonality |
Under normal economic conditions, the
Group’s sales are impacted by seasonal fluctuations, particularly at Consumer Lifestyle and Healthcare, typically resulting in higher revenues and earnings in the second half-year results. At Healthcare, sales are generally higher in the second
half of the year, largely due to the timing of new product availability and customers attempting to spend their annual budgeted allowances before the end of the year. At Consumer Lifestyle, sales are generally higher in the second half-year due to
the holiday sales. Sales in the Lighting businesses are generally not materially affected by seasonality.
For the 12 months ended
June 30, 2014, Healthcare, Consumer Lifestyle and Lighting had revenues of EUR 9,190 million, EUR 4,609 million and EUR 8,224 million respectively (12 months ended July 1, 2013, Healthcare, Consumer Lifestyle and
Lighting had revenues of EUR 9,850 million, EUR 4,522 million and EUR 8,424 million, respectively).
|
Discontinued operations and other assets classified as held for sale |
Discontinued operations included in the Consolidated statements of income and the Consolidated statements of cash flows consists of the
Audio, Video, Multimedia and Accessories (AVM&A) business, the Television business and certain divestments formerly reported as discontinued operations.
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
41 |
Discontinued operations: Audio, Video, Multimedia and Accessories business
As announced on April 28, 2014, the AVM&A business has been divested to Gibson Brands, Inc. The transfer was effectuated on
June 29, 2014.
The following table summarizes the results of the AVM&A business included in the Consolidated statements of
income as discontinued operations.
|
|
|
|
|
|
|
|
|
| |
|
January to June |
|
| |
|
2013 |
|
|
2014 |
|
|
|
|
| Sales |
|
|
545 |
|
|
|
470 |
|
| Costs and expenses |
|
|
(526 |
) |
|
|
(473 |
) |
| Gain on sale of business |
|
|
— |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
| Income before taxes |
|
|
19 |
|
|
|
2 |
|
| Income taxes |
|
|
(8 |
) |
|
|
12 |
|
|
|
|
|
|
|
|
|
|
| Results from discontinued operations |
|
|
11 |
|
|
|
14 |
|
At June 29, 2014, the release of currency translation differences, part of Other reserves in
Shareholders’ equity, recognized in the Consolidated statement of income amounted to EUR nil million.
The following tables shows
the components of the gain on the sale of the AVM&A business on June 29, 2014:
|
|
|
|
|
| |
|
June 29, |
|
| |
|
2014 |
|
|
|
| Net consideration |
|
|
85 |
|
| Carrying value of net assets disposed |
|
|
(73 |
) |
| Cost of disposal |
|
|
(7 |
) |
|
|
|
|
|
| Gain on sale of business |
|
|
5 |
|
| Income taxes |
|
|
12 |
|
|
|
|
|
|
| Net gain on sale of business |
|
|
17 |
|
Balances retained by Philips relating to the divested business, such as certain accounts receivable, accounts
payable and provisions, are reported on the respective balance sheet captions and within the Consumer Lifestyle sector.
Discontinued
operations: Television business
The Television business had in the first half of 2014 a gain, net of income tax, of EUR 11 million
(first half of 2013: a loss of EUR 10 million).
Other assets classified as held for sale
Assets and liabilities directly associated with assets held for sale relate to property, plant and equipment for an amount of EUR 20
million, business divestments of EUR 68 million and other non-current financial assets of EUR 44 million at June 29, 2014.
|
Income taxes |
Income tax expense in the first half of 2014
was lower compared with the previous year, largely due to lower earnings and the impact of the application of the Dutch Innovation Box tax rule, which has been retroactively applied since 2013.
|
Property, plant and equipment |
During the first six months
ended June 29, 2014, there was no significant net movement in Property, plant and equipment. The main movements consist of additions of EUR 228 million (six months ended June 30, 2013: EUR 286 million) offset by depreciation and
impairment charges of EUR 295 million (six months ended June 30, 2013: EUR 297 million).
|
Goodwill |
Goodwill is summarized as follows:
|
|
|
|
|
| Balance as of December 31, 2013: |
|
|
|
|
| Cost |
|
|
8,596 |
|
| Amortization and impairments |
|
|
(2,092 |
) |
|
|
|
|
|
| Book value |
|
|
6,504 |
|
|
|
| Changes in book value: |
|
|
|
|
| Purchase price allocation adjustment |
|
|
8 |
|
| Impairments |
|
|
— |
|
| Divestments and transfers to assets classified as held for sale |
|
|
(16 |
) |
| Translation differences |
|
|
83 |
|
|
|
| Balance as of June 29, 2014: |
|
|
|
|
| Cost |
|
|
8,689 |
|
| Amortization and impairments |
|
|
(2,111 |
) |
|
|
|
|
|
| Book value |
|
|
6,579 |
|
Divestments and transfer to assets classified as held for sale relate to the sectors Healthcare and Lighting.
For impairment testing, goodwill is allocated to (groups of) cash-generating units (typically one level below operational sector level),
which represents the lowest level at which the goodwill is monitored internally for management purposes.
|
|
|
| 42 |
|
Q2 2014 Quarterly report and Semi-annual report |
In 2014, a cash-generating unit Healthcare Informatics Services & Solutions was
created in the Healthcare sector. As a result of the change, a portion of the goodwill associated with the unit Patient Care & Clinical Informatics and the unit Home Monitoring was allocated to Healthcare Informatics Services &
Solutions. The name of the cash-generating unit Patient Care & Clinical Informatics was changed in 2014 to Patient Care & Monitoring Solutions.
Goodwill allocated to the cash-generating units Respiratory Care & Sleep Management, Imaging Systems, Patient Care &
Monitoring Solutions and Professional Lighting Solutions is considered to be significant in comparison to the total book value of goodwill for the Group at June 29, 2014. The amounts associated as of June 29, 2014, are presented below:
|
|
|
|
|
| |
|
June 29, |
|
| |
|
2014 |
|
|
|
| Respiratory Care & Sleep Management |
|
|
1,579 |
|
| Imaging Systems |
|
|
1,426 |
|
| Patient Care & Monitoring Solutions |
|
|
1,180 |
|
| Professional Lighting Solutions |
|
|
1,265 |
|
| Other (non-significant units) |
|
|
1,129 |
|
|
|
|
|
|
| Total book value |
|
|
6,579 |
|
The basis of the recoverable amount used in the annual and trigger-based impairment tests for the units
disclosed in this note is the value in use. In the annual impairment test performed in the second quarter, the estimated recoverable amounts of the cash-generating units tested approximated or exceeded the carrying value of the units, therefore no
impairment loss was recognized. Key assumptions used in the impairment tests for these units were sales growth rates, income from operations and the rates used for discounting the projected cash flows. These cash flow projections were determined
using management’s internal forecasts that cover an initial period from 2014 to 2018 that matches the period used for Philips’ strategic process. Projections were extrapolated with stable or declining growth rates for a period of 5 years,
after which a terminal value was calculated. For terminal value calculation, growth rates were capped at a historical long-term average growth rate.
The sales growth rates and margins used to estimate cash flows are based on past performance, external market growth assumptions and industry
long-term growth averages.
Income from operations in all units is expected to increase over the projection period as a
result of volume growth and cost efficiencies.
Cash flow projections of Respiratory Care & Sleep Management, Imaging Systems,
Patient Care & Monitoring Solutions and Professional Lighting Solutions for 2014 were based on the following key assumptions (used in the annual impairment test performed in the second quarter):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| in % |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
compound sales growth rate1) |
|
|
|
|
| |
|
|
|
|
|
|
|
used to |
|
|
|
|
| |
|
initial |
|
|
extra- |
|
|
calculate |
|
|
pre-tax |
|
| |
|
forecast |
|
|
polation |
|
|
terminal |
|
|
discount |
|
| |
|
period |
|
|
period2) |
|
|
value |
|
|
rates |
|
|
|
|
|
|
| Respiratory Care & Sleep Management |
|
|
4.2 |
|
|
|
3.6 |
|
|
|
2.7 |
|
|
|
11.4 |
|
| Imaging Systems |
|
|
3.3 |
|
|
|
3.1 |
|
|
|
2.7 |
|
|
|
12.8 |
|
| Patient Care & Monitoring Solutions |
|
|
4.9 |
|
|
|
3.8 |
|
|
|
2.7 |
|
|
|
12.8 |
|
| Professional Lighting Solutions |
|
|
9.9 |
|
|
|
6.3 |
|
|
|
2.7 |
|
|
|
13.7 |
|
| 1) |
Compound sales growth rate is the annualized steady growth rate over the forecast period |
| 2) |
Also referred to later in the text as compound long-term sales growth rate |
Among the
mentioned units, Respiratory Care & Sleep Management has the highest amount of goodwill and the lowest excess of the recoverable amount over the carrying amount. The headroom of Respiratory Care & Sleep Management was estimated at
EUR 820 million. The following changes could, individually, cause the value in use to fall to the level of the carrying value:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
decrease in |
|
|
|
|
| |
|
increase in pre- |
|
|
compound |
|
|
|
|
| |
|
tax discount |
|
|
long-term sales |
|
|
decrease in |
|
| |
|
rate, basis |
|
|
growth rate, |
|
|
terminal value |
|
| |
|
points |
|
|
basis points |
|
|
amount, % |
|
| Respiratory Care & Sleep Management |
|
|
380 |
|
|
|
680 |
|
|
|
49 |
|
The results of the annual impairment test of Imaging Systems, Patient Care & Monitoring Solutions
and Professional Lighting Solutions indicate that a reasonably possible change in key assumptions would not cause the value in use to fall to the level of the carrying value.
Additional information
In
addition, other units are sensitive to fluctuations in the assumptions as set out above.
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
43 |
Based on the annual impairment test, it was noted that the headroom for the cash-generating
unit Home Monitoring was EUR 80 million. An increase of 400 points in the pre-tax discounting rate, a 630 basis points decline in the compound long-term sales growth rate or a 51% decrease in terminal value would cause its value in use to fall to
the level of its carrying value. The goodwill allocated to Home Monitoring at June 29, 2014 amounts to EUR 33 million.
Based on the
annual impairment test, it was noted that with regard to the headroom for the cash-generating unit Consumer Luminaires the estimated recoverable amount approximates the carrying value of this cash-generating unit. Consequently, any adverse change in
key assumptions would, individually, cause an impairment loss to be recognized. The goodwill allocated to Consumer Luminaires at June 29, 2014 amounts to EUR 106 million.
|
Intangible assets excluding goodwill |
The changes in
intangible assets excluding goodwill in 2014 are summarized as follows:
|
|
|
|
|
| Book value as of December 31, 2013 |
|
|
3,262 |
|
|
|
| Changes in book value: |
|
|
|
|
| Additions |
|
|
188 |
|
| Purchase price allocation adjustment |
|
|
(8 |
) |
| Amortization |
|
|
(294 |
) |
| Impairment losses |
|
|
(9 |
) |
| Divestments and transfers to assets classified as held for sale |
|
|
(15 |
) |
| Translation differences |
|
|
33 |
|
|
|
|
|
|
| Total changes |
|
|
(105 |
) |
|
|
|
|
|
| Book value as of June 29, 2014 |
|
|
3,157 |
|
The additions for 2014 mainly comprise internally generated assets of EUR 155 million for product
development costs. Divestments and transfers to assets classified as held for sale relate to the sectors Healthcare and Lighting.
|
Other current and non-current financial assets |
Changes in
Other current and non-current financial assets mainly relate to changes in the asset category Loans and receivables which are included in this caption. The decrease in Loans and receivables is the net effect of loan facilities drawn by TPV
Technology
Limited (TPV) of EUR 60 million and the reclassification of loans maturing within one year to Other current financial assets (EUR 121 million).
The drawdown of the loan facility by TPV was enabled by an agreement concluded between Philips and TPV on March 25, 2014, which –
amongst others – involved the transfer of the existing loan agreements between Philips and TP Vision Holding B.V. (at that moment a television venture owned 70% by TPV and 30% by Philips) to TPV. As part of this agreement TPV assumed full
ownership of TP Vision Holding.
|
Shareholders’ equity |
In June 2014, Philips settled a
dividend of EUR 0.80 per common share, representing a total value of EUR 729 million. Shareholders could elect for a cash dividend or a share dividend. Approximately 60% of the shareholders elected for a share dividend, resulting in the
issuance of 18,811,534 new common shares. The settlement of the cash dividend involved an amount of EUR 293 million.
As of
June 29, 2014, the issued and fully-paid share capital consists of 956,657,323 common shares, each share having a par value of EUR 0.20.
During the first six months of 2014, a total of 9,591,833 treasury shares were delivered as a result of stock option exercises, restricted
share deliveries and other employee-related share plans, and a total of 5,822,559 shares were acquired in connection with the LTI coverage program started in January 2014. Furthermore, a total of 11,985,891 shares were acquired for cancellation
purposes in connection with the EUR 1.5 billion share buy-back program started in October 2013. On June 29, 2014 the total number of treasury shares amounted to 32,724,639, which were purchased at an average price of EUR 26.57 per
share.
|
Short-term and long-term debt |
At the end of Q2 2014,
Philips had total debt of EUR 3,768 million, a decrease of EUR 133 million compared to December 31, 2013. Long-term debt was EUR 3,336 million, an increase of EUR 27 million, and short-term debt was EUR 432 million, a
decrease of EUR 160 million compared to December 31, 2013. The movement of debt was mainly due to repayment of a EUR 250 million bilateral loan in Q1 2014. Total remaining long-term debt consists mainly of USD 4,117 million of
public bonds. The weighted average interest rate of long-term USD bonds was 5.59% at the end of Q2 2014.
|
|
|
| 44 |
|
Q2 2014 Quarterly report and Semi-annual report |
|
Provisions |
Provisions are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
December 31,
2013 |
|
|
June 29, 2014 |
|
| |
|
long |
|
|
short |
|
|
long |
|
|
short |
|
| |
|
term |
|
|
term |
|
|
term |
|
|
term |
|
|
|
|
|
|
| Provisions for defined-benefit plans |
|
|
754 |
|
|
|
51 |
|
|
|
746 |
|
|
|
51 |
|
| Other post-retirement benefits |
|
|
200 |
|
|
|
14 |
|
|
|
205 |
|
|
|
14 |
|
| Post-employment benefits and obligatory severance payments |
|
|
41 |
|
|
|
25 |
|
|
|
33 |
|
|
|
20 |
|
| Product warranty |
|
|
59 |
|
|
|
207 |
|
|
|
60 |
|
|
|
204 |
|
| Environmental provisions |
|
|
249 |
|
|
|
62 |
|
|
|
267 |
|
|
|
63 |
|
| Restructuring-related provisions |
|
|
75 |
|
|
|
128 |
|
|
|
62 |
|
|
|
110 |
|
| Onerous contract provisions |
|
|
40 |
|
|
|
53 |
|
|
|
42 |
|
|
|
41 |
|
| Other provisions |
|
|
485 |
|
|
|
111 |
|
|
|
358 |
|
|
|
219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,903 |
|
|
|
651 |
|
|
|
1,773 |
|
|
|
722 |
|
The decrease in provisions is mainly attributable to the reduction in restructuring-related provisions due to
usage (primarily in Healthcare, Lighting and IG&S) and releases (mainly in Healthcare and Lighting) which partly offset the additions (mainly in Healthcare and Lighting).
|
Pensions |
In accordance with IAS 34, actuarial gains and
losses are reported in the semi-annual condensed consolidated financial statements only if there have been significant changes in financial markets. In the first six months of 2014, no actuarial gains and losses were recorded as the changes in
financial markets during that period were considered not significant.
As part of the changed pension funding agreement in the
Netherlands, Philips agreed to make a one-off EUR 600 million contribution to Philips Pensioenfonds, the Company’s Dutch pension fund. In the first half of 2014 an amount of EUR 338 million of the total EUR 600 million was
settled, including a EUR 33 million non-cash transfer. The prepaid pension cost asset created by these contributions has been fully written off through Other comprehensive income due to the asset ceiling test. The remainder of the EUR 600
million must be settled before July 2015.
|
Contingent assets and liabilities |
Contingent assets
For information regarding contingent assets, please refer to the Annual Report 2013. Significant developments regarding contingent
assets that have occurred since the publication of the Annual Report 2013 are described below:
Nintendo
On June 20, 2014, the High Court of Justice in England issued a decision in a patent infringement case against Nintendo, confirming
patent infringement in respect of two Philips patents. Damages for the unauthorized use of Philips’ patents will have to be assessed separately. Nintendo has announced they will request permission to appeal this decision. Three other lawsuits
against Nintendo (in Germany, France and the US) are still pending.
Suframa
In the end of June 2014, the ‘Superior Tribunal de Justiça’ upheld a court decision to reject SUFRAMA’s appeal. SUFRAMA
has until August 2014 to file a Bill of Review and another appeal to ‘Supremo Tribunal Federal’. Final decision is expected in two years.
Contingent liabilities
Guarantees
Philips’ policy is to provide guarantees and other letters of support only in writing. Philips does not stand by other forms of support.
At the end of Q2 2014, the total fair value of guarantees recognized on the balance sheet was EUR nil million (December 31, 2013: EUR nil million). Remaining off-balance-sheet business and credit-related guarantees provided on behalf of third
parties and associates decreased by EUR 12 million during the first half of 2014 to EUR 22 million. Off-balance-sheet guarantees for year-end 2013 have been restated to EUR 34 million to reflect guarantees related to associates and third
parties only.
Environmental remediation
The Company and its subsidiaries are subject to environmental laws and regulations. Under these laws, the Company and/or its subsidiaries may
be required to remediate the effects of the release or disposal of certain chemicals on the environment. The Company accrues for losses associated with environmental obligations when such losses are probable and reliably
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
45 |
estimable. Such amounts are recognized on a discounted basis since they reflect the present value of estimated future cash flows.
Provisions for environmental remediation can change significantly due to the emergence of additional information regarding the extent or
nature of the contamination, the need to utilize alternative technologies, actions by regulatory authorities and changes in judgments, assumptions, and discount rates.
The Company and/or its subsidiaries have recognized environmental remediation provisions for sites in various countries. In the United
States, subsidiaries of the Company have been named as potentially responsible parties in state and federal proceedings for the clean-up of various sites.
Legal proceedings
The Company and certain of its group companies and former group companies are involved as a party in legal proceedings, including regulatory
and other governmental proceedings, including discussions on potential remedial actions, relating to such matters as competition issues, commercial transactions, product liability, participations and environmental pollution. In respect of antitrust
laws, the Company and certain of its (former) group companies are involved in investigations by competition law authorities in several jurisdictions and are engaged in litigation in this respect. Since the ultimate disposition of asserted claims and
proceedings and investigations cannot be predicted with certainty, an adverse outcome could have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows. For certain legal proceedings,
information required under IAS 37 is not disclosed, if the Company concludes that the disclosure can be expected to prejudice seriously the outcome of the legal proceeding.
For information regarding legal proceedings in which the Company is involved, please refer to the Annual Report 2013. Significant
developments regarding legal proceedings that have occurred since the publication of the Annual Report 2013 are described below:
Cathode-Ray Tubes (CRT)
In February 2014, the Company responded to allegations made by the Brazilian authorities in the ongoing investigation into possible
anticompetitive activities in the CRT industry. In addition, the authorities in Hungary are continuing to pursue the matter against
Philips and other defendants. The appeal against the fine imposed by the European Commission is pending with the General Court of the European Union.
In the proposed class proceedings in Canada, a class certification motion for Ontario has been scheduled for April 2015.
On February 18, 2014 the Delaware Chancery Court ruled in favor of the Company in the case filed by Mr. Carlo Vichi in which he
claimed repayment of a EUR 200 million loan made to the CRT joint venture LG.Philips Displays (LPD), alleging that the Company should have disclosed LPD’s participation in a CRT cartel as determined by the European Commission.
Mr. Vichi has appealed the decision with the Delaware Supreme Court.
Smart card chips
The European Commission is continuing its investigation into alleged anti-competitive conduct by Philips in the period September 2003 to
September 2004 relating to the former Philips smart card chips business. Based on its current knowledge, the Company does not believe that this investigation will have a materially adverse effect on the Company’s consolidated financial
position, results of operations or cash flows.
|
Share-based compensation |
Share-based compensation costs
were EUR 41 million and EUR 49 million in the first six months of 2014 and 2013 respectively.
Performance and restricted
shares granted
During the first six months of 2014 the Company granted 5,624,050 performance shares and 206,834 restricted shares.
Restricted shares issued and options exercised
In the first six months of 2014 a total of 1,273,289 restricted shares were issued to employees and 1,914,925 EUR-denominated options and
1,123,943 USD-denominated options were exercised at a weighted average exercise price of EUR 21.47 and USD 28.36 respectively.
Accelerate! shares issued and options exercised
Under the Accelerate! program, in the first six months of 2014, a total of 3,616,917 restricted shares were issued to employees and 887,117
EUR-denominated options
|
|
|
| 46 |
|
Q2 2014 Quarterly report and Semi-annual report |
and 280,600 USD-denominated options were exercised at a weighted average exercise price of EUR 15.24 and USD 20.02 respectively.
Other plans
Under
the employee stock purchase plans 668,754 shares were purchased at an average price of EUR 25.53.
For further information on the
characteristics of all plans, please refer to the Annual Report 2013, note 31.
|
Fair value of financial assets and liabilities |
The
estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methods. The estimates presented are not necessarily indicative of the amounts that will ultimately be
realized by the Company upon maturity or disposal. The use of different market assumptions and/or estimation methods may have a material effect on the estimated fair value amounts.
For cash and cash equivalents, current receivables, accounts payable, interest accrual and short-term debts, the carrying amounts approximate
fair value, because of the short maturity of these instruments.
The table below analyses financial instruments carried at fair value by different hierarchy
levels:
Fair value hierarchy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
level 1 |
|
|
level 2 |
|
|
level 3 |
|
|
total |
|
|
|
|
|
|
| June 29, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Available-for-sale financial assets - non-current |
|
|
47 |
|
|
|
— |
|
|
|
54 |
|
|
|
101 |
|
| Available-for-sale financial assets - current |
|
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
4 |
|
| Securities classified as assets held for sale |
|
|
69 |
|
|
|
— |
|
|
|
— |
|
|
|
69 |
|
| Financial assets designated at fair value through profit and loss |
|
|
22 |
|
|
|
— |
|
|
|
2 |
|
|
|
24 |
|
| Derivative financial instruments - assets |
|
|
— |
|
|
|
76 |
|
|
|
— |
|
|
|
76 |
|
| Current loans and receivables |
|
|
— |
|
|
|
121 |
|
|
|
— |
|
|
|
121 |
|
| Non-current loans and receivables |
|
|
— |
|
|
|
83 |
|
|
|
— |
|
|
|
83 |
|
| Receivables - non-current |
|
|
— |
|
|
|
186 |
|
|
|
— |
|
|
|
186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total financial assets |
|
|
138 |
|
|
|
470 |
|
|
|
56 |
|
|
|
664 |
|
|
|
|
|
|
| Financial liabilities designated at fair value through profit and loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Derivative financial instruments - liabilities |
|
|
— |
|
|
|
(382 |
) |
|
|
— |
|
|
|
(382 |
) |
| Debt |
|
|
(3,498 |
) |
|
|
(199 |
) |
|
|
— |
|
|
|
(3,697 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total financial liabilities |
|
|
(3,498 |
) |
|
|
(581 |
) |
|
|
— |
|
|
|
(4,079 |
) |
|
|
|
|
|
| December 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Available-for-sale financial assets - non-current |
|
|
42 |
|
|
|
— |
|
|
|
54 |
|
|
|
96 |
|
| Available-for-sale financial assets - current |
|
|
6 |
|
|
|
4 |
|
|
|
— |
|
|
|
10 |
|
| Securities classified as assets held for sale |
|
|
62 |
|
|
|
— |
|
|
|
— |
|
|
|
62 |
|
| Financial assets designated at fair value through profit and loss |
|
|
22 |
|
|
|
— |
|
|
|
7 |
|
|
|
29 |
|
| Derivative financial instruments - assets |
|
|
— |
|
|
|
150 |
|
|
|
— |
|
|
|
150 |
|
| Non-current loans and receivables |
|
|
— |
|
|
|
143 |
|
|
|
— |
|
|
|
143 |
|
| Receivables - non-current |
|
|
— |
|
|
|
144 |
|
|
|
— |
|
|
|
144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total financial assets |
|
|
132 |
|
|
|
441 |
|
|
|
61 |
|
|
|
634 |
|
|
|
|
|
|
| Financial liabilities designated at fair value through profit and loss |
|
|
— |
|
|
|
— |
|
|
|
(13 |
) |
|
|
(13 |
) |
| Derivative financial instruments - liabilities |
|
|
— |
|
|
|
(368 |
) |
|
|
— |
|
|
|
(368 |
) |
| Debt |
|
|
(3,345 |
) |
|
|
(200 |
) |
|
|
— |
|
|
|
(3,545 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total financial liabilities |
|
|
(3,345 |
) |
|
|
(568 |
) |
|
|
(13 |
) |
|
|
(3,926 |
) |
|
|
|
| Q2 2014 Quarterly report and Semi-annual report |
|
47 |
Level 1
Instruments included in level 1 are comprised primarily of listed equity investments classified as available-for-sale financial assets,
investees and financial assets designated at fair value through profit and loss.
The fair value of financial instruments traded in
active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency,
and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
The fair value of
Philips’ bond is estimated on the basis of the quoted market prices for certain issues. Accrued interest is not included.
Level
2
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) are
determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an
instrument are based on observable market data, the instrument is included in level 2.
The fair value of derivatives is calculated as
the present value of the estimated future cash flows based on observable interest yield curves and foreign exchange rates.
In connection
with transfer of the remaining 30% stake in the TP Vision venture to TPV Technology, a new loan has been issued with a nominal value of EUR 60 million. Together with remaining TP Vision loans it was transferred to TPV Technology, with a book value
for total loans of EUR 204 million, which approximates the fair value of these loans, within which EUR 121 million will mature in 2015.
Level 3
If one or
more of the significant inputs are not based on observable market data, the instrument is included in level 3.
As part of the
transfer of the remaining 30% stake in the TP Vision venture to TPV Technology, certain derivative options calculated under level 3 assumptions, with a book value of EUR 13 million as of December 31, 2013, expired.
The arrangement with the UK Pension Fund in conjunction with the sale of NXP is a financial
instrument carried at fair value classified as level 3. As of June 29, 2014, the fair value of this instrument is estimated to be EUR 2 million, with the changes of fair value recorded to financial income and expense.
The table below shows the reconciliation from the beginning balance to the end balance for fair value measured in level 3 of the fair value
hierarchy.
|
|
|
|
|
|
|
|
|
| |
|
financial
assets |
|
|
financial
liabilities |
|
|
|
|
| Balance at January 1, 2014 |
|
|
61 |
|
|
|
(13 |
) |
| Total gains and losses recognized in: |
|
|
|
|
|
|
|
|
| - profit or loss |
|
|
(5 |
) |
|
|
13 |
|
| - other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at June 29, 2014 |
|
|
56 |
|
|
|
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Subsequent events |
Philips to set up a stand-alone
company consisting of its Lumileds and Automotive lighting businesses
On June 30, 2014 Philips announced that it is in the
process to combine its Lumileds (LED components) and Automotive lighting businesses into a stand-alone company within the Philips Group. Philips will explore strategic options to attract capital from third-party investors for this business. Philips
intends to remain a shareholder and customer of the new company, and will continue the existing innovation collaboration.
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Q2 2014 Quarterly report and Semi-annual report |
