Interests in entities

In this section we discuss the nature of, and risks associated with, the Company’s interests in its consolidated entities and associates, and the effects of those interests on the Company’s financial position and financial performance.

Interests in entities could in principle relate to:

  • Interests in subsidiaries
  • Joint arrangements
  • Unconsolidated structured entities
  • Investments in associates

Interests in subsidiaries

Wholly owned subsidiaries

The Group financial statements comprise the assets and liabilities of approximately 400 legal entities. Set out below is a list of material subsidiaries representing greater than 5% of either the consolidated group sales, income from operations or net income (before any intra-group eliminations). All of the entities are 100% owned and have been for the last 3 years.

Interests in subsidiaries
in order of EBIT (decreasing)
 
 
Legal entity name
Principal country of business
 
 
Philips Electronics North America Corporation
United States
Philips Medizin Systeme Böblingen GmbH
Germany
Philips Consumer Lifestyle B.V.
Netherlands
Philips Ultrasound, Inc.
United States
Philips (China) Investment Company, Ltd.
China
Philips Lighting Poland S.A.
Poland
Philips Innovative Applications
Belgium
Philips Medical Systems Nederland B.V.
Netherlands
RIC Investments, LLC
United States
Philips Lighting B.V.
Netherlands
Philips Oral Healthcare, Inc.
United States
Philips Medical Systems DMC GmbH
Germany
Philips GmbH
Germany

Not wholly owned subsidiaries

Among the consolidated legal entities is one entity where the Company owns 44% of the voting power. We have determined that the Company controls this entity on a de facto power basis. The sales, income from operations and net income of this entity is less than 1% of the consolidated financial data of the company and therefore not considered material.

In total eleven consolidated subsidiaries are not wholly owned by the Company. The sales, income from operations and net income of these entities (before any intra-group eliminations) are less than 3% of the consolidated financial data of the company and therefore not considered material.

Joint arrangements and unconsolidated structured entities

The Company did not have joint arrangements or unconsolidated structured entities that require separate disclosure under IFRS 12.

Investments in associates

Philips has investments in a number of associates, none of them are regarded as individually material.

The changes during 2013 are as follows:

Investments in associates
 
Total investments
 
 
Balance as of January 1, 2013
177
Changes:
 
Sales/Redemption
(2)
Reclassifications
(7)
Share in income
5
Dividends declared
(6)
Translation and exchange rate differences
(6)
Balance as of December 31, 2013
161

Philips has agreed that it will transfer the remaining 30% stake in the TP Vision venture, which has a book value of nil as at December 31, 2013, to TPV. The net impact of a transaction-related payment has been accrued in Other current liabilities at December 31, 2013 due to conditions that existed at the balance sheet date.

The Company owns four equity interests which represent more than 20% in the capital of the underlying companies. With respect to these equity interests, the Company cannot exercise significant influence based on governance agreements concluded among shareholders. These equity interests are accounted for as Other non-current financial assets. In 2013, the Company’s share in net income of these entities was insignificant.

The Company has one investment where it owns 51% of the shares of an entity, however is not able to control it and therefore it is not consolidated but accounted for as an investment in associate.

During 2013 the Company’s shareholding in two of its investments in associates was diluted and subsequently treated as available-for-sale financial assets. The dilution gains of EUR 16 million are recognized under results related to investments in associates.

The Company has not recognized a proportional share of losses, totaling EUR 37 million (2012: EUR 9 million) in relation to its investments in associates because the Company has no obligation in respect of these losses.

Summarized information of investments in associates

Unaudited summarized financial information on the Company’s most significant investments in associates, on a combined basis, is presented below. It is based on the most recent available financial information.

Included from April 2012 is the 30%-interest in TP Vision Holding which includes the former Philips TV business.

 
 
2011
2012
2013
 
 
 
 
Net sales
408
2,534
2,180
Income before taxes
86
(7)
(243)
Income taxes
(27)
2
12
Net income
59
(5)
(231)
 
 
 
 
Total share in net income of associates recognized in the Consolidated statements of income
18
(5)
5

 
 
2012
2013
 
 
 
Current assets
1,635
1,368
Non-current assets
485
412
 
2,120
1,780
Current liabilities
(1,544)
(1,327)
Non-current liabilities
(186)
(278)
Net asset value
390
175
 
 
 
Investments in associates included in the Consolidated balance sheet
177
161

(0)
(0)
This is an interactive electronic version of the Philips Annual Report 2013 and also contains certain information in summarized form. The contents of this version are qualified in their entirety by reference to the printed version of the full Philips Annual Report 2013. This printed version is available as a PDF file on this website. Information about: forward-looking statements, third-party market share data, fair value information, IFRS basis of presentation, use of non-GAAP information, statutory financial statements and management report, reclassifications and analysis of 2013 compared to 2012.