Building the leading company in health and well-being An introduction to Philips

Philips: a strong diversified industrial group

Who we are
Founded in 1891 Headquartered in Amsterdam, The Netherlands
Sales of 22.6 billion in 20111 33% in Growth Markets 65% in B2B EBITA 7.4% of sales 26% 40%

Our businesses

Operating in >100 countries

2011

Globally recognized brand (world top 50) Our brand value doubled to $8.7bn since 20042
122,000 employees Sales and service outlets in over 100 countries 1.6 billion investment in R&D, 7% of sales
2

34%

Healthcare Lighting Consumer Lifestyle

Growth Markets
Western Europe

North America
Other
2

1Note

- All figures exclude discontinued operations

Source: Interbrand

Operating in the right markets

Addressing key societal issues

Demand for affordable healthcare

Need for energy efficient solutions

Desire for increased personal well-being

Mature 67%

Group Sales:

67%

Mature Geographies

33%

Growth Geographies

Healthcare
Highlights 2011:
Philips received Food and Drug Administration (FDA) clearance to market its whole-body PET-MR imaging system in the US

Ultrasound ClearVue manufactured in China and sold locally and globally

2011
Imaging Systems

Customer Service
Patient Care and Clinical Informatics

Home Healthcare Solutions

Healthcare
Philips Healthcare Businesses1
Imaging Systems Home Healthcare Solutions Patient Care and Clinical Informatics Customer Services

Sales & services geographies1

North America International Growth Geographies

38%

14%

22%

26%

45%

34%

21%

8.9
Billion sales in 2011
1

37,000+
People employed worldwide in 100 countries

8%
of sales invested in R&D in 2011

450+
Products & services offered in over 100 countries

Full year 2011

Consumer Lifestyle
Highlights 2011:
Since launch of Sonicare AirFloss in key geographies, Philips increased market share

The new mixer grinder co-developed with Preethi for local Indian market launched in record time

2011

Domestic Appliances Personal Care Health & Wellness Lifestyle Entertainment Other incl. Licenses

Consumer Lifestyle

Philips Consumer Lifestyle Businesses1 2

Personal Care Health & Wellness Domestic Appliances Lifestyle Entertainment

Geographies1
Mature Geographies Growth Geographies

22%

13%

28%

31%

58%

42%

5.8
Billion sales in 2011
1 2

18,000+
People employed worldwide

5%
of sales invested in R&D in 2011

27%
of green product sales in 2011

Full year 2011 Other category (6%) is mainly license income and is omitted from this overview Note - All figures exclude discontinued operations

Lighting
Highlights 2011:
Philips won the L-Prize for LED replacement of 60W light bulb in a competition by the US Department of Energy

Philips InstantTrust: innovative water solution based on cutting-edge UV disinfection technology

2011

Lamps/Lighting Systems & Controls

Professional Luminaires
Consumer Luminaires

Automotive
Packaged LEDs

Lighting

Philips Lighting Customer Segments1

Homes Offices Outdoor Industry Retail Hospitality Entertainment Healthcare Automotive

23%

17%

15%

9%

15%

5%

3%

4%

9%

7.6
Billion sales in 2011
1

53,000+
People employed worldwide in 60 countries

5%
of sales invested in R&D in 2011

80,000+
Products & services offered in 2011

Indicative split

Sustainability as a driver for growth

Accelerating sustainable business

Green Products represented 39% of total sales in 2011, up from 30% in 2009 By 2015 Philips aims to invest EUR 2 billion in Green Innovation

EcoVision targets for 2010 2015

Bringing care to more than 500 million people Improving the energy efficiency of Philips overall portfolio by 50% Doubling the global collection and recycling amounts of our products, as well as double the amount of recycled materials in our products

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Creating meaningful innovations

Improving lives in new ways

Gain deep insights into peoples needs and aspirations

by following a process requiring end-user input at every stage

Transform insights into innovations

by combining the diverse perspectives of different disciplines

Learn fast, fail cheap

by applying a rigorous process to assess value potential early

Lead in open innovation

by working closely together with partners in a spirit of open innovation

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Customer intimacy and speed

Essentials for successful innovation

Understanding local relevance and customer insights

Increasing entrepreneurial power in the markets Innovating in regional hubs in both mature and growth geographies

Partnering with (local) customers, companies, universities, governments

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Unique leadership positions in many markets

Healthcare
Global Cardiovascular X-ray Global Patient Monitoring Global Cardiac resuscitation Global Sleep Therapy Systems Regional Ultrasound

Consumer Lifestyle
Global Male electric shaving Global Garment Care Global Rechargeable Toothbrushes Regional Kitchen Appliances Regional Electric Hair Care

Lighting
Global Lamps
Global LED Lamps Global Automotive Lighting Global Professional Luminaires

Global High Power LEDs

The worlds 41st most valuable brand in 2011

Philips increased brand value by 29% in the last five years

Value of the Philips brand1

USD billions

A strong brand drives sales

A significant amount of sales is attributable to the brand alone: Healthcare 42% Consumer Lifestyle 42% Lighting 16%

7.7 6.7 5.9 4.4

8.3

8.1

8.7

8.7

Brand ranking improves in 2011

Moving up one rank in top 100 global brands list, Philips has reached the highest position ever. Brand value doubled since 2004

2004

2005

2006

2007

2008

2009

2010

2011

Strong internal brand2

84% of employees are proud to work for Philips

1 2

Source: Interbrand Brand Valuation 2011 Employee Engagement Survey 2011

Philips people
Unlocking full potential: driving market-oriented entrepreneurship Employee Engagement Index
High performance benchmark 72 71 77 76

In the times of change, remaining on par with high-performing companies Customer centricity and strive for excellence strongly embedded in performance culture Making employees accountable for results

66
62 63

2005

2006

2007

2008

2009

2010

2011

Philips at high performance norm

The 2011 employee engagement index polling over 90,000 of the Philips workforce showed we are amongst the worlds top-ranking companies

Our global reach

Focused portfolio through strategic acquisitions*
Tomcat (2008) Sectra (2011) Interactive Medical Developments (2008) Genlyte (2008) Traxtal (2009) MedSage (2011) Street Controls (2010) Dameca (2011)

Raytel (2007)
Burton (2010)

Indal (2011)
Teletrol (2009) Optimum (2011)

Saeco (2009)

Somnolyzer (2010) CDP Medical Ltd. (2010)

Povos(2011)

Lighting Technologies (2007) Discus (2010) InnerCool Therapies (2009)

Shenzhen Goldway (2008) NSW (2010)

Ilti Luce (2009)

Luceplan (2010) Visicu (2008) Respironics (2008) Medel (2008) Meditronics (2008)

Apex (2010)

Alpha X-Ray (2008)

Dynalite (2009) Preethi (2011) Selecon (2009)

AllPartsMedical (2011)

Wheb Sistemas (2010)

Emergin (2007) Tecso Informatica (2010) VMI-Sistemas Medico (2007) Dixtal Biomedica e Technologia (2008)

Healthcare

Lighting

Consumer Lifestyle

Growth geographies

* Strategic acquisitions since mid-September 2007 until May 2012

Our portfolio now consists of ~65% B2B businesses

Healthcare Lighting Consumer Lifestyle Semiconductors

Healthcare Lighting Consumer Lifestyle

Healthcare Lighting Consumer Lifestyle excl. TV

16%

22%
2

30% 43%

26% 40%
3

2005

2008

2011

17%

45% 27%
1

34%

Healthcare

Consumer Lifestyle

Lighting

Semiconductors

1 Consumer 2

Lifestyle in 2005 includes the former DAP and Consumer Electronics divisions 2005 figures are based on US GAAP 3 Figures exclude Television as it is treated as discontinued operation

Building on our strong fundamentals

Innovation capabilities
Philips brand Global footprint People Domain leadership

Technology, know-how, strong IP positions (53,000 registered patents)

Worlds 41st most valuable brand 2011: USD 8.7 billion

Loyal customer base in 100+ countries 1/3 of group revenues from growth geographies Employee Engagement Index1 exceeds high performance benchmark value of 70% Culturally diverse top-200 leadership team Global market leader in Lighting; Top 3 Healthcare player; Leading Consumer Lifestyle brands (e.g. Philips Sonicare, Avent, Saeco)

Solid balance sheet

A3 rating by Moodys and A- by Standard & Poors

Based on annual Philips Employee Engagement Survey

Looking ahead

Clear vision to make the world healthier and more sustainable through innovation

Building upon a focused portfolio, with strong potential in growth and mature markets

Driving investments and results in innovation and markets to deliver improved profitable growth

Delivered by 120,000 engaged employees

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