Financial reporting related matters. Jan van Leeuwen Group Controller

Transcription

1 Financial reporting related matters Jan van Leeuwen Group Controller

2 Agenda Goodwill review and update on equity stakes Goodwill review Equity stakes Pensions Funded status 2011 pension costs Group Management & Services Composition Cost estimate Calendar date of Annual Shareholder s Meeting 2

3 Goodwill review No impairments are expected for acquisitions in Lighting and Healthcare Little headroom remains for Professional Luminaires, Respiratory and Home Monitoring 3

4 Philips remaining main* equity interests have a book value of EUR 284 million as per Q Equity interest Ownership (% of total) Book value (in EUR million) Valuation Accounting basis Source of equity stakes Intertrust Technologies Corporation 49.5% 53 Not listed Equity accounted Acquired in 2002 together with Sony Innolux Display Corp. 1.3% 85 Listed, Taiwanese Stock Exchange Fair value Acquired in 2010 after TPO Displays Corp. merged with Innolux Display Corp. Share in TPO Displays Corp. following merger of Philips Mobile Display Systems with Toppoly Optoelectronics Corporation of Taiwan in 2006 TCL 5.5% 67 Listed, Shanghai Stock Exchange TPV 2.7% 31 Listed, Hong Kong Stock Exchange Fair value Strategic investments, acquired in 2002 and 2007 Fair value Acquired in 2005 in exchange of the transfer of the monitor business to TPV. Shareholding reduced in 2010 from 12.4% to 2.7% Shenyang Neusoft Corp. Ltd. 2.0% 48 Listed, Shanghai Stock Exchange Fair value Acquired in 2008 following the swap of shares in Neusoft Group Ltd. held by Philips Total 284 * The aggregate amount of Investments in Associates and Other non-current financial assets was * EUR 666 million as per September 30,

5 Equity stakes status update The estimated fair value of Intertrust Technologies Corporation exceeds the original book value by approximately EUR 50 million. The total fair value of Innolux Display Corp., TCL, TPV and Shenyang Neusoft Corp., based on their latest share price*, are EUR 136 million above their historical cost price. Innolux Display Corp. share price: TWD as per November 30, 2010; TCL share price: CNY 3.55 as per November 30, 2010; TPV share price: HKD 4.99 as per November 30, 2010; Shenyang Neusoft Corp. share price: CNY as per November 30,

6 Agenda Goodwill review and update on equity stakes Goodwill review Equity stakes Pensions Funded status 2011 pension costs Group Management & Services Composition Cost estimate Calendar date of Annual Shareholder s Meeting 6

7 Pension plans funded status update: June 30, 2009 December 31, 2009 June 30, 2010 (not reported) October 31, 2010 (not reported) Funded Status Balance sheet position Funded Status Balance sheet position Funded Status Balance sheet position Funded Status Balance sheet position Netherlands Pre-paid pension asset 1, ,658 1,497 1,911 1,453 1,436 1) 0 Other major plans (1,926) (1,711) (1,844) (2,263) (2,384) (1,563) (1,674) Net balance sheet position major plans Funded status minor plans Net balance sheet position (1,926) (347) (931) (1,674) (199) (197) (201) (220) (2,125) (544) (1,132) (1,894) 1) Incl. negative impact new mortality tables EUR 750m Pre-paid pension asset = recognized part of surplus, i.e. net present value of future benefits (discounts/refunds) 7

8 Pension costs in 2011 Pension cost in 2010 forecast to amount to EUR 75 million, including one-off gains from plan changes in Q3 and Q4 1) of EUR 85 million. Excluding one-off gains, the pension cost in 2010 are EUR 160 million Following a reduction of Expected Return On Assets, updated for increased longevity and using current market data for discount rates, the 2011 pension costs 2) are currently expected to be EUR 50 million higher than in 2010, and amount to EUR 210 million Calculations will be finalized early January 2011 based on actual market data and assumptions as per December 31, ) An additional curtailment gain of EUR 49m is forecast in Q4 due to further plan changes in the UK plan. 2) Pension Cost = Service Cost + Interest cost on DBO Expected Return On Assets credit -/+ settlement/curtailment gains/losses 8

9 Cash Flow: 2010 forecast and 2011 projection Pension related cash flow in 2010 is forecast to be an outflow of EUR 460 million (excl. EUR 350m contribution to the UK plan, covered by NXP shares) 2011 regular pension related cash out flow is expected to increase by approx. EUR 50 million to EUR 510 million, due to increase of cash contributions for the NL plan In addition, a regulatory one-off funding for the US plan of approx. EUR 200 million is expected Pension related cash flow = DB and DC contributions (regular and incidental) + pension payments by unfunded plans 9

10 Agenda Goodwill review and update on equity stakes Goodwill review Equity stakes Pensions Funded status 2011 pension costs Group Management & Services Composition Cost estimate Calendar date of Annual Shareholder s Meeting 10

11 Group Management & Services Composition Corporate Technologies Philips Corporate Technologies encompasses Corporate Research and Intellectual Property & Standards (IP&S) Overhead Cost Corporate center and Country & regional overheads Pensions Pension and other postretirement benefit costs mostly related to former Philips employees Service Units and Other Global Service units; Corporate Investments, New venture integration and Philips Design. Service unit cost are charged out based on a zero budget basis GM&S costs in Q are expected to be around the level during the first half of No material change is foreseen for

12 Agenda Goodwill review and update on equity stakes Goodwill review Equity stakes Pensions Funded status 2011 pension costs Group Management & Services Composition Cost estimate Calendar date of Annual Shareholder s Meeting 12

13 Date of Annual Shareholders meeting now set on March 31, 2011 Due to an amendment of Dutch law with respect to certain statutory notice periods we had to change the corporate calendar as follows: Annual Report to be published on the website on Thursday February 17, 2011 Annual Shareholders Meeting to be held on Thursday March 31,

14 In summary As part of our Q results: We continue to explore opportunities to reduce our non-core equity interests in the forthcoming year No goodwill impairments are expected to date Philips pension balance sheet position has declined in 2010 mainly because of revised interest rates and updated longevity tables in the Netherlands 2011 pension cost (before one-off s) are expected to increase by EUR 50 million compared to 2010 Group Management & Services adjusted* costs in 2011 are expected to be around 2010 level Due to new legislation, dates for Annual report publication and Shareholder s meeting have been adjusted * Costs exclude incidental items for restructuring, sale of assets and for pensions 14

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