phg-20251231


	3

None

(Title of class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.


Class	Outstanding at December 31, 2025
KONINKLIJKE PHILIPS NV	962,920,132
Common Shares par value EUR 0.20 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. xYes o No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. o Yes x No

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the

registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. xYes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months

(or for such shorter period that the registrant was required to submit such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer," "accelerated filer,” and

"emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer x Accelerated filer o Non-accelerated filer o Emerging growth company o

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with

any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. o

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the

effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.

7262(b)) by the registered public accounting firm that prepared or issued its audit report. x


	6

Introduction

This document contains information required for the Annual Report on

Form 20-F for the year ended December 31, 2025 of Koninklijke Philips

N.V. (the 2025 Form 20-F). Reference is made to the Form 20-F cross

reference table herein. Only the following information shall be deemed

to be filed with the Securities and Exchange Commission (SEC) for any

purpose (i) the information in this document that is referenced in the

Form 20-F cross reference table, (ii) this introduction and the cautionary

statement “forward-looking statements” on the next two pages and

(iii) the Exhibits. Any additional information in this document which is

not referenced in the Form 20-F cross reference table, or the Exhibits

themselves, shall not be deemed to be so incorporated by reference,

shall not be part of the 2025 Form 20-F and is furnished to the SEC for

information only.

References to Philips

References to the Company or company, to Philips or the (Philips)

Group or group, relate to Koninklijke Philips N.V. and its subsidiaries, as

the context requires. Royal Philips refers to Koninklijke Philips N.V.

IFRS based information

The audited consolidated financial statements as of December 31, 2025

and 2024, and for each of the years in the three-year period ended

December 31, 2025, included in the 2025 Form 20-F have been

prepared in accordance with International Financial Reporting

Standards (IFRS) as endorsed by the European Union (EU). All standards

and interpretations issued by the International Accounting Standards

Board (IASB) and the IFRS Interpretations Committee effective 2025

have been endorsed by the EU; consequently, the accounting policies

applied by Philips also comply with IFRS Accounting Standards as issued

by the IASB. These accounting policies have been applied by group

entities.

Use of non-IFRS information

In presenting and discussing the Philips financial position, operating

results and cash flows, management uses certain financial measures

that are not measures of financial performance or liquidity under IFRS

(‘non-IFRS’). These non-IFRS measures should not be viewed in isolation

as alternatives to the equivalent IFRS measure and should be used in

conjunction with the most directly comparable IFRS measures. Non-IFRS

measures do not have standardized meaning under IFRS and therefore

may not be comparable to similar measures presented by other issuers.

In this document, Philips reports the following non-IFRS measures:

comparable sales growth; EBITA; Adjusted EBITA; Adjusted EBITDA;

Adjusted income from continuing operations attributable to

shareholders; Adjusted income from continuing operations attributable

to shareholders per common share (in EUR) - diluted (Adjusted EPS);

Free cash flow; Net debt : group equity ratio; and Organic Return on

Invested Capital (ROIC).

A reconciliation of these non-IFRS measures to the most directly

comparable IFRS measures is contained in this document. Reference is

made in Reconciliation of non-IFRS information.

ESG-related statements

Materiality, as used in the context of ESG, is distinct from, and should

not be confused with, such term as defined in the Market Abuse

Regulation or as defined for SEC reporting purposes. Any issues

identified as material for purposes of ESG in this document, including

the materiality assessment undertaken by Philips pursuant to the EU

Corporate Sustainability Reporting Directive and the related European

Sustainability Reporting Standards, are therefore not necessarily

material as defined in the Market Abuse Regulation or for SEC

reporting purposes.

Third-party market share data

Statements regarding market share, contained in this document,

including those regarding Philips’ competitive position, are based on

outside sources such as specialized research institutes, industry and

dealer panels in combination with management estimates. Where full

year information regarding 2025 is not yet available to Philips, market

share statements may also be based on estimates and projections

prepared by management and/or based on outside sources of

information. Management's estimates of rankings are based on order

intake or sales, depending on the business.

Documents on display

Philips’ SEC filings are publicly available through the SEC’s website at

www.sec.gov. The SEC website contains reports, proxy and information

statements, and other information regarding issuers that file

electronically with the SEC. Philips’ internet address is

www.philips.com/investor. The contents of any websites referred to

herein shall not be considered a part of or incorporated by reference

into this document.

For definitions and abbreviations reference is made in Definitions and

abbreviations

Due to rounding, amounts may not add up precisely to the totals

provided in this report.


	7

Forward-looking statements

Pursuant to provisions of the United States Private Securities Litigation

Reform Act of 1995, Philips is providing the following cautionary

statement.

This document, including the information referred to in the Form 20-F

cross reference table, contains 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, in particular, among other statements, certain statements

in Item 4 “Information on the Company” with regard to management's

views and objectives, market trends, market standing, product volumes,

business risks, the statements in Item 5 “Operating and financial review

and prospects” with regards to trends in results of operations, margins

overall, market trends, risk management, exchange rates, the

statements in Item 8 “Financial Information” relating to legal

proceedings and goodwill and statements in Item 11 “Quantitative and

qualitative disclosure about market risks” relating to risk caused by

derivative positions, interest rate fluctuations and other financial

exposure are forward-looking in nature. Forward-looking statements

can be identified generally as those containing words such as

“anticipates”, “assumes”, “believes”, “estimates”, “expects”, “should”,

“will”, “will likely result”, “forecast”, “outlook”, “projects”, “may” or

similar expressions. 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: macro-

economic and geopolitical changes including protectionism measures

such as enacted and proposed tariffs and retaliatory trade measures in

response thereto; Philips’ ability to keep pace with the changing health

technology environment; Philips’ ability to gain leadership in artificial

intelligence (AI) and health informatics in response to developments in

the health technology industry; integration of acquisitions and their

delivery on business plans and value creation expectations; ability to

meet expectations with respect to ESG-related matters; securing and

maintaining Philips’ intellectual property rights, and unauthorized use

of third-party intellectual property rights; failure of products and

services to meet quality or security standards, adversely affecting

patient safety and customer operations; the resilience of our supply

chain; challenges in simplifying our organization and our ways of

working; attracting and retaining personnel; breach of cybersecurity;

challenges in driving operational excellence and speed in bringing

innovations to market; treasury and financing risks; tax risks; reliability

of internal controls; compliance with regulations and standards

involving quality, product safety, (cyber) security and AI; and

compliance with business conduct rules and regulations including

privacy, existing and upcoming ESG disclosure and due diligence

requirements. 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,

reference is made to the information in Risk factors.


	8

Form 20-F cross reference table

Only the following information shall be deemed to be filed with the Securities and Exchange Commission for

any purpose (i) the information in this document that is referenced in the Form 20-F cross reference table, (ii)

the Introduction and the cautionary statements concerning forward-looking statements of this report on

pages 7-8, and (iii) the Exhibits. The content of Philips websites and other websites referenced herein should

not be considered to be a part of or incorporated into the 2025 Form 20-F. Any additional information which

is not referenced in the Form 20-F cross reference table or the Exhibits themselves shall not be deemed to be

so incorporated by reference, shall not be part of the 2025 Form 20-F and is furnished to the Securities and

Exchange Commission for information only.

The table below sets out the location in this document of the information required by SEC Form 20-F. The

exact location is included in the column ‘Location in this document’. The page number refers to the starting

page of the section for reference only (and is not intended to refer to the starting page of the specific

subsection, if applicable).


Item	Form 20-F caption	Location in this document
Part 1
1	Identity of directors, senior management and advisors	Not applicable
2	Offer statistics and expected timetable	Not applicable
3	Key information
	A [Reserved]	Not applicable

	B Capitalization and indebtedness	Not applicable

	C Reason for the offer and use of proceeds	Not applicable

	D Risk factors	Risk factors
		Strategic risks
		Operational risks
		Financial and reporting risks
		Compliance risks
		Factors impacting performance


Item	Form 20-F caption	Location in this document
4	Information on the Company
	A History and development of the company	Cover
		Introduction – Documents on display
		Strategy – Strategic focus
		Our Business structure
		Business – Connected Care segment
		Factors impacting performance – Operating model
		Results of operations – Discontinued operations
		Results of operations – Restructuring, acquisition-related charges and other items
		Acquisitions and divestments
		Cash flows
		Corporate governance
		Other Corporate governance
		Corporate information
		Investor contact – How to reach us
		Note 3 – Discontinued operations and assets classified as held for sale
		Note 4 – Acquisitions and divestments
		Note 5 – Interests in entities
		Note 30 – Subsequent events

	B Business Overview	Introduction – Third-party market share data
		Strategic focus
		Our Business structure
		Business – Our business structure; Diagnosis and Treatment segment; Connected Care segment; Personal Health segment; Segment other
		Our Regions
		Supply chain and procurement
		Performance Summary (excluding the information set forth under the subheading "Outlook")
		Results of operations – Sales per geographic area
		Patient safety, quality and regulatory and the Medical Office
		Note 2 – Information by segment and main country


	10


Item	Form 20-F caption	Location in this document
	B Compensation	Remuneration report 2025
		Remuneration report 2025 – Letter from the Remuneration Committee Chair
		Remuneration report 2025 – Board of management
		Note 26 – Share-based compensation
		Note 27 – Information on remuneration

	C Board practices	Members of the Supervisory Board
		Members of the Board of Management and Executive Committee – Members of the Board of Management
		Governance – Annual financial statements and external audit
		Supervisory Board report – Supervisory Board Committees
		Report of the Audit Committee
		Remuneration report 2025 – Letter from the Remuneration Committee Chair, Main elements of the Remuneration Policy; Services agreements
		Board of Management and Executive Committee – Appointment and composition
		Supervisory Board – Appointment and composition; Supervisory Board committees
		Other Corporate governance – Committees of our Supervisory Board

	D Employees	Employment
		Note 6 – Income from operations – Employees

	E Share ownership	Remuneration report 2025 – Historical LTI grants and holdings
		Remuneration report 2025 – Remuneration of the Board of Management in 2025
		Other Board-related matters – Remuneration and share ownership
		Further information – Voting rights; Equity compensation plans
		Note 26 – Share-based compensation
		Note 27 – Information on remuneration - Supervisory Board members’ and Board of Management members’ interest in Philips shares

	F Disclosure of registrant's action to recover erroneously awarded compensation	Not applicable


Item	Form 20-F caption	Location in this document
7	Major shareholders and related party transactions
	A Major shareholders	General Meeting of Shareholders – Share capital; issue and repurchase of (rights to) shares (second and third paragraphs)
		Stichting Preferente Aandelen Philips
		Major shareholders
		Other Corporate governance – Voting Rights (last sentence)

	B Related party transactions	Other Board-related matters – Conflicts of interest; Remuneration and share ownership (fifth paragraph)
		Note 5 – Interests in entities
		Note 25 – Related-party transactions

	C Interests of experts and counsel	Not applicable
8	Financial information
	A Consolidated statements and other financial information	Dividend – Dividend policy
		Group financial statements

	B Significant changes	Note 30 – Subsequent events
9	The offer and listing
	A Offer and listing details	Share information

	B Plan of distribution	Not applicable

	C Markets	Share information

	D Selling shareholders	Not applicable

	E Dilution	Not applicable

	F Expenses of the issue	Not applicable
10	Additional information
	A Share capital	Not applicable

	B Memorandum and articles of association	Board of Management and Executive Committee – Appointment and composition
		Supervisory Board – Appointment and composition
		Other Board-related matters – Remuneration and share ownership (fifth paragraph); Conflicts of interest


	11


Item	Form 20-F caption	Location in this document
		General Meeting of Shareholders – Meetings; Main powers of the General Meeting of Shareholders
		Stichting Preferente Aandelen Philips
		Other Corporate governance – Articles of association
		Index of exhibits – Exhibit 1; Exhibit 2

	C Material contracts	Remuneration report 2025 – Letter from the Remuneration Committee Chair (sixth paragraph); Services agreements
		Board of Management and Executive Committee - Appointment and composition (third paragraph)
		Supervisory Board – Appointment and composition (last paragraph)
		Note 24 Contingencies - Product liability claims
		Note 25 – Related-party transactions
		Note 26 – Share-based compensation
		Note 27 – Information on remuneration
		Index of exhibits – Exhibit 4(a)
		Index of exhibits – Exhibit 4(b)
		Index of exhibits – Exhibit 4(c)
		Index of exhibits – Exhibit 4(d)
		Index of exhibits – Exhibit 4(e)
		Index of exhibits – Exhibit 4(f)

	D Exchange controls	Other Corporate governance – Exchange controls
		Note 29 – Details of treasury and other financial risks - Liquidity risk

	E Taxation	Taxation

	F Dividends and paying agents	Not applicable

	G Statements by experts	Not applicable

	H Documents on display	Introduction - Documents on display

	I Subsidiary information	Not applicable

	J Annual Report to Security Holders	The Company intends to submit any annual report provided to security holders in electronic format as an exhibit to a current report on Form 6-K.


Item	Form 20-F caption	Location in this document
11	Quantitative and qualitative disclosure about market risk
	A Quantitative information about market risk	Forward-looking statements
		Note 29 – Details of treasury and other financial risks

	B Qualitative information about market risk	Forward-looking statements
		Note 29 – Details of treasury and other financial risks

	C Interim periods	Not applicable

	D Safe harbor	Forward-looking statements
		Note 29 – Details of treasury and other financial risks

	E Smaller reporting companies	Not applicable
12	Description of securities other than equity securities
	A Debt securities	Not applicable

	B Warrant and rights	Not applicable

	C Other securities	Not applicable

	D American depository shares	Other Corporate governance – New York Registry Shares
Part 2
13	Defaults, dividend arrearages and delinquencies	Not applicable
14	Material modifications to the rights of security holders and use of proceeds	Not applicable
15	Controls and procedures
	A Disclosure controls and procedures	Disclosure controls and procedures

	B Management's Annual Report on internal control over financial reporting	Management's annual report on internal control over financial reporting
		Attestation report of the registered public accounting firm

	C Attestation report of the registered public accounting firm	Attestation report of the registered public accounting firm


	12


Item	Form 20-F caption	Location in this document
		Independent auditor’s report - PricewaterhouseCoopers Accountants N.V. (PCAOB ID: 1395)

	D Changes in internal control over financial reporting	Changes in internal control over financial reporting
16A	Audit Committee Financial Expert	Supervisory Board - Supervisory Board Committees (fifth paragraph)
16B	Code of Ethics	General Business Principles (GBP) (last paragraph)
16C	Principal Accountant Fees and Services	Report of the Audit Committee
		Annual financial statements and external audit
		Note 6 – Income from operations - Audit and audit-related fees
16D	Exemptions from the Listing Standards for Audit Committees	Not applicable
16E	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	Shareholders’ equity – Share repurchase methods for long-term incentive plans and capital reduction purposes
16F	Change in Registrant’s Certifying Accountant	Annual financial statements and external audit (second paragraph, last sentence)
16G	Corporate Governance	Other Corporate governance – Significant differences in corporate governance practices
16H	Mine Safety Disclosure	Not applicable
16I	Disclosure regarding Foreign Jurisdictions that prevent inspections	Not applicable
16J	Insider Trading Policies	General Business Principles (GBP)
		Index of exhibits - Exhibit 11
16K	Cybersecurity	Cybersecurity
Part 3
17	Financial statements	Not applicable
18	Financial statements	Group financial statements
19	Exhibits	Index of exhibits


	14

Message from the CEO

“We delivered for those who count on us and strengthened our

foundations. Looking ahead, we are energized by our plan to drive

profitable growth to deliver sustainable value.”

Roy Jakobs CEO Royal Philips

Dear stakeholder,

In 2025, amid profound global change, we focused on delivering better

care for more people to create value with sustainable impact.

When we set out our three-year plan, we were navigating challenging

circumstances. Committed to rebuilding our foundations and boosting

our innovation power, we went to work with discipline and clarity –

making tough choices and determined to execute consistently. In 2025,

the results of this work became increasingly visible.

Looking back on the year, I am proud of what we delivered and

grateful for how we did it. We served the patients, customers and

consumers who count on us. We strengthened the fundamentals of our

company, creating the foundations to drive sustainable growth in the

years ahead. I am deeply grateful to my colleagues for their resilience,

focus and determination in executing our strategy while living our

culture of impact with care.

Throughout the year, we delivered solid progress. We improved

order intake and comparable sales growth, reflecting strong

demand for our innovations, while achieving meaningful

operational improvements. We continued to advance patient

safety and quality in a focused, disciplined way.

Despite ongoing global uncertainty and an uneven environment,

we stayed focused on what we could control, responding to tariff

developments, rigorously managing costs and productivity, and

simplifying how we work. These actions drove strong order intake,

gross and Adjusted EBITA margin expansion and free cash flow

generation throughout the year.

Seeing the results of our plan in action

Reflecting our commitment to patient safety and quality, our number

one priority, we continued to strengthen processes, controls and

culture. We improved early warning systems and completed major

elements of our quality management improvements, and continued to

work under the consent decree requirements for Respironics in the US.

In early 2025, the US Food and Drug Administration (FDA) inspected

nine global facilities. Observations at three sites resulted in a warning

letter in September 2025. Philips is committed to resolving these issues.

Building on our previous Timeouts for Patient Safety and Quality, we

introduced Blue Heart Day and the Blue Heart Series for all employees.

These initiatives enhanced our open, meaningful conversations about

patient safety, quality, integrity and speaking up.

* Helium-free 3.0T MRI is Work in Progress and not available in the US or any jurisdiction. Its future availability cannot be guaranteed.


	15

In 2025, we delivered several world-firsts, underlining our innovation

power. Philips unveiled its latest innovations in helium-free 3.0T MRI,

which combine breakthroughs in hardware with AI-powered software

to improve outcomes for both clinicians and patients*. Verida, the

world’s first detector-based spectral CT powered by AI, advances

diagnostic precision while improving clinical and operational

performance. In acquiring SpectraWAVE, Inc., we doubled down on

image-guided therapy and expanded our portfolio in the coronary

intervention segment. We also launched new propositions that help

shape daily routines in the home – from oral care to baby feeding to

personal grooming – and expanded our reach. Our Lumea IPL, launched

in the US, brings the world’s number one Intense Pulsed Light hair-

removal brand to more people. We introduced an innovative

monitoring platform designed to help address critical challenges in

cardiac care, with a key component being the next-generation

Telemetry Monitor 5500.

Beyond individual innovations, we focused on how we scale impact

through collaboration. A landmark example in 2025 was our multi-year

partnership with the Ministry of Health in Indonesia, where we are

providing nationwide coverage of image-guided therapy systems,

expanding access to stroke, cardiac and cancer care for a population

of more than 280 million people. Such partnerships reinforce our

conviction that sustained transformation in healthcare requires deep

collaboration across the ecosystem.

Executing our plan meant strengthening our operational resilience,

which allowed us to quickly respond to the impact of tariff

developments. We continued to simplify, reduce complexity and drive

productivity. Our teams delivered substantial savings, contributing to

improved gross margins and Adjusted EBITA margins. At the same time,

we continued our commitment to responsible and sustainable business

by advancing our efforts to decarbonize healthcare and operate with

transparency across the environmental, social and governance

dimensions.

The year was one of ongoing cultural progress, where we nurtured our

own workforce, strengthened our leadership team and grew vital

capabilities, including deepening our domain expertise. I see a

company that is more connected, more open and more focused on

impact, with engagement rising from 70% in the first half of 2023 to

79% at the end of 2025. Two moments of pride for our workforce in

2025 were the opening of our new headquarters in Amsterdam, which

honored Philips’ legacy while marking the beginning of a new chapter,

and the announcement of the expansion of our operation in Reedsville,

Pennsylvania, as part of our USD 150 million investment in US

manufacturing capability for our AI-powered health technology.

I thank the patients and consumers who put their trust in us. I am

grateful for impactful collaboration with our customers and partners,

and I thank our shareholders for their continued support.

Reflecting the progress we have made in executing our plan, reducing

risk and strengthening our balance sheet, along with the importance

we attach to dividend stability, we propose to maintain the dividend at

EUR 0.85 per share, to be in shares or cash at the option of the

shareholder.

Building on our momentum to deliver impact

As we close our three-year plan, we look ahead with confidence. We

have launched our plan to drive profitable growth to deliver

sustainable value, including our 2026-2028 outlook. We entered this

next phase of our strategy having strengthened our core fundamentals,

team and culture, resilience and execution agility. Building on this

foundation, Philips leverages its scalable platform-based innovation

advantage, supported by a large global customer base and a trusted

brand across healthcare and self-care. Our 2030 Impact Ambitions

support our strategy and purpose by embedding three priorities into

our business operations and management: improving people’s health

and well-being, reducing impact on the environment, and maintaining

strong governance for sustainable long-term value creation.

As I look to 2026, I am confident and energized. We have the right

plan, and the right capabilities, culture and team to deliver it. I remain

mindful of the uncertainties that continue to shape the world. Yet I am

also encouraged by what we have proven over the past three years.

We have momentum. We have a clear direction. And we are united in

our ambition to deliver better care for more people.

Roy Jakobs

Chief Executive Officer

*This page reflects the composition of the Board of Management as of December 31, 2025. For a current overview, please refer to our website.


	16

Members of the Board

of Management and

Executive Committee

Royal Philips has a two-tier board structure consisting of a Board of

Management and a Supervisory Board, each of which is accountable

to the General Meeting of Shareholders for the fulfillment of its

respective duties. The Board of Management is entrusted with the

management of the company. The other members of the Executive

Committee have been appointed to support the Board of

Management in the fulfillment of its managerial duties.

Please also refer to Board of Management and Executive

Committee within the company's Corporate governance report.



14 members		50% female 50% male

8 nationalities	Average 25+ years leadership experience within healthcare


Members of the Board of Management*


Roy Jakobs Born 1974, Dutch and German Chief Executive Officer (CEO) Chairman of the Board of Management and the Executive Committee (since October 2022) Roy joined Philips in 2010 and has held various global leadership positions across the company, starting as Chief Marketing & Strategy Officer for Philips Lighting. In 2012, he became Market Leader for Philips Middle East & Turkey, leading the Healthcare, Consumer, and Lighting businesses out of Dubai. Subsequently, he became global Business Leader of Domestic Appliances, based in Shanghai, in 2015. In 2018, Roy joined the Executive Committee as Chief Business Leader of Personal Health and in early 2020 he started as Chief Business Leader of Connected Care. As Chief Executive Officer and Chairman of the Board of Management and the Executive Committee, he also holds direct responsibility for Patient Safety and Quality, Medical Office, and Internal Audit. Prior to his career at Philips, he held various management positions at Royal Dutch Shell and RELX.	Charlotte Hanneman Born 1978, Dutch Chief Financial Officer Member of the Board of Management and the Executive Committee (since October 2024) Charlotte joined Philips in 2024 and is responsible for Finance, including Investor Relations, Strategy and M&A, as well as Real Estate and Security. Prior to joining Philips, Charlotte served as Controller and Head of Financial Planning & Analysis at global medical technology company Stryker. In this role, she was responsible for external reporting, enterprise financial planning and analysis, and business development finance. She also oversaw indirect procurement and had direct responsibility for finance teams across Europe, the Middle East and Africa, Canada, and Latin America. Earlier in her career, Charlotte held several international finance leadership roles at Stryker and other multinational healthcare companies, including Merck, Schering- Plough and Organon. She has extensive experience working in the US and has lived in multiple countries across Asia and Europe.	Marnix van Ginneken Born 1973, Dutch Chief ESG & Legal Officer Member of the Board of Management and the Executive Committee (since November 2017) Marnix became a member of the Executive Committee in 2014 and was appointed a member of Philips’ Board of Management in 2017. He is responsible for driving Environmental, Social and Governance efforts across the company, including sustainability. Marnix is also responsible for Legal, Intellectual Property & Standards, Government & Public Affairs and Communications & Brand. He became Chair of the Board of the Philips Foundation in 2024. He has also been a Professor of International Corporate Governance at the Erasmus School of Law in Rotterdam since 2011. In 2025, Marnix was appointed to the Dutch Monitoring Committee Corporate Governance Code by the Minister of Economic Affairs. Before joining Philips in 2007, Marnix worked for Akzo Nobel, and prior to that he was an attorney in private practice.

* This page reflects the composition of the Executive Committee as of December 31, 2025. For a current overview of the Executive Committee members, please refer to our website.


	17


Other members of the Executive Committee*


Willem Appelo Born 1964, Dutch Executive Vice President Chief Operations Officer Wim joined Philips in 2022, bringing over 30 years of experience in technology and the medical device technology industry, in finance and supply chain management.	Steve C de Baca Born 1968, American Executive Vice President Chief Patient Safety & Quality Officer Steve joined Philips in 2023 and brings over 30 years of quality and regulatory affairs experience in the medical technology industry.	Jeff DiLullo Born 1969, American Executive Vice President Chief Region Leader, Philips North America Jeff joined Philips in 2019, drawing on more than 30 years of leadership experience in the US Army and the information technology industry.	Özlem Fidanci Born 1970, Turkish Executive Vice President Chief of International Region Özlem rejoined in 2025 and has been with Philips more than 27 years. She has extensive expertise and proven leadership across multiple geographies in both the health systems and personal health domains.	Deeptha Khanna Born 1976, Singaporean Executive Vice President Chief Business Leader Personal Health Deeptha joined Philips in 2020. She has over 25 years of leadership experience working across Europe, the US and Asia on major global brands and across personal care and the consumer health industry.	Ling Liu Born 1974, Chinese Executive Vice President Chief Region Leader, Philips Greater China Ling joined Philips in 1998 and has more than 28 years of experience in leadership roles in Greater China, the Netherlands and North America.


Bert van Meurs Born 1961, Dutch Executive Vice President Chief Business Leader Diagnosis and Treatment Bert joined Philips in 1985 and has more than 40 years of experience in the medical imaging interventional and healthcare business.	Shez Partovi Born 1967, Canadian Executive Vice President Chief Innovation Officer and Chief Business Leader Enterprise Informatics Shez joined Philips in 2021, bringing over 30 years of clinical (neuroradiology) and healthcare informatics experience, including cloud transformation, machine learning, and AI.	Heidi Sichien Born 1974, Belgian Executive Vice President Chief People Officer Heidi joined Philips in 2006 and brings over 19 years of experience in leadership roles in HR across many parts of the company.	Julia Strandberg Born 1974, American Executive Vice President Chief Business Leader Connected Care Julia joined Philips in 2023 and has over 20 years of leadership experience in the medical technology industry, especially in monitoring and North America.	Jie Xue Born 1973, American and Chinese Executive Vice President Chief Business Leader Diagnosis and Treatment Jie joined Philips in 2025 with over 25 years of leadership experience in the imaging industry, especially in the US.


	20

Value with sustainable impact

Philips in 2025 delivered on its three-year plan to drive progressive

value creation through a strategy of focused growth, scalable patient-

and people-centric innovation, and reliable execution supported by our

culture of impact with care.

Concentrating our resources where we have strong positions – Image

Guided Therapy, Monitoring, Ultrasound, and Personal Health – we

aimed to accelerate growth and expand margins more quickly. We

focused on clinical workflows in areas where we have domain

leadership, such as cardiology, and built on our deep strength in the

intensive care unit and cath lab.

In the remaining Business Units, we aimed for Adjusted EBITA margin

expansion by increasing productivity and scale, and by improving

execution. Additionally, we worked to rebuild our position in Sleep &

Respiratory Care after the progress made to resolve the effects of the

Respironics recall.

Accountability for value creation is assigned to the Business Units,

supported by lean Functions and Regions following tailored models, all

guided by fewer KPIs and more focused targets. To effectively manage

the risks associated with the enterprise, we implement balanced

responses and monitor their effectiveness. Refer to Risk management

and internal control for more information.

Industry-leading innovation

In an increasingly competitive environment, innovation is our strength

and will continue to be our core differentiator. We seek to innovate for

purpose and impact, addressing pain points across operational and

clinical workflows in healthcare, and providing personalized tools that

help people take charge of their health and well-being.

This is what it means to innovate in the age of intelligence – where AI

enhances human expertise and gives caregivers more time to focus on

what matters most, and empowers patients and consumers to live their

best lives. We believe that the application of AI can enable our

products and solutions to deliver better care for more people by

automating administrative and repetitive tasks; augmenting clinical

capabilities to deliver insights; and enabling quick, agile responses to

data and insights. And to ensure that we use, design, develop and

deploy AI in a responsible way, we have AI principles that align our AI

vision with our company purpose and priorities. Refer to Risk factors for

more information about the risks associated with health informatics and

AI, and to Business for highlights from 2025.

By bringing together expertise across the product life cycle, from

research through serviceability, we aim to fulfill customers’ needs and

scale to drive maximum impact, while minimizing negative effects on the

environment. We believe that acting responsibly toward the planet and

society is the best way for us to meet our business goals and create

superior, long-term value for Philips’ stakeholders. Refer to Governance

for an overview of our commitments, and for information on how we act

and perform in the environmental and social dimensions and on the

main elements of our governance framework.

Operational excellence

Enabled by a culture of patient- and people-centricity, accountability

and impact, effective execution is a key value driver. The components:

•patient safety and quality – our highest priority Read more u

•end-to-end supply chain resilience Read more u

•a simplified operating model with an agile way of working

Read more u

The 5,000th Zenition mobile C-arm system installation is a milestone in

expanded access to high-quality, efficient surgical and interventional care.

See more highlights in Image Guided Therapy u

Philips unveiled new offerings in radiation therapy (RT), including the

advanced Rembra RT and Areta RT CT scanners, which deliver clearer and

more consistent images, as well as its latest innovations in helium-free

3.0T MRI. See more highlights in Precision Diagnosis u

1Industry rankings are based on internal estimates, as well as publicly available market research and analyst reports per segment (e.g., Euromonitor International Limited). Rankings reflect relative position within each specific industry and are not directly comparable

across segments.


	21

Business

Our Business structure

Koninklijke Philips N.V. (Royal Philips) is the parent company of the Philips Group. The segments Diagnosis & Treatment, Connected Care and Personal Health are

responsible for the management of their activities worldwide, and are made of six Businesses, which in turn include a number of Business Units. Philips' operating

model puts Business Units in the lead and accountable for value creation through their value streams. Additionally, Royal Philips identifies the segment Other,

which includes Innovation & Design, IP royalties, Central costs, and other small items.1


Segments


Diagnosis & Treatment		Connected Care		Personal Health


	Businesses1: •Image Guided Therapy #1 •Precision Diagnosis #1 in cardiovascular ultrasound #3 in diagnostic imaging		Businesses1: •Monitoring #1 in hospital and ambulatory •Enterprise Informatics #1 in PACS and interoperability •Sleep & Respiratory Care #2 in sleep therapy devices and masks		The Personal Health Business includes three Business Units1: •Personal Care #1 in grooming •Oral Healthcare #2 •Mother and Child Care #2 in infant feeding

Philips Group

Total sales by reportable segment

Diagnosis & Treatment

Connected Care

Personal Health

Other


	22

Diagnosis & Treatment segment

The portfolio of innovative AI-enabled solutions supports precision

diagnosis and minimally invasive treatment.

Our strategy is to focus on more precise and predictive diagnoses,

integrating our intelligent imaging systems with our informatics

solutions to optimize workflow efficiency and improve productivity. By

expanding access to care, we help healthcare providers reach more

people. At the same time, we work to maximize the lifetime value of

our products and improve resource efficiency.

We also provide integrated solutions that combine imaging systems

and advanced clinical software, as well as diagnostic and therapeutic

devices and services. We are driving further innovation to treat new

and more complex patient pools, using clinical and economic evidence

to foster the adoption of these solutions, and that translates into

guidelines and reimbursement.

The Diagnosis & Treatment segment consists of the following

Businesses:

•Precision Diagnosis – This Business offers a range of diagnostic

imaging products, solutions and services to address some of our

customers’ biggest challenges, from staff shortages and burnout to

image quality and workflow, to ultimately delivering better care for

their patients.

•Ultrasound Business Unit – imaging solutions that are enabled by

proprietary AI software, advanced imaging technology and tele-

ultrasound to offer guidance for cardiac, general imaging,

obstetrics/gynecology, and point-of-care applications.

•Magnetic Resonance Imaging (MRI) Business Unit – BlueSeal

portfolio with helium-free-for-life operations, bundled with AI-

enabled software.

•Computed Tomography (CT) Business Unit – advanced systems and

software, including detector-based Spectral CT and systems

equipped with advanced AI capabilities, for diagnosis,

interventional procedures and screening.

•Diagnostic X-ray Business Unit – X-ray and fluoroscopy systems

with associated software.

•Image Guided Therapy – This Business includes a portfolio of

integrated interventional imaging systems, smart devices, and

disease-specific software, as well as services. Building upon our

leading-edge Azurion platform, we address a range of interventional

clinical segments with high procedural growth rates, such as

coronary artery disease, peripheral artery and venous disease,

electrophysiology, structural heart disease, neuroradiology, and

oncology.

•Image Guided Therapy Systems Business Unit – integrated

interventional X-ray systems (fixed and mobile surgery) and

software solutions, supported by AI, to perform a wide range of

routine and complex interventional procedures.

•Image Guided Therapy Devices Business Unit – interventional

specialty devices and software to aid in diagnosis, navigation,

treatment and confirmation. Complemented by integration with

Image Guided Therapy Systems.

Diagnosis & Treatment

Total sales by Business


	2025
Precision Diagnosis 1	59%
Image Guided Therapy ²	41%

1of which Magnetic Resonance Imaging 35%, Ultrasound 32%, Computed

Tomography 20%, Diagnostic X-ray 9%, other 5%

2of which Image Guided Therapy Systems 68%, Image Guided Therapy Devices

32%

Revenue is predominantly earned through the sale of products, leasing,

customer services fees, recurring per-procedure fees for disposable

devices, and software license fees. For certain offerings, per-study fees

or outcome-based fees are earned over the contract term.

Sales channels are a mix of direct sales, especially in the larger markets,

third-party distributors and online sales. This varies by product, market

and price segment. Our sales organizations have an intimate

knowledge of technologies and clinical applications, as well as the

solutions necessary to meet the needs of our customers.

Sales in the Diagnosis & Treatment Businesses are generally higher in

the second half of the year, largely due to the timing of customer

spending patterns.



	Addressing challenges In 2025, we took steps to strengthen the performance and impact of our Precision Diagnosis business, including actions aimed at enhancing quality and operations across all Business Units and stepping up commercial execution to land our latest innovations. We worked on fostering a culture of continuous improvement and accountability. We also built strong momentum in our Image Guided Therapy Business, driving continued growth and reinvesting gains into innovation. We continued our efforts to, year-on-year, improve productivity; shorten delivery timelines by reducing variability; and optimize our portfolio. These are enablers to increase resilience and reduce the negative impact of tariff developments.

1Helium-free 3.0T MRI is Work in Progress and not available in the US or any

jurisdiction. Its future availability cannot be guaranteed.


	23

2025 developments: Diagnosis & Treatment

•Philips unveiled its latest innovations in helium-free 3.0T MRI1,

further advancing sustainability and precision in diagnostic imaging.

•With the launch of SmartSpeed Precise with Integrated Dual AI, MR

scans can be delivered up to three-times faster with up to 80%

sharper images; plus, the Smart Reading cloud-based AI solutions, in

partnership with Cortechs.ai, aim to enable zero-click workflows.

•Philips launched Verida, its flagship spectral CT system, with Spectral

Precise Image technology to offer sharper, more conclusive

diagnostic insights in a single scan.

•In Diagnostic X-Ray, Philips extended the Radiography 7300 C

serviceable life to 20 years, helping customers manage costs and

support more sustainable use.

•A trio of Ultrasound innovations, engineered to accelerate diagnoses

and elevate confidence: Flash Ultrasound System 5100 POC for critical

care moments; Transcend Plus, the next-generation EPIQ CVx and

Affiniti CVx cardiovascular systems; and Elevate software for the EPIQ

Elite and Affiniti imaging platforms, with automation designed to

assess liver health.

•Philips launched the RADIQAL clinical trial across multiple hospitals.

This study will test the effectiveness of Philips’ new ultra-low dose

technology, SmartIQ, in reducing radiation without impacting

coronary procedure performance.

•Three-year results from the Philips-sponsored iMODERN study

support the use of minimally invasive treatments for acute

myocardial infarctions. Philips enabled both invasive and non-

invasive approaches in the 1,146-patient trial.

•Now available in Europe, the VeriSight Pro 3D ICE catheter offers

enhanced procedural guidance without general anesthesia,

supporting efficient, patient-friendly care for structural heart disease.

•DeviceGuide, an AI-powered solution built on the EchoNavigator

platform and developed with Edwards Lifesciences, offers real-time

imaging guidance to physicians repairing leaking heart valves.

•European clinicians gained access to SmartCT, an intelligent 3D

imaging solution integrated with the Azurion platform, helping

diagnose and treat stroke faster and more confidently.

Leiden University Medical Center opened the new Leiden Image Guided Therapy Center in partnership with Philips, equipped with advanced image-guided

therapy systems such as Azurion, AngioCT Spectral, and Zenition 70 C-arms.


	24

Connected Care segment

Connected Care supports healthcare providers across hospital,

ambulatory and home settings with advanced monitoring, diagnostics,

informatics and sleep therapy solutions that connect data and insights

across the care continuum.

At the core of this portfolio is Philips’ informatics and data platform,

which provides a complete and continuous view of patient conditions.

This foundation enables clinical algorithms and operational analytics

that enhance diagnostics, workflow efficiency and system performance

across the enterprise. This platform also helps Connected Care increase

access to care in medically underserved communities.

Philips continues to deploy AI at scale – including through our ECG AI

Marketplace, which brings cardiac diagnostic algorithms directly to the

point of care. Connected Care also drives sustainable value propositions

through its EcoDesigned new product introductions that are more

energy- and material-efficient, helping customers do more with less

environmental impact. We believe that by combining data, devices,

intelligence and more sustainable solutions, Connected Care is a

differentiated platform partner.

The Connected Care segment consists of the following Businesses.

Monitoring – Monitoring delivers patient monitoring and diagnostic

solutions across care settings. In 2025, the Business advanced its role as a

key partner to health systems by strengthening continuous monitoring

capabilities that improve patient visibility and operational efficiency.

•Hospital Patient Monitoring Business Unit – includes monitoring

devices (e.g., bedside and transport monitors, fetal and maternal

monitors), central monitoring systems, software solutions and mobile

apps, with option for flexible subscription models such as Enterprise

Monitoring as-a-service (EMaaS).

•Ambulatory Monitoring & Diagnostics Business Unit – provides

remote cardiac monitoring and diagnostic services that connect care

from hospital to home. Through this service, Philips helps support on-

time discharge from hospitals with companion at-home monitoring.

•Emergency Care Business Unit – focuses on acute-care management,

including automated external defibrillators and emergency response

devices for professional and consumer use. On January 28, 2025,

Philips announced an agreement to sell this Business Unit, and the

transaction was completed by the end of the year. It is now

operating as an independent company under the name Heartstream.

Enterprise Informatics – Our portfolio delivers AI-enabled, cloud-based,

and interoperable solutions that streamline workflows and deliver

actionable insights. By connecting data across specialties and care

settings, we help healthcare providers increase efficiency, improve

collaboration, and deliver better patient outcomes.

•Imaging Informatics Business Unit – offers solutions for radiology and

cardiology, including enterprise imaging, PACS, workflow

orchestration, cardiology workflow applications and reporting.

•Clinical Informatics Business Unit – provides solutions for acute and

virtual care, radiology, pathology, and urology.

Sleep & Respiratory Care – Working with clinical partners and home

medical equipment providers, Philips delivers integrated solutions for

sleep and respiratory care – spanning diagnostics and therapy for sleep

apnea and chronic respiratory conditions.

Philips is a leader in the global sleep therapy market, supported by a

strong masks and accessories portfolio and an established international

presence (including sleep therapy and respiratory solutions) across the

portfolio.

Under the consent decree with the US Department of Justice and the

US Food and Drug Administration (FDA), Philips continues to execute a

defined plan to meet the regulators’ requirements and restore the

business. As of December 2025, more than 99% of registered CPAP and

BiPAP devices affected by the 2021 voluntary recall have been

remediated globally, with field-safety closures completed in 31

countries and the remainder expected through 2026. Ventilator

remediation continues in coordination with the relevant authorities. In

the US, Respironics will continue to service sleep and respiratory care

devices already with healthcare providers and patients. Philips

Respironics will also supply accessories, consumables, and replacement

parts. Until the relevant requirements of the consent decree are met,

Respironics will not sell new CPAP or BiPAP sleep therapy devices or

other respiratory care devices in the US. Outside the US, Respironics will

continue to provide new sleep and respiratory care devices, accessories,

consumables, replacement parts, and services, subject to certain

requirements.

Connected Care

Total sales by Business


	2025
Monitoring 1	59%
Enterprise Informatics 2	22%
Sleep & Respiratory Care	19%

1of which Hospital Patient Monitoring 78%, Ambulatory Monitoring &

Diagnostics 13%, Emergency Care 8%

2of which Imaging Informatics 53%, Clinical Informatics 47%

In most of the Connected Care Businesses and Business Units, revenue is

earned through the sale of products and solutions, as well as services

and software licenses. Some commercial models (including as-a-service

offerings) result in usage-based earnings models and re-occurring

revenue streams. In the area of patient care management (Ambulatory

Monitoring & Diagnostics Business Unit and Sleep & Respiratory Care

Business), revenue is generated through clinical services, product sales

and rental models, whereby revenue is generated over time. Sales

channels include a mix of direct sales, partly paired with an online sales

portal and distributors. Sales in the Connected Care Businesses are

generally higher in the second half of the year, largely due to customer

spending patterns.



	Addressing challenges In 2025, we took action to address geopolitical risks impacting health systems directly. Tariff developments globally led to a focus on cost predictability. This was compounded by changes in healthcare funding in the US and the EU, which led to Medicaid, rural and home-based care initiatives. We positioned Philips as a partner in driving productivity improvements, reducing vendor complexity, and supporting financial predictability – through Enterprise Monitoring as-a-service and productivity-driving software solutions. We also worked with government agencies, industry partners and providers to mitigate cybersecurity threats by closing security gaps and by strengthening digital resilience.


	25

2025 developments: Connected Care

•Significant partnerships in the US and Europe: monitoring

partnerships with integrated delivery networks and health systems,

including Rush University System for Health in the midwestern US,

as well as long-term Enterprise Monitoring as-a-service (EMaaS)

arrangements with leading systems, including Hoag and Rady

Children’s Hospital in California.

•Philips and Getinge formed a commercial partnership in Europe

that combines Philips’ monitoring solutions with Getinge’s leading

anesthesia care products, to provide a single point of contact for

purchasing and support.

•A renewed collaboration with Masimo aims to integrate advanced

technologies in Philips’ multi-parameter patient monitoring

platforms.

•Philips announced a collaboration with Epic Systems, the leading

electronic health record company, to integrate Philips’ suite of

cardiac ambulatory monitoring and diagnostics services with Epic

Systems’ specialty diagnostics suite. This collaboration will make the

broadest cardiac care portfolio offered by any single service provider

that has integrated with Aura to-date.

•The new ECG AI Marketplace platform gives cardiac care teams

access to multiple vendor offerings in one location, to help clinicians

manage and implement AI-powered diagnostic tools more easily.

•As part of a national agreement with Optum Healthcare in the US,

Philips has become a preferred in-network provider for cardiac

ambulatory monitoring services. The deal made Philips’ Mobile

Cardiac Telemetry and Extended Holter (ePatch) solutions available

to about 3.4 million Optum members across 22 states.

•Philips signed partnerships to improve patient monitoring and

modernize workflows with Citadell Hospital in Belgium, the region

of Norrbotten in Sweden, and Hospital Israelita Albert Einstein in

Brazil.

•HealthSuite’s cloud services launched in Europe, managed by Philips

and hosted on AWS; almost 300 customer sites were live by year’s

end. In the US, about 12 million medical imaging studies will be

migrated to the cloud for Rochester Regional Health in New York.

•The next-generation Vue PACS, Image Management 15, offers a

zero-footprint, web-based diagnostic viewer with full radiology

capabilities.

Philips introduced an innovative telemetry platform designed to help address critical challenges in healthcare – including staff shortages and alarm

management. A key component of the solution is the next-generation Telemetry Monitor 5500, which offers a data-driven approach to operational

performance and patient care for cardiac monitoring.

* Hard plastic parts excluding silicone nipple (mass balance approach).


	26

Personal Health segment

Our Personal Health segment enables individual care routines with

technology and solutions that support people’s long-term health and

well-being. Through our Personal Health Business, we offer a broad

range of solutions in various consumer price segments, with locally

relevant innovations in some markets.

We aim to drive profitable growth through a focus on innovation

across three key areas:

•reaching more people through consumer-driven innovation of

products and solutions

•ensuring the highest quality of consumer experience from pre-

purchase consideration through to purchase and unboxing, all the

way to end-of-use recycling

•expanding our ecosystem through partnerships with leading retailers

and scaling new business models, such as try-and-buy and

subscription services

A notable aspect of our commercial strategy is driving direct-to-

consumer relationships and sales through consumer communities and

our online store. We are also leveraging connectivity, partnering with

key players in the health ecosystem, such as insurance companies and

healthcare professionals, and – through social media and digital

innovation – engaging consumers in their health journey in new and

impactful ways.

In Personal Health, improving lives also means caring for the planet,

with a key focus on environmental sustainability. In 2025, product

launches continued to reflect the brand’s efforts to reduce usage of

virgin fossil-based plastics. For example, with the Philips Avent Ultra

Soother range, pacifiers and sterilizer cases are now made using 80%

plant-based materials*, and Philips Sonicare brush heads are now made

from 70% bio-based plastic, with packaging that is made from 50%

recycled materials and is 100% recyclable.

The Personal Health segment consists of a single Business, with three

Business Units.

Personal Health – To help people take greater control of their

personal health and well-being, we deliver sustainable, meaningful

solutions that help them to take care of themselves and their families,

for happier, healthier lives, today and tomorrow.

•Personal Care Business Unit – grooming and beauty products ranging

from entry-level to premium. The grooming portfolio includes

shavers, OneBlade, groomers, trimmers, and hair clippers, as well as

premium solutions with SenseIQ Pro technology, powered by AI, in-

app coaching for a personalized shave, and blade subscriptions. The

beauty portfolio includes devices to support skin care, hair care and

hair removal, including Lumea premium Intense Pulsed Light hair

removal devices and solutions with the latest SenseIQ technology

that sense and adapt for personalized care; these are also available

through subscription models.

•Oral Healthcare Business Unit – power toothbrushes for a range of

price segments, from entry-level, battery-operated toothbrushes for

a young audience to premium power toothbrushes connected to the

Sonicare app with in-app coaching; brush heads, which are also

available as a subscription service; and products for interdental

cleaning and for in-office and take-home teeth whitening.

•Mother and Child Care Business Unit – products to support parents

and babies in the first 1,000 days, including infant feeding (breast

pumps, baby bottles and sterilizers), connected baby monitors

(Pregnancy+ and Baby+ apps).

Personal Health

Total sales by Business


	2025
Personal Health 1	100%

1of which Personal Care 55%, Oral Healthcare 33%, Mother and Child Care 11%

The revenue model is mainly based on product sales at the point in

time the products are delivered to retailers and online platforms. We

continue to increase revenue model diversity by expanding our business

models, including direct-to-consumer, subscriptions, and try-and-buy

offerings and services.

The Personal Health Business experiences seasonality, with higher sales

around key events and holidays.



	Addressing challenges In 2025, we took action to address the cost-management challenges posed by tariff developments in various jurisdictions. Through close planning with key retail and distribution partners, we adjusted supply chain strategies, improved forecasting, and adapted pricing structures. This disciplined approach helped us manage volatility in our operating environment while maintaining supply continuity and supporting long-term customer relationships.


	28

Segment Other

In Other we report on the items Innovation & Design, IP royalties,

Central costs, and other small items.

Innovation & Design

At Philips, we aim to ensure that innovation happens where it matters

most: close to our customers and consumers. By working backward

from their needs and co-creating with clinicians through long-term

partnerships, we aim to ensure our innovations are truly people- and

patient-centric. 

Our Innovation & Design organization supports our businesses by

providing capabilities in software and systems engineering for

proprietary software and systems, as well as for licensed software and

systems. We advance breakthrough and exploratory innovation

programs, working on a consistent, trusted user experience through

strong design principles. We are also accelerating the responsible and

sustainable application of AI, embedding AI into solutions designed to

improve care delivery and operational efficiency.

Philips is committed to use, design, develop and deploy AI in a

responsible way. At enterprise level, an AI policy is in force, guiding the

company with a revised set of eight AI principles that align our AI

vision with our company purpose and values. AI processes are being

integrated in the existing development and quality management

processes, with the aim of meeting international regulations.

Guidelines and guardrails for AI usage by employees are being

developed and deployed. A Responsible AI Office has been established,

orchestrating the enterprise level policies, standards, guidelines and

guardrails.

Our R&D and innovation operations focus on four major sites –

Eindhoven (the Netherlands), Cambridge (US), Bengaluru (India), and

Beijing (China, where we established our Greater China R&D

Headquarters in 2025) – with smaller innovation and research sites in

the Regions. This global footprint allows us to stay close to customers,

understand diverse healthcare needs, and anticipate emerging trends

everywhere Philips operates.

Philips was the leading applicant in medical technology at the

European Patent Office in 2024, and Clarivate recognized Philips as the

top-ranked medical technology company in its list of the Top 100

Global Innovators 2025. The Philips brand also received 160 design

awards in 2025.

IP royalties

Philips Intellectual Property & Standards (IP&S) proactively pursues the

creation of new intellectual property (IP) in close cooperation with

Philips’ operating Businesses and Innovation & Design. IP&S is a leading

industrial IP organization providing world-class IP solutions to Philips

Businesses to support their growth, competitiveness and profitability.

Royal Philips’ IP portfolio currently consists of approximately 53,000

patent rights, 31,500 trademarks, 159,000 design rights and 3,100

domain names. Philips filed 700 new patents in 2025, with a strong

focus on the growth areas in health technology services and solutions.

Of those 700, 57 involve AI, spread across our Businesses.

Philips earns substantial annual income from license fees and royalties

to third parties.

Philips believes its business as a whole is not materially dependent on

any particular third-party patent or license, or any particular group of

third-party patents and licenses.

Central costs

Philips is present in 71 countries globally and has its corporate

headquarters in Amsterdam, the Netherlands. Our real estate locations

are spread around the globe, with key manufacturing and R&D sites in

Europe, the Americas and Asia. The project to move the Philips

headquarters to a new location in Amsterdam in 2025 has been

completed.

We recharge the directly attributable part of the Functional costs to the

Businesses. The remaining part is accounted for as ’central costs’, and

includes costs related to the Executive Committee and Group Functions

such as Legal & ESG and Internal Audit.

Other small items

Other small items refer to remaining items for intra-group services and

legacy items relating to previously disposed businesses.


	29

Our Regions

Geographically, our business is organized in three Regions: North America, Greater China and International Region (the latter consisting of Europe

and the rest of the world). The Regions' primary accountability is to manage customer intimacy, build and maintain relationships, and cultivate an

understanding of customer needs, as well as managing strategic accounts, delivering services, and engaging with private hospital groups, public

health systems, and government and defense customers through both direct and indirect channels. They are also accountable for government

relations and for providing local infrastructure needed to support Philips’ presence in a country (license to operate).



	2025 developments North America Philips is working with innovative health systems such as Bon Secours Mercy Health, Vanderbilt University Medical Center and Nicklaus Children’s Hospital to advance care – from standardizing patient monitoring and expanding interventional radiology to introducing AI-enabled precision diagnostics. Recognizing the transformative potential of AI in healthcare, we announced a collaboration with Mass General Brigham to advance AI solutions that help clinicians capture, analyze and act on data in real time. We also worked with Hoag to modernize patient monitoring with a software-driven solution across its acute care hospitals. We continue to support the more than 9 million veterans who receive healthcare through the US Department of Veterans Affairs and expanded critical healthcare initiatives in Georgia, Michigan, Virginia and New York. Philips announced a plan for new investments of USD 150 million to expand manufacturing and R&D, including the growth of our Reedsville, Pennsylvania, facility, which produces AI-enabled ultrasound systems, and the expansion of our Image Guided Therapy site in Plymouth, Minnesota. In partnership with Ingeborg Initiatives, the Philips Avent Pregnancy+ app reached families in Arkansas, delivering information about localized maternal health resources that improve access to care and health literacy.



	2025 developments International Region We remained focused on delivering our global vision, ensuring it aligned with diverse market realities and customer needs across the region. We refined our go-to-market strategy through a connected, multi-channel approach combining direct, digital, and strategic partner-led engagement to better serve customers and patients. Our Services business remained central to driving customer success, with new life cycle models and offerings that seek to enhance value and performance. We advanced our ‘big bet’ strategy by unlocking opportunities in priority growth markets such as Saudi Arabia, India, and Indonesia. Philips signed a long-term partnership with Indonesia’s Ministry of Health to install its advanced Azurion image-guided therapy system nationwide, expanding access to cardiac, stroke and cancer care to more than 280 million people across all of Indonesia’s 38 provinces. India, in particular, has emerged as a strong microcosm of Philips, bringing together deep local market presence, world- class innovation in AI and software, global manufacturing capabilities, and a growing Services footprint. Solutions developed through this integrated approach, combining locally relevant innovation with manufacturing scale, have strengthened Philips’ position as a leading partner for healthcare providers across India.



	2025 developments Greater China We are committed to our strategy of ‘in China, for China first’, focusing on local innovation, manufacturing, services and partnerships. Amid evolving market dynamics and growing healthcare demands, driven by aging populations and the rise of AI-driven care, we continue to see China as a key market shaping the future of healthcare globally. The Region’s leadership is putting strong emphasis on creating value for China’s healthcare system by reinforcing ecosystem collaboration and advancing clinical partnerships. Philips is also promoting innovations to empower consumers to manage their health and well-being through locally relevant, trusted personal health solutions. For example, during China’s 618 festival, Philips ranked No. 1 on JD.com in male grooming sales and in the electric toothbrush category. Celebrating 40 years since our first joint venture in China, we formally launched the Greater China Innovation Headquarters in Beijing to enhance innovation capabilities and speed up time to market. Philips is partnering with local AI innovators and exploring cooperation with the national intervention center to launch the IGT AI Ecosystem Platform to address key gaps in the interventional workflow, which provides physicians and technologists with access to advanced, high-quality guidance and remote expertise.


	30

Supply chain and procurement

Philips runs an integrated supply chain tailored to customer needs,

focusing on producing and delivering our innovations to our customers

and consumers.

Inflationary effects persisted throughout 2025. Like the rest of the

industry, we remained exposed to continued geopolitical tensions

around the world, as well as (sudden) changes in tariffs and other trade

measures that negatively influence cost and availability of materials.

Labor costs and the scarcity of skilled workforce remained a concern in

2025.

To further increase our responsiveness and our reliability in delivery,

we continued to build a robust and efficient, more regionalized supply

chain ecosystem, prioritizing service level and customer experience. In

this ecosystem, we seek to balance our manufacturing capabilities in-

house, focusing on our strengths while leveraging suppliers’ specialized

capabilities that support the vision and ambitions of Philips.

Driving end-to-end supply chain reliability and agility

The supply chain plays an important role in improving our performance

and delivering to our customers and consumers as promised. As we

complete our three-year plan, we look back on how our multiple

interventions, as well as the longer-term programs we initiated, helped

improve our execution capabilities and made Philips more resilient in

navigating volatility.

Measures were taken to mitigate the impact of the increase in tariffs

such as dual sourcing, selective regionalization of components and

further vertical integration and optimization of our global network.

Going forward, we aim to maintain close relationships with our

suppliers and conduct an ongoing dialogue with respect to our

forecasted demand.

When selecting and evaluating supplier partners, we consider not only

business metrics such as quality, on-time delivery performance and cost,

but also other factors, such as strategic fit.

Philips Group

Supplier spend analysis per geographic area in % 1


	2025
Western Europe	32%
North America	33%
Other mature geographies	5%
Mature geographies	71%
Growth geographies	29%
Philips Group	100%

1For the purposes of reporting sales, we have four geographic areas based on

similar economic characteristics: Western Europe, North America, Other

mature geographies, and Growth geographies.

We use supplier classification models to identify critical suppliers,

including those supplying materials, components and services that

could influence the safety and performance of our products and

solutions.

The Philips Supplier Quality Manual outlines Philips’ quality, regulatory,

product, process and customer requirements. The standards outlined in

this manual underpin agreements between suppliers and Philips, and

guide compliance with Philips’ quality standards.


	31

Employment

The total number of Philips employees was 65,340 at the end of 2025, compared with 66,678 at the end of

2024, a decrease of 1,338 employees. Of these, 3,234 were temporary employees, typically hired to cover long-

term leave or to support short-term projects and events. The total number of non-employees (contingent

workers) in headcount at Philips at the end of 2025 was 1,614.

Philips Group

Employees per worker type in headcount


	2025	2024
Philips employees	65,340	66,678
Contingent workers	1,614	1,741
Total	66,954	68,419

By year-end 2024, Philips completed its previously announced plans to reduce its workforce by 10,000 roles

globally by 2025. These reductions were part of our multi-year plan designed to create value with sustainable

impact, and Philips sought to support those who were directly impacted by the reductions in finding new

roles. In 2025 we further streamlined a range of activities within our Functions, aligning teams more closely

with our Businesses and driving shifts in services, product management, and commercial teams.

Subject to local country legislation, our support to employees impacted by organizational changes include:

•social plan or respective severance policy

•outplacement services and support through our Employee Assistance Program

•work placement agency, where applicable, for employment-to-employment support

•redeployment – where possible – as applicable by local legislation and in the context of any hiring

restrictions

Philips Group

Employment in FTEs at year-end


	2025	2024	2023
Balance as of January 1	67,823	69,656	77,233
Consolidation changes:
Acquisitions	-	-	27
Divestments	(109)	(227)	(353)
Other changes	(1,313)	(1,606)	(7,251)
Balance as of December 31	66,401	67,823	69,656

Geographic footprint

Approximately 55% (2024: 56%) of the Philips workforce is located in Mature geographies and 45% (2024:

44%) in Growth geographies. In 2025, the number of employees in Mature geographies decreased by 1,471.

The number of employees in Growth geographies increased by 133 .

Philips Group

Employees headcount by contract type and region at year-end


	Permanent employees		Temporary employees		Other		Philips Group
	2025	2024 1	2025	2024 1	2025	2,024	2025	2024 1
Western Europe	15,589	16,156	211	256	7	1	15,807	16,413
North America	16,362	17,176	2	5	-	-	16,364	17,181
Other mature geographies	3,685	3,737	113	109	-	-	3,798	3,846
Mature geographies	35,636	37,069	326	370	7	1	35,969	37,440
Growth geographies	25,440	25,562	3,929	3,676	2	-	29,371	29,238
Philips Group	61,076	62,631	4,255	4,046	9	1	65,340	66,678

In addition, the accompanying table shows the spread of employees across countries where Philips has the

highest presence in terms of headcount (at least 10% of the total employee population).

Philips Group

Number of employees (headcount) in countries representing at least 10% of total workforce


Country	2025	2024
US	15,832	16,639
The Netherlands	8,104	8,566
India	8,150	8,166
China	6,440	6,716

All reported employee data is actual and based on year-end numbers. Employees are defined as individuals

who are in an employment relationship with the undertaking according to national law or practice.

Philips employees include permanent (with an undefined end-date contract) and temporary (with a defined

end-date contract) employees. The following categories are excluded from the employee definition: interns,

individuals on long-term leave, Heartfelt Program workers in Japan, and WGP workers in the Netherlands.

There is no non-guaranteed hours employment (without a guarantee of a minimum or fixed number of

working hours) at Philips.


	34



		“In 2025, we delivered on our commitments and drove performance every quarter. Successfully navigating a complex macro-environment, including tariffs, we increased comparable sales, expanded margins, and strengthened cash flow through industry-leading innovation and productivity improvements.” Charlotte Hanneman CFO Royal Philips

Performance summary

The year 2025

•Sales amounted to EUR 17.8 billion, a decrease of 1% on a nominal basis. Nominal sales were negatively

impacted by the depreciation of several currencies against the euro, including the US dollar with the

biggest impact. On a comparable basis*, sales increased 2%. Comparable sales* growth was flat in the

Diagnosis & Treatment segment, 3% in the Connected Care segment, and 8% in the Personal Health

segment. Comparable sales growth was positive in Mature Geographies as well as Growth Geographies.

•Income from operations improved to EUR 1,424 million, mainly driven by higher gross margin and

operational improvements, lower depreciation and amortization, Respironics-related expenses and

restructuring, acquisition-related charges and other items.

•Net income amounted to EUR 897 million, mainly driven by higher income from operations and lower

income tax charges, compared with a loss of EUR 698 million in 2024.

•Adjusted EBITA* amounted to EUR 2,195 million, or 12.3% of sales, compared with 11.5% of sales in 2024.

Adjusted EBITA* margin increased, mainly driven by growth in comparable sales, operational improvements,

productivity actions, and favorable mix effects, partly offset by cost inflation and higher tariffs.

•Net cash flows from operating activities amounted to EUR 1,172 million; free cash flow* amounted to EUR

512 million.

For a discussion of our financial performance for the year ended December 31, 2024, compared to the year

ended December 31, 2023, please see section ‘Financial Performance’ in our Annual Report on Form 20-F for

the year ended December 31, 2024, which we filed with the SEC on February 21, 2025.

Philips Group

Key data in millions of EUR unless otherwise stated


	2025	2024
Sales	17,834	18,021
Nominal sales growth	(1%)	(1%)
Comparable sales growth ¹	2%	1%
Income from operations	1,424	529
as a % of sales	8%	3%
Financial expenses, net	(233)	(282)
Results of associates	(9)	(124)
Income tax (expense) benefit	(282)	(963)
Income from continuing operations	901	(840)
Discontinued operations, net of income taxes	(4)	142
Net income	897	(698)
Adjusted EBITA ¹	2,195	2,077
as a % of sales	12.3%	11.5%
Income from continuing operations attributable to shareholders ² per common share (in EUR) - diluted	0.93	(0.88)
Adjusted income from continuing operations attributable to shareholders ² per common share (in EUR) - diluted ¹	1.56	1.36

1Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to

Reconciliation of non-IFRS information.

2Shareholders in this table refers to shareholders of Koninklijke Philips N.V. Includes the effect of the share dividend with

respect to 2024 for 2024.


	35

Factors impacting performance

The factors below are believed to have had a significant impact on

Philips’ performance during the year.

Macro-economic landscape

Global economic growth slowed down slightly in 2025, with global real

GDP rising by 3.2% compared to 3.3% in 2024. North America led with

robust growth, while China faced challenges from subdued consumer

sentiment. Europe and other growth markets performed steadily.

Innovation

Philips’ growth was driven by new product launches and Personal

Health acceleration. We prioritized patient- and people-driven

innovation at scale, leveraging AI to enhance product offerings.

Investments in technology facilitated ongoing productivity

improvements to reduce operating costs.

Operating model

In 2025, Philips completed our three-year plan, having created a

simplified operating model to increase agility and structurally lower the

cost base by giving end-to-end accountability to the Business Units.

Workforce-related restructuring charges were EUR 124 million in 2025

and EUR 106 million in 2024 and were focused on optimization of

enterprise Functions and on reduction of non-core activities.

Supply chain resilience

Philips has taken action to boost supply chain resilience, including

sourcing products in the market in which they are being sold and

improving component and material availability. These efforts enhanced

agility and minimized the impact of tariffs and trade disruptions. In

August 2025, Philips announced the investment of USD 150 million to

expand US manufacturing and R&D.

Geopolitical environment

The Russia-Ukraine war and Middle East tensions continued to place

strain on supply chains and fuel inflation. Philips’ operations in Russia

and Ukraine are minimal, focused on essential healthcare deliveries. In

Israel, activities center on manufacturing and R&D in Diagnosis &

Treatment and Connected Care.

Outlook

For 2026, Philips expects:

•Comparable sales growth: 3%-4.5%

•Adjusted EBITA margin: 12.5%-13.0%

•Free cash flow: EUR 1.3-1.5 billion

Furthermore, Philips plans to drive profitable growth to deliver

sustainable value and aims to deliver the following mid-term targets

for 2026-2028:

•Comparable sales growth at mid-single-digits CAGR

•Adjusted EBITA margin at mid-teens in 2028

•Free cash flow of EUR 4.5-5.0 billion cumulatively over the period

•EUR 1.5 billion of productivity savings in the period 2026-2028

Within the context of an uncertain macro-environment, Philips' 2026

outlook and mid-term targets include currently known tariffs. They

exclude ongoing Respironics-related proceedings, including the

investigation by the US Department of Justice.

On January 15, 2026, Philips completed the acquisition of

SpectraWAVE, Inc., a US-based innovator in Enhanced Vascular Imaging

(EVI) of coronary arteries, angiography-based physiology assessments,

and the use of AI in medical imaging. The acquisition forms part of

Philips’ Diagnosis & Treatment segment and complements its

intravascular imaging and physiology portfolio.

* Non-IFRS financial measure. For the definition and reconciliation of the most

directly comparable IFRS measure, refer to Reconciliation of non-IFRS

information.


	36

Results of operations

Sales

Philips Group

Sales in millions of EUR unless otherwise stated


		2025			2024
	Sales	Nominal sales growth	Comparable sales growth ¹	Sales	Nominal sales growth	Comparable sales growth ¹
Diagnosis & Treatment	8,531	(3%)	0%	8,790	0%	1%
Connected Care	5,076	(1%)	3%	5,134	0%	2%
Personal Health	3,673	5%	8%	3,486	(3%)	(1%)
Other	554			611	1%	4%
Philips Group	17,834	(1%)	2%	18,021	(1%)	1%

1Non-IFRS financial measure. For the definition and reconciliation of the most

directly comparable IFRS measure, refer to Reconciliation of non-IFRS

information.

Group sales in 2025 amounted to EUR 17,834 million, 1% lower than in

2024 on a nominal basis. Considering a 3% negative currency effect

and consolidation impact, comparable sales growth* was 2%. The

negative currency effect was mainly due to depreciation of currencies,

such as the US dollar against the euro, and affected all segments.

Comparable order intake increased to 6% in 2025, compared with 1%

growth in 2024. Comparable order intake is not a financial measure,

but is presented when discussing the Philips Group's performance. For

further details, refer to Other key performance indicators.

Diagnosis & Treatment

In 2025, sales amounted to EUR 8,531 million, 3% lower than the

nominal sales in 2024. Considering a 3% negative currency effect and

consolidation impact, comparable sales* were flat. This was driven by

mid-single-digit growth in Image Guided Therapy, partly offset by a

low-single-digit decline in Precision Diagnosis.

Connected Care

In 2025, sales amounted to EUR 5,076 million, 1% lower than the

nominal sales in2024. Considering a 4% negative currency effect and

consolidation impact, comparable sales* increased by 3%. This growth

was mainly driven by mid-single-digit growth in Monitoring and low

single-digit growth in Enterprise Informatics.

Personal Health

In 2025, sales amounted to EUR 3,673 million, 5% higher than in 2024

on a nominal basis. Considering a 3% negative currency effect and

consolidation impact, growth in comparable sales was 8%.

Other

In 2025, sales amounted to EUR 554 million, compared with EUR 611

million in 2024, mainly due to lower royalty income.

Sales per geographic area

For the purposes of reporting sales, we have four geographic areas

based on similar economic characteristics: Western Europe, North

America, Other mature geographies, and Growth geographies.

Western Europe, North America and Other mature geographies are

collectively grouped as Mature geographies in reporting on sales.

Philips Group

Sales by geographic area in millions of EUR unless otherwise stated


		2025			2024
	Sales	Nominal sales growth	Comparable sales growth ¹	Sales	Nominal sales growth	Comparable sales growth ¹
Western Europe	3,921	(1%)	(1%)	3,978	4%	5%
North America	7,542	(1%)	3%	7,655	1%	2%
Other mature geographies	1,452	(5%)	(1%)	1,526	(6%)	(1%)
Mature geographies	12,915	(2%)	1%	13,159	1%	2%
Growth geographies	4,919	1%	5%	4,863	(6%)	(2%)
Philips Group	17,834	(1%)	2%	18,021	(1%)	1%

1Non-IFRS financial measure. For the definition and reconciliation of the most

directly comparable IFRS measure, refer to Reconciliation of non-IFRS

information.

Sales in Western Europe decreased year-on-year on a nominal and

comparable basis*, with a low-single-digit comparable sales decline in

Connected Care and in Diagnosis & Treatment, partly offset by mid-

single-digit comparable sales growth in the Personal Health segment.

Sales in North America decreased year-over-year on a nominal basis*

and increased by 3% on a comparable basis* with mid-single-digit

comparable sales growth in Connected Care, high-single-digit growth

in Personal Health, and low-single-digit growth in Diagnosis &

Treatment. Sales in Other mature geographies decreased year-on-year

on a nominal and comparable basis*, mainly due to a low-single-digit

comparable sales decline in Personal Health, which was partly offset by

mid-single-digit growth in Connected Care.

Despite lower sales in China, as a result of adverse market conditions,

sales in Growth geographies increased year-on-year on a nominal basis

and on a comparable sales growth* basis. The Diagnosis & Treatment

comparable sales in Growth geographies were flat, while Connected

Care showed low-single-digit growth. Personal Health was not

negatively impacted by China and recorded double-digit comparable

sales growth.


	37

Cost of sales

Philips Group

Cost of sales components in millions of EUR unless otherwise stated


	2025	As a % of sales	2024	As a % of sales
Costs of materials used	4,120	23%	4,213	23%
Salaries and wages	2,249	13%	2,313	13%
Depreciation and amortization	431	2%	609	3%
Other manufacturing costs	2,976	17%	3,113	17%
Cost of sales	9,776	55%	10,248	57%

Cost of sales includes only expenses directly or indirectly attributable to

the sale of products or services, such as cost of materials used, salaries

and wages, depreciation and amortization of assets used in

manufacturing, and other manufacturing costs (such as repair and

maintenance costs related to production, expenses incurred for

shipping and handling of internal movements of goods, and other

expenses related to manufacturing).

Cost of sales decreased by EUR 472 million to EUR 9,776 million in 2025

compared with EUR 10,248 million in 2024, and decreased by 2% of

sales in 2025.

Factors influencing cost of sales were as follows:

•Despite the negative impact of tariffs and cost inflation, cost of

materials used decreased by EUR 94 million in 2025, which was

mainly driven by productivity actions, lower restructuring,

acquisition-related and other items and a favorable foreign currency

impact. The costs for tariffs as a percentage of cost of sales increased

from approximately 1% in 2024 to approximately 3% in 2025.

•Salaries and wages decreased by EUR 64 million, mainly driven by

productivity actions, lower restructuring charges and a favorable

foreign currency impact, partly offset by cost inflation.

•Depreciation and amortization decreased by EUR 178 million in 2025,

mainly driven by the comparative impact of a prior year intangible

asset impairment charge.

•Other manufacturing costs decreased by EUR 137 million in 2025,

driven by productivity actions, lower restructuring, acquisition-

related and other charges, and a favorable foreign currency impact,

and partly offset by cost inflation.

Gross margin

In 2025, gross margin was EUR 8,058 million, or 45% of sales, compared

with EUR 7,773 million, or 43% of sales, in 2024. The gross margin

increased by EUR 285 million year-on-year, driven by higher

comparable sales growth from innovation, operational improvements,

productivity measures and lower restructuring, acquisition-related and

other items, and partly offset by an unfavorable foreign currency

impact, cost inflation and higher tariffs.

Selling expenses

Selling expenses amounted to EUR 4,342 million, or 24% of sales, in

2025, compared with EUR 4,486 million, or 25% of sales, in 2024. Year-

on-year selling expenses decreased by EUR 144 million, mainly driven by

productivity actions, lower restructuring, acquisition-related and other

items and a favorable foreign currency impact, and partly offset by cost

inflation.

General and administrative expenses

General and administrative expenses amounted to EUR 628 million, or

4% of sales, in 2025, compared with EUR 582 million, or 3% of sales, in

2024. Expenditure increased year-on-year by EUR 46 million, mainly due

to cost inflation, partly offset by productivity actions, lower

restructuring, acquisition-related and other items and a favorable

foreign currency impact.

Research and development expenses

Research and development costs were EUR 1,700 million, or 10% of

sales, in 2025, compared with EUR 1,747 million, or 10% of sales, in

2024. The costs decreased year-on-year, mainly driven by productivity

actions and a favorable foreign currency impact, and partly offset by

cost inflation.

Philips Group

Research and development expenses in millions of EUR unless otherwise stated


	2025	2024
Diagnosis & Treatment	866	899
Connected Care	586	599
Personal Health	201	190
Other	46	59
Philips Group	1,700	1,747
As a % of sales	10%	10%

Restructuring, acquisition-related charges and other

items

Restructuring, acquisition-related charges and other items were EUR

530 million in 2025, compared to EUR 1,156 million in 2024, and EUR

1,739 million in 2023. Respironics-related charges were EUR 209 million

in 2025 compared with EUR 691 million in 2024,and EUR 1,162 million

in 2023.

Diagnosis & Treatment

Restructuring, acquisition-related and other charges in 2025 were EUR

120 million and included EUR 42 million restructuring charges, mainly

related to workforce reduction and asset impairment, and EUR 77

million for quality actions. Restructuring, acquisition-related and other

charges in 2024 were EUR 202 million and included EUR 45 million

charges in relation to quality actions and EUR 122 million restructuring

charges, mainly related to workforce reduction. Restructuring,

acquisition-related and other charges in 2023 were EUR 210 million and

included EUR 81 million charges in relation to quality remediation

actions and EUR 73 million restructuring charges, mainly related to

workforce reduction.

Connected Care

Restructuring, acquisition-related and other charges in 2025 were EUR

314 million and included charges of EUR 112 million Respironics field-

action running remediation costs and EUR 97 million in connection with

the Respironics consent decree, partly offset by a contract settlement

gain of EUR 27 million. Restructuring, acquisition-related and other

charges in 2024 were EUR 818 million and included: charges of EUR 984


	38

million for the Respironics litigation provision, EUR 113 million in

connection with the Respironics consent decree, and EUR 133 million

Respironics field-action running remediation costs, partly offset by

Respironics insurance income of EUR 538 million. In addition, it

included charges in relation to quality remediation actions of EUR 78

million. Restructuring, acquisition-related and other charges in 2023

were EUR 1,390 million and included: charges of EUR 575 million

Respironics litigation provision, EUR 363 million in connection with the

proposed Respironics consent decree, and EUR 224 million Respironics

field-action running costs. In addition, it includes charges in relation to

quality remediation actions of EUR 94 million and EUR 64 million

restructuring charges, mainly related to workforce reduction and.

Personal Health

Restructuring, acquisition-related and other charges in 2025 were EUR

17 million, mainly for workforce reduction and asset-related

impairments. Restructuring, acquisition-related and other charges in

2024 were EUR 25 million, mainly related to workforce reduction and

asset-related impairments. Restructuring, acquisition-related and other

charges in 2023 were EUR 31 million and included a EUR 23 million

investment re-measurement loss and restructuring costs mainly related

to workforce reduction of EUR 9 million.

Other

Restructuring, acquisition-related and other charges in 2025 were EUR

79 million, mainly for workforce reduction. Restructuring, acquisition-

related and other charges in 2024 were EUR 111 million and included

EUR 92 million restructuring charges, mainly related to workforce

reduction, lease termination and asset impairment charges.

Restructuring, acquisition-related and other charges in 2023 were EUR

108 million and included EUR 140 million restructuring charges mainly

related to workforce reduction and a gain of EUR 35 million due to a

divestment.

Philips Group

Restructuring charges in millions of EUR


	2025	2024
Restructuring charges per segment:
Diagnosis & Treatment	42	122
Connected Care	109	29
Personal Health	17	25
Other	74	91
Philips Group	242	268

Cost breakdown of restructuring charges:
Provision for personnel lay-off costs	124	106
Restructuring-related asset impairment	37	134
Other restructuring-related costs	81	29
Philips Group	242	268

In 2025, Philips continued general productivity actions aimed at

simplifying the organization to streamline ways of working and reduce

operating expenses. Several restructuring projects were executed

during the year, of which the most significant impacted the segments

Other and Connected Care and mainly took place in the US and the

Netherlands.

For further information on restructuring, refer to Provisions.

Philips Group

Acquisition-related charges in millions of EUR


	2025	2024
Diagnosis & Treatment	2	34
Connected Care	17	24
Philips Group	19	58

In 2025, acquisition-related charges in the Connected Care segment

mainly related to post-acquisition integration charges of Biotelemetry.

(In 2024, acquisition-related charges in the Diagnosis & Treatment

segment mainly related to the post-acquisition integration charges of

Spectranetics, and charges in the Connected Care segment mainly

related to post-acquisition integration charges of BioTelemetry.)

Philips Group

Other items in millions of EUR


	2025	2024
Diagnosis & Treatment	77	45
Connected Care	188	765
Personal Health	-	-
Other	5	20
Philips Group	270	830

Consisting of:
Respironics litigation provision	-	984
Respironics insurance income	-	(538)
Respironics field-action running costs	112	133
Respironics consent decree charges	97	113
Respironics-related charges	209	691
Quality actions	89	123
Contract settlement gain	(27)	-
Remaining items	(1)	16
Philips Group	270	830

In 2025 Respironics-related charges totaled EUR 209 million. In 2024

Respironics-related charges totaled EUR 691 million.


	39

Income from operations (EBIT) and Adjusted EBITA*

Philips Group

Income from operations and Adjusted EBITA 1 in millions of EUR unless

otherwise stated


	Income from operations	As a % of sales	Adjusted EBITA ¹	As a % of sales
2025
Diagnosis & Treatment	804	9%	998	11.7%
Connected Care	89	2%	544	10.7%
Personal Health	631	17%	662	18.0%
Other	(100)		(9)
Philips Group	1,424	8%	2,195	12.3%
2024
Diagnosis & Treatment	592	7%	1,018	11.6%
Connected Care	(466)	(9%)	494	9.6%
Personal Health	544	16%	584	16.7%
Other	(142)		(18)
Philips Group	529	3%	2,077	11.5%

1Non-IFRS financial measure. For the definition and reconciliation of the most

directly comparable IFRS measure, refer to Reconciliation of non-IFRS

information.

Income from operations amounted to EUR 1,424 million, or 8% of sales,

in 2025, compared with EUR 529 million, or 3% of sales, in 2024, mainly

driven by higher gross margin, lower depreciation and amortization,

lower Respironics-related expenses, and lower charges for

restructuring, acquisition-related and other items. Adjusted EBITA*

increased to EUR 2,195 million and the margin improved to 12.3%,

compared with EUR 2,077 million and a margin of 11.5% in 2024,

mainly driven by comparable sales growth, favorable mix effects,

operational improvements and productivity actions, and partly offset

by cost inflation and higher tariffs. Amortization of acquired intangible

assets was EUR 240 million in 2025 compared with EUR 392 million in

2024. Amortization of acquired intangible assets was EUR 298 million in

2023, which also included goodwill impairment charges of EUR 8

million.

Diagnosis & Treatment

Income from operations increased to EUR 804 million in 2025,

compared with EUR 592 million in 2024. This was mainly driven by

operational improvements and productivity actions and favorable mix

effects, offset by higher tariffs. Adjusted EBITA* increased to 11.7% of

sales in 2025.

Amortization charges in 2025 were EUR 73 million. Amortization

charges in 2024 were EUR 225 million and included the impairment of

acquired intangible assets following product discontinuation.

Amortization and goodwill impairment charges in 2023 were EUR 98

million and included EUR 89 million amortization charges and EUR 8

million goodwill impairment charges.

Connected Care

Income from operations increased to EUR 89 million in 2025, compared

with a loss of EUR (466) million in 2024. This was mainly driven by the

comparative impact of EUR 984 million for the Respironics litigation

provision (which was partly offset by EUR 538 million insurance income

related to the Respironics product liability claims) recorded in 2024,

higher comparable sales, operational improvements and productivity

actions, partly offset by cost inflation and higher tariffs. Adjusted

EBITA* improved to 11% of sales in 2025.

Amortization charges were EUR 141 million in 2025, EUR 141 million in

2024 and EUR 178 million in 2023.

Personal Health

Income from operations increased to EUR 631 million in 2025, compared

with EUR 544 million in 2024. This was mainly driven by sales growth,

operational improvements and productivity actions, partly offset by

higher tariffs and advertising and promotion spend. Adjusted EBITA*

increased to 18% of sales in 2025.

Amortization charges were EUR 14 million in 2025, EUR 15 million in

2024 and EUR 14 million in 2023.

Other

In Other we report on the items Innovation & Design, IP royalties,

Central costs and Other.

Income from operations amounted to a loss of EUR (100) million in

2025, compared with a loss of EUR (142) million in 2024. Adjusted

EBITA* amounted to a loss of EUR (9) million, compared with a loss of

EUR (18) million in 2024. The improvement in Income from operations

and Adjusted EBITA was mainly driven by lower costs, and partly offset

by lower royalty income.

Financial income and expense

Financial income and expenses resulted in a net expense of EUR 233

million in 2025, compared with a net expense of EUR 282 million in

2024, mainly due to lower provision related accretion costs in 2025

compared with 2024.

Income taxes

Income tax expense decreased to EUR (282) million in 2025, compared

with an income tax expense of EUR (963) million in 2024. The income

tax expense decreased by EUR 682 million year-on-year, mainly driven

by the comparative impact of the de-recognition of deferred tax assets

in the US in 2024 and recognition of deferred tax assets in other

jurisdictions in 2025, partly offset by higher income before tax in 2025.

Investment in associates

Results of associates improved from a loss of EUR (124) million in 2024

to a loss of EUR (9) million in 2025. 2025 includes EUR (10) million for

share of results of associates. 2024 includes impairments of EUR (103)

million and share of results of associates of EUR (20) million.

Discontinued operations

In 2025, discontinued operations included a loss of EUR (4) million,

compared with an income of EUR 142 million in 2024, and a loss of EUR

(10) million in 2023. Discontinued operations consist of certain costs

related to past divestments, including the Domestic Appliance business,

which were previously reported as discontinued operations. For further

information, refer to Discontinued operations and assets classified as

held for sale.


	41

Financial position

Acquisitions and divestments

In 2025 and 2024, Philips did not make any acquisitions. In 2025, Philips

completed two divestments for consideration of EUR 77 million,

notably the Emergency Care business. The divestments were not

individually material.

In 2024, Philips completed four divestments for a cash consideration of

EUR 118 million. The divestments were not individually material.

In 2023, Philips completed one acquisition involving a total net cash

outflow of EUR 53 million (total equity price and settlement of debt).

The purchase price allocation was finalized in the second quarter of

2024. In 2023, Philips completed six divestments for a cash

consideration of EUR 80 million notably Philips Pharma Solutions in the

US. For details, please refer to Acquisitions and divestments.

Summary balance sheet

For details refer to Consolidated balance sheets.

Philips Group

Summary balance sheet information in millions of EUR


	2025	2024
Total non-current assets	17,012	18,955
Total current assets	9,932	10,022
Total assets	26,944	28,976

Total non-current liabilities	8,446	8,787
Total current liabilities	7,509	8,146
Total liabilities	15,954	16,933

Shareholders’ equity	10,957	12,006
Non-controlling interests	32	37
Group equity	10,990	12,043

Total liabilities and group equity	26,944	28,976

Debt position

Total debt outstanding at the end of 2025 was EUR 8,084 million,

compared with EUR 7,639 million at the end of 2024.

Philips Group

Total debt outstanding in millions of EUR


	2025	2024
Long-term debt	6,934	7,113
Short-term debt	1,151	526
Debt	8,084	7,639

Philips Group

Balance sheet changes in debt in millions of EUR


	2025	2024
New lease liabilities	135	167
New borrowings long-term debt	1,057	710
Repayments long-term debt incl. leases	(609)	(763)
New borrowings (repayments) short-term debt	(24)	(30)
Forward contracts entered (matured)	127	(248)
Currency effects, consolidation changes and other	(241)	114
Changes in debt	446	(50)

In 2025, total debt increased by EUR 446 million primarily due to the

issuance of fixed-rate notes with principal amount of EUR 1 billion

maturing in 2030 and 2035, partly offset by the repayment of existing debt

and leases, as well as the results of the tender offer for certain outstanding

EUR-denominated bonds due 2026, 2027, 2028 and 2029. The remainder

of proceeds from the new issuance will be used for the repayment of USD

and EUR bonds maturing in 2026.

In 2024, total debt decreased by EUR 50 million. The decrease was

primarily the result of repayment of existing debt and leases as well as the

maturity of forward contracts related to the share buyback program and

long-term incentive and employee stock purchase plans, partly offset by

the issuance of principal amount of EUR 700 million fixed rate notes

maturing in 2032.

At the end of 2025, long-term debt as a proportion of the total debt

stood at 86% with an average remaining term (including current

portion) of 5.4 years, compared with 93% and 5.9 years, respectively, at

the end of 2024. For further information, please refer to Debt.


	42

Shareholders’ equity

In 2025, shareholders’ equity decreased by EUR 1,049 million to EUR

10,957 million at year-end. The decrease was mainly due to currency

translation reductions in equity of EUR 1,667 million, primarily due to

the depreciation of the US dollar against the euro in 2025 and the cash

portion of the dividend paid to shareholders of EUR 328 million, partly

offset by the net income attributable to shareholders of EUR 895

million.

In 2024, shareholders’ equity decreased by EUR 23 million to EUR

12,006 million at year-end. The decrease was mainly due to the net loss

attributable to shareholders of EUR 702 million and currency

translation gains in equity of EUR 751 million, primarily due to the

appreciation of the US dollar against the euro in 2024.

Share capital structure

The number of issued common shares of Royal Philips as of December

31, 2025, was 962,920,132. At year-end 2025, the company held 11.6

million shares in treasury to cover obligations under Long-Term

Incentive plans. In 2025 (and earlier years), the company entered into

several forward contracts to acquire its own shares, and as of December

31, 2025, the outstanding forward contracts related to 12.5 million

shares. Philips issued 23 million shares in June 2025 in order to

distribute the 2024 share portion of the dividend.

The number of issued common shares of Royal Philips as of December

31, 2024, was 939,939,384. At year-end 2024, the company held 14.9

million shares in treasury to cover obligations under Long-Term

Incentive plans. In 2024 (and earlier years), the company entered into

several forward contracts to acquire its own shares, and as of December

31, 2024, the outstanding forward contracts related to 6.5 million

shares. Philips issued 30.9 million shares in May 2024 in order to

distribute the 2023 dividend. The company cancelled 4.4 million shares

in June 2024.

Share repurchase methods for Long-Term Incentive

plans and capital reduction purposes

Historically, Philips uses different methods to repurchase shares in its

own capital: (i) share buyback repurchases in the open market via an

intermediary; (ii) repurchase of shares via forward contracts for future

delivery of shares; and (iii) the unwinding of call options on own

shares.

The open market transactions via an intermediary allow for buybacks

during both open and closed periods.

For more information on share repurchase transactions entered into

2023, 2024, and 2025, refer to Equity.

Philips Group

Impact of share acquisitions and cancellations on share count

in thousands of shares as of December 31


	2025	2024	2023	2022	2021
Shares issued	962,920	939,939	913,516	889,315	883,899
Shares in treasury	11,631	14,930	7,113	7,835	13,717
Shares outstanding	951,289	925,009	906,403	881,481	870,182
Shares acquired	-	13,718	15,964	5,081	45,486
Shares cancelled	-	4,437	15,134	8,758	33,500


	43

Philips Group

Total number of shares repurchased in thousands of shares unless otherwise stated


	Share repurchases related to shares acquired for capital reduction	Average price paid per share in EUR	Shares acquired for LTI’s	Average price paid per share in EUR	Total number of shares purchased	Average price paid per share in EUR	Total number of shares purchased as part of publicly announced plans or programs 1 2 3	Approximate value of shares that may yet be purchased under the plans or programs in thousands of EUR 5 6
January 2025	-	-	-	-	-	-	-	131,518
February 2025	-	-	-	-	-	-	-	131,518
March 2025	-	-	-	-	-	-	-	131,518
April 2025	-	-	-	-	-	-	-	131,518
May 2025	-	-	-	-	-	-	-	131,518
June 2025	-	-	-	-	-	-	-	244,434
July 2025	-	-	-	-	-	-	-	244,434
August 2025	-	-	-	-	-	-	-	244,434
September 2025	-	-	-	-	-	-	-	246,621
October 2025	-	-	-	-	-	-	-	246,621
November 2025	-	-	-	-	-	-	-	246,621
December 2025	-	-	-	-	-	-	-	246,621
Total	-	-	-	-	-	-	-	246,621
Of which 4
Purchased in the open market	-	-	-	-	-	-	-
Acquired through exercise of call options/ settlement of forward contracts	-	-	-	-	-	-	-
To be acquired by settlement of forward contracts after December 31, 2025								246,621

1First, on June 14, 2023, Philips announced that it would repurchase up to 7.1 million shares to cover certain of its obligations arising from its long-term incentive and employee stock purchase plans. Under this program, Philips entered into three forward contracts

for an amount of EUR 138 million to acquire 7.1 million shares with settlement dates varying between November 2024 and November 2025. On September 15, 2025, the original settlement dates of the two remaining share tranches entered into under this program

(in total 4 million shares) have been extended to October and November 2026, respectively. Second, on August 5, 2024, Philips announced that it would repurchase shares for an amount of up to EUR 125 million to cover certain of its obligations arising from its Long-

Term Incentive plans. The repurchases were executed through a combination of open market purchases (in August 2024) and one forward contract for an amount of EUR 65 million to acquire 2.5 million shares with a settlement date in November 2026. Third, on

June 3, 2025, Royal Philips announced that it will repurchase up to 6 million shares to cover certain of its obligations arising from its Long-Term Incentive plans. To this end, Philips entered into three forward transactions to acquire 6 million shares with settlement

dates in February, November and December 2027. For further details on these publicly announced plans or programs refer to Equity.

2Philips did not cancel shares in 2025.

3In 2025, Philips did not determine to terminate any publicly announced plans or programs prior to expiration, or determine that it intends not to make any further purchases under any publicly announced plans or programs.

4As described above, under its current repurchase arrangements, Philips will only acquire shares via forward contracts for future delivery of shares.

5All shares will be purchased through publicly announced plans or programs.

6Calculated considering the present value of the forward purchase contract obligations.


	44

Cash flow and liquidity

Cash flows

The movements in cash and cash equivalents for the years ended

December 31, 2025 and 2024 are presented and explained as follows.

Philips Group

Condensed consolidated cash flows in millions of EUR


	2025	2024
Beginning cash and cash equivalents balance	2,401	1,869
Net cash flows from operating activities	1,172	1,569
Net cash flows from investing activities
Net capital expenditures	(660)	(663)
Other cash flows from investing activities	(77)	90
Net cash flows from financing activities
Treasury shares transactions	13	(410)
Changes in debt	424	(83)
Dividend paid to shareholders of the company	(328)	(1)
Other cash flow items	(141)	43
Net cash flows from discontinued operations	(10)	(13)
Ending cash and cash equivalents balance	2,794	2,401

Net cash flows from operating activities

Net cash flows from operating activities amounted to an inflow of EUR

1,172 million in 2025, compared with an inflow of EUR 1,569 million in

2024. This decrease is mainly due to the cash payment of EUR 1,025

million for Respironics recall-related medical monitoring and personal

injury settlements in 2025, partly offset by improved working capital.

2024 included payments in connection with the Respironics economic

loss settlement in the US and Respironics insurance proceeds. Free cash

flow* amounted to a cash inflow of EUR 512 million in 2025, compared

with an inflow of EUR 906 million in 2024.

Net cash flows from operating activities amounted to an inflow of EUR

1,569 million in 2024, compared with an inflow of EUR 2,136 million in

2023. This decrease was mainly due to the payments in connection with

the Respironics economic loss settlement in the US and working capital

outflows, partly offset by the Respironics insurance receipt. Free cash

flow* amounted to a cash inflow of EUR 906 million in 2024, compared

with an inflow of EUR 1,582 million in 2023.

Net cash flows from investing activities

Net cash flows from investing activities consist of net capital

expenditures and other cash flows from investing activities. In 2025,

other cash flows from investing activities amounted to a cash outflow

of EUR 77 million, and mainly include minority investments and a cash

payment with respect to foreign exchange derivative contracts.

Net capital expenditures were EUR 660 million in 2025, in line with

2024. Philips plans to expand its facilities in the U.S. and invest in

additional manufacturing and R&D projects over the next several years

to support the company’s growth in the U.S.

In 2024, other cash flows from investing activities amounted to a cash

inflow of EUR 90 million, mainly due to proceeds from divested

businesses and cash receipt with respect to foreign exchange derivative

contracts.

Net cash flows from financing activities

Net cash flows from financing activities consist of treasury shares

transactions, changes in debt, dividend paid and other cash flow items.

In 2025, treasury shares transactions mainly included the exercise of

stock options, which resulted in EUR 13 million net cash inflow.

Changes in debt mainly includes the issuance of EUR 1 billion fixed-rate

notes maturing in 2030 and 2035, partly offset by the repayment of

existing debt and leases.

In 2024, treasury shares transactions mainly included share repurchases

for capital reduction purposes, as well as related withholding taxes,

and share repurchases for Long-Term Incentive plans, which resulted in

EUR 410 million net cash outflow. Changes in debt mainly included the

new bond issuance of EUR 700 million and bond redemption of EUR

547 million, partly offset by debt repayments.

Other cash flow items

In 2025 and 2024, other cash flow items mainly reflect the foreign

currency impact on the cash balance.

Net cash flows from discontinued operations

In 2025 and 2024, net cash used by discontinued operations mainly

related to the tax claims of previously divested businesses.

Liquidity position

As of December 31, 2025, the Philips Group had access to available

liquidity of EUR 3,796 million (2024: EUR 3,405 million) including cash

and cash equivalents and a EUR 1 billion committed revolving credit

facility, compared with gross debt of EUR 8,084 million (2024: EUR

7,639 million).

Philips Group

Liquidity position in millions of EUR


	2025	2024
Cash and cash equivalents	2,794	2,401
Listed equity investments at fair value ¹	2	4
Committed revolving credit facility	1,000	1,000
Liquidity	3,796	3,405

Short-term debt	(1,151)	(526)
Long-term debt	(6,934)	(7,113)
Debt	(8,084)	(7,639)

Net available liquidity resources	(4,289)	(4,233)

1Philips held listed equity investments at fair value (level 1) in common shares of

companies in various industries. Refer to Other financial assets and Fair value of

financial assets and liabilities.

In 2024, Philips extended the maturity of its EUR 1 billion committed

revolving credit facility to 2029. The facility, undrawn in 2025, can be

used for general group purposes, such as a backstop for its Commercial

Paper Program.

Philips’ Commercial Paper Program amounts to USD 2.5 billion, under

which commercial paper can be issued up to 364 days in tenor, both in

the US and in Europe, in any major freely convertible currency. As of

December 31, 2025, Philips had no commercial paper outstanding.

*Non-IFRS financial measure. For the definition and reconciliation of the most

directly comparable IFRS measure, refer to Reconciliation of non-IFRS

information.


	45

Philips established a Euro Medium Term Note (EMTN) program, which

facilitates the issuance of notes for a total amount of up to EUR 10

billion. In 2025, Philips issued two new tranches under the program for

a total of EUR 1 billion fixed rate notes due 2030 and 2035 for general

corporate purposes, including the repayment of USD and EUR bond

maturities in 2026. As of December 31, 2025, the principal amount of

notes outstanding under the EMTN program was EUR 4.5 billion.

The company’s liquidity risk management procedures have not

changed during 2025. The access to existing lines of credit remains

intact. These lines of credit, along with other financial risks to which

Philips is exposed, are disclosed in Details of treasury and other

financial risks. Further, with respect to potential claims related to the

Respironics recall, please refer to Contingencies. Management

continues to monitor the risks associated with such potential claims and

their impact on liquidity position, if any.

Philips’ existing long-term debt is rated BBB+ (with stable outlook) by

Fitch, Baa1 (with stable outlook) by Moody’s, and BBB+ (with stable

outlook) by Standard & Poor’s. As part of our capital allocation policy,

our net debt position is managed with the intention of retaining our

strong investment grade credit rating. Ratings are subject to change at

any time and there is no assurance that Philips will be able to achieve

this goal. Philips’ aim when managing the net debt position is dividend

stability and a pay-out ratio of 40% to 50% of adjusted income from

continuing operations attributable to shareholders. Philips’ outstanding

long-term debt and credit facilities do not contain financial covenants.

Adverse changes in the company’s ratings will not trigger automatic

withdrawal of committed credit facilities or any acceleration in the

outstanding long-term debt (provided that the USD-denominated

bonds issued by Philips in March 2008 and 2012 contain a ‘Change of

Control Triggering Event’ and the EUR-denominated bonds contain a

‘Change of Control Put Event’). A description of Philips’ credit facilities

can be found in Debt.

Philips Group

Credit rating summary


	Long-term	Short-term	Outlook
Fitch	BBB+		Stable
Moody’s	Baa1	P-2	Stable
Standard & Poor’s	BBB+	A-2	Stable

Philips pools cash from subsidiaries to the extent legally and

economically feasible. Cash not pooled remains available for local

operational needs or general purposes. We face cross-border foreign

exchange controls and/or other legal restrictions in a few countries,

which could limit our ability to make these balances available on short

notice for general use by the group.

Philips believes its current liquidity and direct access to capital markets

is sufficient to meet our present financing needs.

Cash obligations

Contractual cash obligations

The following table presents a summary of the Group’s fixed

contractual cash obligations and commitments as of December 31,

2025. These amounts are an estimate of future payments, which could

change as a result of various factors, such as a change in interest rates,

foreign exchange, and contractual provisions, as well as changes in our

business strategy and needs. Therefore, the actual payments made in

future periods may differ from those presented in the accompanying

table.

Philips Group

Contractual cash obligations 1 2 in millions of EUR


	2025
	Payments due by period
	Total	Less than 1 year	1-3 years	3-5 years	After 5 years
Long-term debt	7,086		1,630	1,806	3,650
Short-term debt	1,174	1,174
Interest on debt	1,765	216	402	361	786
Derivative liabilities	36	35	1	-	-
Purchase obligations ³	1,189	293	390	306	200
Trade and other payables	1,927	1,927
Contractual cash obligations	13,177	3,645	2,423	2,473	4,636

1Amounts in this table are undiscounted

2This table excludes post-employment benefit plan contribution commitments,

contingent consideration and income tax liabilities with respect to tax risks

because it is not possible to make a reasonably reliable estimate of the actual

period of cash settlement.

3Purchase obligations are agreements to purchase goods or services that are

enforceable and legally binding for the Group. They specify all significant terms,

including fixed or minimum quantities to be purchased, fixed, minimum or

variable price provisions and the approximate timing of the transaction. They do

not include open purchase orders or other commitments which do not specify all

significant terms.

Debt includes forward contracts of EUR 260 million (nominal value)

relating to the repurchase of shares to cover long-term incentive and

employee stock purchase plans. In 2025, Philips extended the maturity

of EUR 76 million relating to the repurchase of up to 4 million shares for

long-term incentive from the third-quarter of 2025 to the third quarter

of 2026, and entered into a forward contract for EUR 119 million that

matures in 2027 relating to the repurchase of up to 6 million shares for

long-term incentive and employee stock purchase plans.

Philips offers voluntary supply chain finance programs with third parties,

which provide participating suppliers with the opportunity to factor their

trade receivables at the sole discretion of both the suppliers and the

third parties. Philips continues to recognize these liabilities as trade

payables and settles them accordingly on the invoice maturity date based

on the terms and conditions of these arrangements. As of December 31,

2025, approximately EUR 117 million (2024: EUR 97 million) of the Philips

accounts payable were transferred under these arrangements.


	46

Other cash commitments

Philips and our subsidiaries sponsor post-employment benefit plans in

many countries in accordance with legal requirements, customs, and

the local situation in the countries involved. For a discussion of the

plans and expected cash outflows, please refer to Post-employment

benefits.

We had various provisions by the end of 2025 that are expected to

result in cash outflows in 2026. Refer to Provisions.

Philips has contracts with investment funds in which we committed to

make, under certain conditions, capital contributions to these funds of

an aggregated remaining amount of EUR 112 million (2024: EUR 130

million). Capital contributions already made to these investment funds

are recorded as non-current financial assets.

Please refer to Dividend for information on the proposed dividend

distribution.

Please refer to Equity for information on other long-term incentive and

employee stock purchase plans.

Guarantees

Business-related guarantees on behalf of third parties and associates

amount to EUR 4 million as of December 31, 2025 (December 31, 2024:

EUR 343 million), and are not recorded on the balance sheet. The

decrease compared to the prior year primarily reflects that the

insurance‑related product‑liability exposure associated with the

Respironics recall was settled and, accordingly, was no longer

outstanding as of December 31, 2025.

Dividend

Dividend policy

Philips’ dividend policy is aimed at dividend stability and a pay-out ratio

of 40% to 50% of adjusted income from continuing operations

attributable to shareholders*.

Proposed distribution

A proposal will be submitted to the Annual General Meeting of

Shareholders, to be held on May 8, 2026, to declare a distribution of

EUR 0.85 per common share, in shares or cash at the option of the

shareholder, against the net income for 2025.

If the above dividend proposal is adopted, the shares will be traded ex-

dividend at the Euronext Amsterdam as of May 12, 2026, and at the

New York Stock Exchange as of May 13, 2026. In compliance with the

listing requirements of Euronext Amsterdam and the New York Stock

Exchange, the dividend record date will be May 13, 2026.

Shareholders will be given the opportunity to make their choice

between shares and cash between May 14 and May 28, 2026, for shares

traded at the New York Stock Exchange, and between May 14 and May

29, 2026, for shares traded at Euronext Amsterdam. If no choice is

made during this election period, the dividend will be distributed in

shares.

The number of share dividend rights entitled to one new common

share will be determined based on the volume weighted average price

of all traded common shares of Koninklijke Philips N.V. at Euronext

Amsterdam on May 27, 28 and 29, 2026. The company will calculate the

number of share dividend rights entitled to one new common share

(the ratio), such that the gross dividend in shares will be approximately

equal to EUR 0.85. The ratio and the number of shares to be issued will

be announced on June 2, 2026. Delivery of new common shares and

payment of the dividend, with settlement of fractions in cash, if

required, will take place from June 3, 2026.


	Ex-dividend date	Record date	Distribution from
Euronext Amsterdam	May 12, 2026	May 13, 2026	June 3, 2026
New York Stock Exchange	May 13, 2026	May 13, 2026	June 3, 2026

Further details will be given in the agenda with explanatory notes for

the 2026 Annual General Meeting of Shareholders. The proposed

distribution and all dates mentioned remain provisional until then.

Dividend in shares is subject to 15% dividend withholding tax, but only

with respect to the par value of the shares (EUR 0.20 per share).

Dividend in cash is in principle subject to 15% Dutch dividend

withholding tax, which will be deducted from the dividend in cash paid

to the shareholders. Shareholders are advised to consult their tax

advisor on the applicable situation with respect to taxes on the

dividend received.

Dividends and distributions per common share

The following table sets forth in euros the gross dividends on the

common shares in the fiscal years indicated (from prior-year profit

distribution) and such amounts as converted into US dollars and paid to

holders of shares of the New York Registry:

Philips Group

Gross dividends on the common shares (per share)


	2025 ¹	2024 ¹	2023 ²	2022 ²	2021 ¹
in EUR	0.85	0.85	0.85	0.85	0.85
in USD	0.97	0.92	0.93	0.90	1.03

1In cash or shares at the election of shareholder

2In shares only

*Non-IFRS financial measure. For the definition and reconciliation of the most

directly comparable IFRS measure, refer to Reconciliation of non-IFRS

information.


	48

Governance

This section describes the governance framework that enables us to

operationalize our purpose by adopting a fully integrated approach to

doing business responsibly and sustainably.

Corporate governance

Management and oversight responsibilities and accountability within

our company are ultimately guided by the corporate governance of the

parent company of the Philips Group, Koninklijke Philips N.V. (Royal

Philips). Royal Philips is a company organized under Dutch law and its

shares have been listed on the Amsterdam stock exchange (Euronext

Amsterdam) since 1912. In addition, Royal Philips’ shares have been

traded in the United States since 1962 and have been listed on the New

York Stock Exchange since 1987.

Royal Philips has a two-tier board structure consisting of a Board of

Management and a Supervisory Board, each of which is accountable to

the General Meeting of Shareholders for the fulfillment of its

respective duties. The members of the Board of Management,

supported by the other members of the Executive Committee, drive the

company’s management agenda and share responsibility for the

continuity of the Philips Group, focusing on sustainable long-term

value creation. The independent Supervisory Board supervises the

Board of Management and the Executive Committee and advises them

on general policies related to the activities of the company, including

setting and executing the strategy of the Philips Group. These

responsibilities include the oversight of the Environmental, Social and

Governance (ESG) dimensions and their integration into the company’s

overarching strategy, which is a responsibility of the Supervisory Board

as a whole because of their significance.

Philips is governed by Dutch corporate and securities laws, its Articles of

Association, and the Rules of Procedure of the Board of Management

and the Executive Committee and of the Supervisory Board,

respectively. Our corporate governance framework is also based on the

Dutch Corporate Governance Code (dated March 20, 2025) and US laws

and regulations applicable to Foreign Private Issuers.

Board of Management and Executive Committee

Introduction

The Board of Management is entrusted with the management of the

company. Certain key officers have been appointed to support the

Board of Management in the fulfillment of its managerial duties. The

members of the Board of Management and these key officers together

constitute the Executive Committee, which consists of 14 members on

the date of this Corporate governance report. In this Corporate

governance report, wherever the Executive Committee is mentioned,

this also includes the members of the Board of Management, unless the

context requires otherwise. Please refer to Members of the Board of

Management and Executive Committee for an overview of the current

members.

Under the chairmanship of the President/Chief Executive Officer (CEO),

and supported by the other members of the Executive Committee, the

members of the Board of Management drive the company’s

management agenda and share responsibility for the continuity of the

Philips Group. Please refer to the Rules of Procedure of the Board of

Management and the Executive Committee, which are published on

the Philips website, for a description of further responsibilities and

tasks, as well as procedures for meetings, resolutions, and minutes.

In fulfilling their duties, the members of the Board of Management and

Executive Committee are guided by the interests of Philips and the

affiliated enterprise, taking into account the interests of our

stakeholders. The Board of Management and the Executive Committee

have adopted a division of responsibilities based on the Functions,

Businesses and Regions, each of which is monitored and reviewed by

the individual members. The Board of Management is accountable for

the actions and decisions of the Executive Committee and has ultimate

responsibility for external reporting (including reporting to the

shareholders).

The Board of Management and the Executive Committee are

supervised by the Supervisory Board. Members of the Board of

Management and the Executive Committee will be present in the

meetings of the Supervisory Board, if so invited. In addition, the CEO

and other members of the Board of Management (and if needed, the

other members of the Executive Committee) meet on a regular basis

with the Chairman and other members of the Supervisory Board. The

Board of Management and the Executive Committee are required to

keep the Supervisory Board informed of all facts and developments

concerning Philips that the Supervisory Board may need to be aware of

in order to function as required and to properly carry out its duties.

Certain important decisions of the Board of Management require

Supervisory Board approval, including decisions concerning: the

operational and financial objectives and the strategy designed to

achieve these objectives; the issue, repurchase or cancellation of shares;

and major acquisitions or divestments.

Appointment and composition

Members of the Board of Management, including the CEO, are

appointed by the General Meeting of Shareholders upon a binding

recommendation drawn up by the Supervisory Board after consultation

with the CEO. This binding recommendation may be overruled by a

resolution of the General Meeting of Shareholders adopted by a simple

majority of the votes cast and representing at least one-third of the

issued share capital. If a simple majority of the votes cast is in favor of

the resolution to overrule the binding recommendation, but such

majority does not represent at least one-third of the issued share

capital, a new meeting may be convened, at which the resolution may

be passed by a simple majority of the votes cast, regardless of the

portion of the issued share capital represented by such majority. In the

event that a binding recommendation has been overruled, a new

binding recommendation shall be submitted to the General Meeting of

Shareholders. If such second binding recommendation has been

overruled, the General Meeting of Shareholders shall be free to

appoint a board member.

The CEO and the other members of the Board of Management are

appointed for a (maximum) term of four years, it being understood

that this term expires at the closing of the General Meeting of

Shareholders to be held in the fourth calendar year after the year of

their appointment or, if applicable, at a later retirement date or other

contractual termination date in the fourth year, unless the General

Meeting of Shareholders resolves otherwise. The same applies in the

case of re-appointment, which is possible for consecutive terms of (a


	49

maximum of) four years. A (re-)appointment schedule for the Board of

Management is published on the Philips website.

Pursuant to Dutch law, the members of the Board of Management are

engaged by means of a services agreement (overeenkomst van

opdracht). The term of the services agreement is aligned with the term

for which the relevant member has been appointed by the General

Meeting of Shareholders. In the event of termination of the services

agreement by the company, severance payment is limited to a

maximum of one year’s base salary. The services agreements provide no

additional termination benefits.

Members of the Board of Management may be suspended by the

Supervisory Board and by the General Meeting of Shareholders, and

members of the Board of Management may be dismissed by the

General Meeting of Shareholders (in each case in accordance with the

Articles of Association). A shareholders’ resolution to suspend or dismiss

a member of the Board of Management, other than a resolution

proposed by the Board of Management or the Supervisory Board, may

only be adopted by a simple majority of the votes cast, representing at

least one-third of the issued share capital. The other members of the

Executive Committee are appointed, suspended and dismissed by the

CEO, subject to approval by the Supervisory Board.

Supervisory Board

Introduction

The Supervisory Board oversees the policies, management and general

affairs of Philips, and assists the Board of Management and the

Executive Committee with advice on general policies related to Philips’

activities. In fulfilling their duties, the members of the Supervisory

Board shall be guided by the interests of Philips and the affiliated

enterprise, taking into account the interests of our stakeholders.

In the two-tier corporate structure under Dutch law, the Supervisory

Board is a separate body that is independent of the Board of

Management and the company. Its independent character is also

reflected in the requirement that members of the Supervisory Board

can be neither a member of the Board of Management nor an

employee of the company. On the date of this Corporate governance

report, the Supervisory Board as a whole is considered independent, as

10 out of 11 members (91%) are independent under the Dutch

Corporate Governance Code, and for Mr Ribadeau-Dumas the

independence exception of best practice provision 2.1.7(iii) of the

Dutch Corporate Governance Code is deemed to apply. Furthermore, all

members of its Audit Committee are independent under the rules of

the US Securities and Exchange Commission, applicable to the Audit

Committee.

The Supervisory Board must approve certain important decisions of the

Board of Management. The Supervisory Board and its individual

members each have a responsibility to request from the Board of

Management, the Executive Committee and the external auditor all

information that the Supervisory Board needs in order to be able to

carry out its duties properly as a supervisory body.

Please refer to the Rules of Procedure of the Supervisory Board, which

are published on the Philips website, for a description of further

responsibilities and tasks, as well as procedures for meetings,

resolutions and minutes.

In its report (included in the Philips Annual Report), the Supervisory

Board describes the composition and functioning of the Supervisory

Board and its committees, their activities in the financial year, the

number of committee meetings held and the main items discussed.

Please refer to Supervisory Board report. Please also refer to

Supervisory Board for an overview of the members of the Supervisory

Board.

Appointment and composition

Members of the Supervisory Board are appointed by the General

Meeting of Shareholders upon a binding recommendation drawn up by

the Supervisory Board. This binding recommendation may be overruled

by a resolution of the General Meeting of Shareholders adopted by a

simple majority of the votes cast and representing at least one-third of

the issued share capital. If a simple majority of the votes cast is in favor

of the resolution to overrule the binding recommendation, but such

majority does not represent at least one-third of the issued share

capital, a new meeting may be convened. At this new meeting the

resolution may be passed by a simple majority of the votes cast,

regardless of the portion of the issued share capital represented by

such majority. In the event that a binding recommendation has been

overruled, a new binding recommendation shall be submitted to the

General Meeting of Shareholders. If such second binding

recommendation has been overruled, the General Meeting of

Shareholders shall be free to appoint a board member.

The term of appointment of members of the Supervisory Board expires

at the closing of the General Meeting of Shareholders to be held after

a period of four years following their appointment. There is no age

limit requiring the retirement of board members.

In line with the Dutch Corporate Governance Code, members of the

Supervisory Board are eligible for re-appointment for a fixed term of

four years once, and may subsequently be re-appointed for a period of

two years, which appointment may be extended by at most two years.

The report of the Supervisory Board must state the reasons for any re-

appointment beyond an eight-year period.

A (re-)appointment schedule for the Supervisory Board is published on

the Philips website.

Members of the Supervisory Board may be suspended or dismissed by

the General Meeting of Shareholders in accordance with the Articles of

Association. A resolution to suspend or dismiss a member of the

Supervisory Board, other than a resolution proposed by the Supervisory

Board, may only be adopted by a simple majority of the votes cast,

representing at least one-third of the issued share capital.

Candidates for appointment to the Supervisory Board are selected

taking into account the Diversity Policy, which is published on the

Philips website. The Supervisory Board’s composition furthermore

follows the profile included in the Rules of Procedure of the

Supervisory Board, and the size of the board may vary as it considers

appropriate to support its profile. Please refer to Supervisory Board

report. Typically, newly appointed members of the Supervisory Board

follow an induction program and interact with Executive Committee

members for deep-dives on matters such as strategy, finance and

investor relations, quality, governance, legal, sustainability and

digitization.


	50

Effective 2022, Dutch law provides a mandatory gender quota,

requiring that at least one-third of the Supervisory Board members are

women and at least one-third men (for calculation purposes, a total

number of board members that cannot be divided by three must be

rounded up to the next number that can be divided by three). The

quota is applicable to (i) the appointment of new Supervisory Board

members, and (ii) the re-appointment of acting board members after

eight years following their initial appointment. Except in certain

exceptional circumstances, any appointment or re-appointment

resulting in a Supervisory Board composition that does not meet (or no

longer meets) the quota, will be invalid (null and void).

As announced on August 14, 2023, Philips and Exor N.V. entered into a

Relationship Agreement on August 13, 2023, which has been published

on the Philips website. The relationship agreement includes Exor’s

commitment to be a long-term minority investor in Philips and its right

to propose one member to the Supervisory Board. In this context, it is

noted that, for as long as Exor has such nomination right pursuant to

the relationship agreement, the independence exception of best

practice provision 2.1.7(iii) of the Dutch Corporate Governance Code is

deemed to apply to any Exor nominee that has been appointed upon

such nomination in accordance with the Relationship Agreement.

Supervisory Board committees

The Supervisory Board, while retaining overall responsibility, has

assigned certain tasks to four committees: the Corporate Governance

and Nomination & Selection Committee, the Remuneration Committee,

the Audit Committee, and the Quality & Regulatory Committee. Each

committee reports to the full Supervisory Board. Please refer to the

charters of the respective committees, which are published on the

Philips website as part of the Rules of Procedure of the Supervisory

Board, for a description of their responsibilities, composition, meetings

and working procedures.

The Corporate Governance and Nomination & Selection Committee is

responsible for preparing selection criteria and appointment

procedures for members of the Supervisory Board, the Board of

Management and the Executive Committee. The Committee makes

proposals to the Supervisory Board for the (re)appointment of such

members, and periodically assesses their functioning. The Committee

also periodically assesses the Executive Committee succession planning

and the Diversity Policy, and supervises the policy of the Executive

Committee on the selection criteria and appointment procedures for

Philips executives. At least once a year, the Committee reviews the

corporate governance principles applicable to Philips, and advises the

Supervisory Board on any changes to these principles that it deems

appropriate.

The Remuneration Committee is responsible for preparing decisions of

the Supervisory Board on the remuneration of individual members of

the Board of Management and the Executive Committee. The

Committee prepares an annual remuneration report, which is published

on the Philips website by the Supervisory Board ahead of the Annual

General Meeting of Shareholders. In performing its duties and

responsibilities, the Remuneration Committee is assisted by an external

consultant and an in-house remuneration expert.

The Audit Committee assists the Supervisory Board in fulfilling its

oversight responsibilities for: the integrity of the financial statements;

the financial and non-financial (ESG) reporting processes; the

effectiveness (also in respect of the reporting process) of the risk

management and internal control framework; the internal and

external audit process; the internal and external auditor’s

qualifications, independence and performance; and the process for

monitoring compliance with laws and regulations and the General

Business Principles (including related manuals, training and tools). It

reviews the annual and interim financial statements, including non-

financial information, prior to publication and advises the Supervisory

Board on the adequacy and appropriateness of internal control policies

and internal audit programs and their findings. The Committee

furthermore supervises the Internal Audit Function, maintains contact

with and supervises the external auditor and prepares the nomination

of the external auditor for appointment by the General Meeting of

Shareholders.

The composition of the Audit Committee meets the relevant

requirements under Dutch law and the applicable US rules. All of the

members are considered to be independent and financially literate, and

the Audit Committee as a whole has competence relevant to the sector

in which the company is operating. In addition, Liz Doherty is

designated as an Audit Committee financial expert, as defined under

the regulations of the US Securities and Exchange Commission. The

Supervisory Board considers the expertise and experience available in

the Audit Committee, in conjunction with the possibility to take advice

from internal and external experts and advisors, to be sufficient for the

fulfillment of the tasks and responsibilities of the Audit Committee.

The Quality & Regulatory Committee has been established by the

Supervisory Board in view of the central importance of the quality and

(patient) safety of Philips’ products, systems, services and software, as

well as the development, testing, manufacturing, marketing and

servicing thereof, and the regulatory requirements relating thereto.

The Quality & Regulatory Committee assists the Supervisory Board in

fulfilling its oversight responsibilities in this area, while recognizing

that the Audit Committee assists the Supervisory Board in its oversight

of other areas of regulatory, compliance and legal matters.

Other Board-related matters

Remuneration and share ownership

The remuneration of the individual members of the Board of

Management is determined by the Supervisory Board, taking into

account the remuneration policy adopted by the General Meeting of

Shareholders. The remuneration of the individual members of the

Supervisory Board is determined by the General Meeting of

Shareholders, also on the basis of a remuneration policy.

The current remuneration policies for the Board of Management and

the Supervisory Board, respectively, were adopted in 2024 and are

published on the Philips website. Pursuant to Dutch law, the

shareholders are entitled to vote on the adoption of the separate

remuneration policies for the Board of Management and the

Supervisory Board at the Annual General Meeting of Shareholders (at

least) every four years. The adoption of a remuneration policy will

require a special majority of three-quarters of the votes cast (as the

Articles of Association do not provide for a lower majority).

A description of the composition of the remuneration paid and owed

to the individual members of the Board of Management and the

Supervisory Board is included in the annual Remuneration Report (as

prepared by the Remuneration Committee, adopted by the Supervisory


	51

Board and published on the Philips website). Shareholders have an

advisory vote at each Annual General Meeting of Shareholders on the

Remuneration Report relating to the preceding financial year.

Pursuant to Dutch law, the Supervisory Board is authorized to reduce or

eliminate unpaid bonuses awarded to members of the Board of

Management if payment or delivery of the bonus would be

unacceptable according to the principles of reasonableness and

fairness. Philips, which in this respect may also be represented by the

Supervisory Board or a special representative appointed for this

purpose by the General Meeting of Shareholders, may also request

return of bonuses already paid or delivered insofar as these have been

granted on the basis of incorrect information on the fulfillment of the

relevant performance criteria or other conditions. Bonuses are broadly

defined as ‘non-fixed’ (variable) remuneration – either in cash or in the

form of share-based compensation – that is conditional in whole or in

part on the achievement of certain targets or the occurrence of certain

circumstances. The explanatory notes to the balance sheet shall report

on any moderation and/or claim for repayment of Board of

Management remuneration. No such reduction of unpaid bonuses or

requests for repayment occurred during the financial year 2025.

In compliance with the Dutch Corporate Governance Code, Philips does

not grant personal loans to, or guarantees on behalf of, members of

the Board of Management or the Supervisory Board. No such loans

were granted and no such guarantees were issued in 2025, nor were

any loans or guarantees outstanding as of December 31, 2025.

Also in compliance with the Dutch Corporate Governance Code, the

Articles of Association provide that shares or rights to shares shall not

be granted to members of the Supervisory Board.

Members of the Board of Management and the Supervisory Board may

only hold shares in Philips for the purpose of long-term investment and

must refrain from short-term transactions in Philips securities.

According to Philips’ internal rules of conduct with respect to inside

information, members of the Board of Management and the

Supervisory Board are only allowed to trade in Philips securities

(including the exercise of stock options) during ‘windows’ of 20

business days following the publication of annual and quarterly results

(provided further the person involved has no inside information

regarding Philips at that time, unless an exemption is available).

Furthermore, members of the Board of Management and the

Supervisory Board are prohibited from trading, directly or indirectly, in

securities of any of the companies belonging to Philips’ peer group (as

determined by the Supervisory Board) during one week preceding the

disclosure of Philips’ annual or quarterly results.

Transactions in Philips shares carried out by members of the Board of

Management and the Supervisory Board are reported to the Dutch

Authority for the Financial Markets (AFM) in accordance with the EU

Market Abuse Regulation and, if necessary, to other relevant

authorities.

Indemnification

Unless Dutch law provides otherwise, the members of the Board of

Management and of the Supervisory Board shall be reimbursed for

various costs and expenses, such as the reasonable costs of defending

claims, as formalized in the Articles of Association. Under certain

circumstances, described in the Articles of Association, such as an act or

failure to act by a member of the Board of Management or a member

of the Supervisory Board that can be characterized as intentional

(opzettelijk), intentionally reckless (bewust roekeloos) or seriously

culpable (ernstig verwijtbaar), there will be no entitlement to this

reimbursement unless the law or the principles of reasonableness and

fairness require otherwise. The company has also taken out liability

insurance (D&O – Directors & Officers) for the persons concerned.

Diversity

The Diversity Policy for the Supervisory Board, Board of Management

and Executive Committee was adopted in 2017 and revised in February

2023 and July 2025, and it is published on the Philips website. Pursuant

to the Diversity Policy, the selection of candidates for appointments is

based on merit and its criteria aim to ensure that the Supervisory

Board, the Board of Management and the Executive Committee have

sufficient diversity of views and the expertise needed for a good

understanding of current affairs and longer-term risks and

opportunities related to Philips’ business. The nature and complexity of

our business is considered when assessing the optimal mix of

perspectives, as well as the social and environmental context in which

we operate.

The composition of the Supervisory Board furthermore follows its

profile as included in the Rules of Procedure of the Supervisory Board.

Also, effective 2022, Dutch law provides mandatory gender quota for

the Supervisory Board. For more information on the profile and current

composition of the Supervisory Board refer to Supervisory Board report.

Effective 2022, Dutch law requires listed companies to set appropriate

and ambitious gender diversity targets for the Board of Management

and for a management level of a seniority to be determined by the

company. To this end, the Diversity Policy includes the Supervisory

Board’s aim that at least one-third of the members of the Board of

Management and Executive Committee are women, and at least one-

third are men. The composition of the Board of Management and the

Executive Committee, respectively, currently meets this aim.

Conflicts of interest

Dutch law on conflicts of interest provides that members of the Board

of Management or Supervisory Board may not participate in the

adoption of resolutions if they have a direct or indirect personal

conflict of interest with the company or related enterprise. If all

members of the Board of Management have a conflict of interest, the

resolution concerned will be considered by the Supervisory Board. If all

members of the Supervisory Board have a conflict of interest, the

resolution concerned must be considered by the General Meeting of

Shareholders.

In compliance with the Dutch Corporate Governance Code, our

corporate governance includes rules to specify situations in which a

potential or actual conflict may exist, procedures to avoid such conflicts

of interest as much as possible, and procedures to deal with such

conflicts should they arise. Relevant matters relating to conflicts of

interest, if any, must be mentioned in the Annual Report (specifically

the management report) for the financial year in question. No decision

to enter into any such material transaction in which there is a conflict

of interest with a member of the Board of Management or the

Supervisory Board, or with any major shareholder (holding at least 10%

of shares) was taken during the financial year 2025.


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Outside directorships

In compliance with the Dutch Corporate Governance Code, members of

the Board of Management require the approval of the Supervisory

Board before they can accept a position as a member of a supervisory

board or a position as a non-executive director on a one-tier board

(Non-Executive Directorship) at another company. The Supervisory

Board must be notified of other important positions (to be) held by a

member of the Board of Management.

Dutch law provides for certain limitations on the number of Non-

Executive Directorships a member of the Board of Management or

Supervisory Board may hold. No member of the Board of Management

shall hold more than two Non-Executive Directorships at ‘large’

companies (naamloze vennootschappen or besloten vennootschappen)

or ‘large’ foundations (stichtingen), as defined under Dutch law, and

no member of the Board of Management shall hold the position of

chairman of another one-tier board or the position of chairman of

another supervisory board. No member of the Supervisory Board shall

hold more than five Non-Executive Directorships at such companies or

foundations, with a position as chairman counting for two. During the

financial year 2025 all members of the Board of Management and the

Supervisory Board complied with the limitations described in this

paragraph.

General Meeting of Shareholders

Meetings

The Annual General Meeting of Shareholders shall be held no later

than six months after the end of the financial year. The agenda for the

meeting typically includes: an advisory vote on the Remuneration

Report; discussion of the Annual Report; the adoption of the financial

statements; policy on additions to reserves and dividends; any proposed

dividends or other distributions; discharge of the members of the Board

of Management and the Supervisory Board; and any other matters

proposed by the Supervisory Board, the Board of Management or

shareholders in accordance with Dutch law and the Articles of

Association.

Shareholders’ meetings are convened by public notice via the Philips

website, and registered shareholders are notified by letter or by

electronic means of communication at least 42 days prior to the day of

the relevant meeting. Shareholders who wish to exercise the rights

attached to their shares with respect to a shareholders’ meeting are

required to register for such meeting. Shareholders may attend a

meeting in person, vote by proxy (via an independent third party) or

grant a power of attorney to a third party to attend the meeting and

vote on their behalf. Details on registration for meetings, attendance

and proxy voting will be included in the notice convening the relevant

meeting.

Pursuant to Dutch law, the record date for the exercise of voting rights

and rights relating to shareholders’ meetings is set at the 28th day prior

to the day of the relevant meeting. Shareholders registered on such

date are entitled to attend the meeting and to exercise the other

shareholder rights (at the relevant meeting) notwithstanding any

subsequent sale of their shares after the record date.

In accordance with the Articles of Association and Dutch law, requests

from shareholders for items to be included on the agenda will

generally be honored, subject to the company’s rights to refuse to

include the requested agenda item under Dutch law, provided that

such requests are made in writing at least 60 days before a General

Meeting of Shareholders to the Board of Management and the

Supervisory Board by shareholders representing at least 1% of the

company’s outstanding capital or, according to the official price list of

Euronext Amsterdam, representing a value of at least EUR 50 million.

Written requests may be submitted electronically and shall comply with

the procedure stipulated by the Board of Management, which is posted

on the Philips website.

Pursuant to Dutch law, shareholders requesting an item to be included

on the agenda of a meeting have an obligation to disclose their full

economic interest (i.e., long position and short position). Philips has the

obligation to publish such disclosures on our website.

Main powers of the General Meeting of Shareholders

The powers are:

•to appoint, suspend and dismiss members of the Board of

Management and the Supervisory Board

•to adopt remuneration policies for the Board of Management and

the Supervisory Board, to determine the remuneration of the

individual members of the Supervisory Board and to approve long-

term incentive (equity-based) plans for the Board of Management

•to adopt the annual accounts, to declare dividends and to discharge

the Board of Management and the Supervisory Board from any

liability with respect to the performance of their respective duties for

the previous financial year

•to appoint the company’s external auditor

•to adopt amendments to the Articles of Association and proposals to

dissolve or liquidate the company

•to issue shares or rights to shares

•to restrict or exclude pre-emptive rights of shareholders and to

repurchase or cancel outstanding shares

•in accordance with Dutch law, to approve decisions of the Board of

Management that are so far-reaching that they would greatly

change the identity or nature of the company or the business

We apply principle 4.1 of the Dutch Corporate Governance Code within

the framework of the Articles of Association and Dutch law and in the

manner described in this Corporate governance report. All issued and

outstanding shares carry voting rights and each share confers the right

to cast one vote in a shareholders’ meeting. Pursuant to Dutch law, no

votes may be cast at a General Meeting of Shareholders with respect to

shares that are held by Philips. Furthermore, there are no special

statutory rights attached to the shares of the company, and no

restrictions on the voting rights of the company’s shares exist. Subject

to certain exceptions provided by Dutch law and/or the Articles of

Association, resolutions of the General Meeting of Shareholders are

passed by an absolute majority of votes cast and do not require a

quorum.

Share capital: issue and repurchase of (rights to) shares

The authorized share capital of the company amounts to EUR 800

million, divided into 2 billion common shares with a nominal value of

20 eurocents each and 2 billion preference shares, also with a nominal


	53

value of 20 eurocents each. On December 31, 2025, the issued share

capital amounted to EUR 192,584,026.40 divided into 962,920,132

common shares and no preference shares. All shares are fully paid-up.

There are currently no limitations, either under Dutch law or the

Articles of Association, to the transfer of the common shares.

Only Euroclear shares are traded on Euronext Amsterdam. Only New

York Registry Shares are traded on the New York Stock Exchange.

Pursuant to article 10:138(2) of the Dutch Civil Code, the laws of the

State of New York are applicable to the proprietary regime with

respect to the New York Registry Shares, which proprietary regime

includes the requirements for a transfer of, or the creation of an in rem

right in, such New York Registry Shares. Euroclear shares and New York

Registry Shares may be exchanged for each other.

As per December 31, 2025, approximately 93% of the common shares

were held through the system of Euroclear Nederland (Euroclear

shares) and approximately 7% of the common shares were represented

by New York Registry Shares issued in the name of approximately 731

holders of record. The latter include Cede & Co. Cede & Co acts as

nominee for The Depository Trust Company, which holds the shares

(indirectly) for individual investors as beneficiaries. Deutsche Bank Trust

Company Americas is Philips’ New York transfer agent, registrar and

dividend disbursing agent. Since certain shares are held by brokers and

other nominees, these numbers may not be representative of the actual

number of US beneficial holders or the number of New York Registry

Shares beneficially held by US residents.

At the 2025 Annual General Meeting of Shareholders, it was resolved

to authorize the Board of Management, subject to the approval of the

Supervisory Board, to issue shares or to grant rights to acquire shares,

as well as to restrict or exclude the pre-emption right accruing to

shareholders for a period of 18 months. This authorization is limited to

a maximum of 10% of the number of shares issued as of May 8, 2025.

In addition, at the 2025 Annual General Meeting of Shareholders, it

was resolved to authorize the Board of Management, for a period of 18

months and subject to the approval of the Supervisory Board, to

acquire shares in Philips within the limits of the Articles of Association

and within a certain price range. The maximum number of shares

Philips may hold will not exceed 10% of the issued share capital as of

May 8, 2025. The number of shares may be increased by 10% of the

issued capital as of that same date in connection with the execution of

share repurchase programs for capital reduction programs.

The Philips integrated operating model

Our operating model is designed to enable us to deliver on our

purpose, driving impact and creating value for our stakeholders. And to

do so responsibly and sustainably, ensuring patient safety, quality,

compliance and integrity. The model is intended to promote

accountability and agility, based on the following fundamentals:

•We serve our customers and consumers with patient safety and

quality at the core of everything we do.

•Our Business Units are in the lead and accountable for value creation

through their value streams.

•Our Regions and Functions enable value stream execution.

•Our leaders and teams are empowered to prioritize and allocate

their resources for impact.

Our operating model integrates five organizational elements. We

ensure alignment of the elements to deliver on our strategic objectives,

with clear accountability to drive flawless execution.

•Strategy

•Structure & Governance

•People & Culture

•Performance Management

•Policies, Processes, Systems & Data

More information on our strategic focus can be found in Strategic

focus.

Structure and governance

In order to meet the needs of patients, customers and consumers, our

empowered Business Units are supported by the Regions and Functions.

Business Units, Businesses and segments

Our Business Units are in the lead, accountable for value creation

through their value streams. Our Business Unit leaders have full

accountability for meeting customer needs and their end-to-end P&L,

including patient safety and quality and supply chain performance.

Business Units are broken down into business categories, where

relevant.

The Businesses are lean, and their leaders ensure consistent alignment

among the Business Units’ strategies and goals. They also execute

performance management toward the Business Units, including target

setting.

Our segment leaders ensure strategic execution and focus cross-

Business, and they are held accountable by the Board of Management

for the results of their underlying Businesses/Business Units. The three

segments are Diagnosis & Treatment, Connected Care, and Personal

Health, as also disclosed in our external reporting.

Regions

We are organized in three Regions: North America, Greater China and

International Region (the latter consisting of Europe and Growth

areas). The Regions’ primary accountability is to manage customer

intimacy, build and maintain relationships, and cultivate understanding

of their needs, as well as carry out (strategic) account management,

service delivery, and indirect partner management. They are also

accountable for government relations and for providing the local

infrastructure needed to support Philips’ presence in a country (license

to operate).

Functions

Our Functions’ core objective is to drive excellence (for reasons of skill,

scope and scale) across the organization. Functions deliver cost-

effective services, ensure legal and regulatory requirements are met,

and propose enterprise policies, standards, guidance and infrastructure,

as well as build and share capabilities and expertise.

Performance management

We set ambitious targets and closely manage performance through a

disciplined and focused operating cadence. Our performance

management system is based on an annual planning cycle, in which we

translate our vision and strategy into objectives and plans. The cycle

starts with strategic planning, where we define our long-term

ambitions, both financial and non-financial, and set our long-term


	54

priorities. Each year, Philips’ strategic plan is translated into an annual

operating plan, underpinned with Business Unit, Regional and

Functional plans. Detailed plans to achieve the company’s targets are

cascaded into the organization and, ultimately, people’s personal

objectives, making clear what performance and behaviors are expected

from them.

Policies, processes, systems and data

Our framework of policies, processes, systems and data principles

applies throughout the organization. It allows our Business Units

flexibility to adapt to specific requirements in order to meet specific

Business Unit needs.

Enterprise-wide policies provide high-level mandatory rules that apply

to all Philips employees. All enterprise-wide policies are maintained

through a standard process and approved by the Board of

Management. Function leaders can set more specific policies and

standards within their mandate.

Philips’ processes are captured in our process framework, where we

manage end-to-end connections and define the critical process

elements (including the ‘what’ and ‘how’, roles and responsibilities,

systems and data, and compliance requirements). The process

framework provides the foundation for our management systems,

including quality, environmental, and health and safety, to ensure a

compliant approach for processes, systems, data and competencies for a

specific management area.

Patient safety, quality and regulatory and the

Medical Office

Enabling the delivery of patient-centric, safe, and high-quality care –

the essence of patient safety and quality – is foundational to Philips’

purpose. The Patient Safety and Quality organization brings together

the quality and regulatory affairs as one unified team in close

coordination with the Medical Office. This team is positioned to foster

the quality culture and implement the capabilities, processes, and tools

required for operating in the highly regulated healthcare technology

industry. This structured approach promotes non-conformance

management, high standards of product quality, and compliance. The

Chief Patient Safety and Quality Officer is a member of the Philips

Executive Committee and reports directly to the Chief Executive Officer.

Our processes are designed to address specific, potentially negative

impacts to patients, customers and consumers. They include:

•maintaining effective Quality Management Systems (QMSs)

•tracking Corrective and Preventive Action (CAPA) and complaint

management performance, and supporting those who are

accountable for the performance and reporting results (ultimately to

the Board of Management)

•performing external audits for compliance and standards

certification

•performing internal QMS audits

•having quarterly reviews by the Quality & Regulatory Committee of

the Supervisory Board

As part of our CAPA approach, a centralized system collects, manages,

addresses and stores complaints and other feedback from customers.

Teams in all Businesses, Regions, and Functions foster a quality culture

and mindset, where all employees are encouraged to speak up and

share ideas for improving the safety and efficacy of our products. In

September 2025, Philips launched the Blue Heart Series, which included

videos aimed at reinforcing our shared commitment to compliance,

promoting the SpeakUp program, and fostering patient safety and

quality as part of our overall culture. Employees reflected on how these

elements, in particular patient safety and quality, are a personal

commitment and obligation. We also continued to strengthen the

patient safety and quality performance review meetings with each

Business individually and in the aggregate. We set patient safety and

quality key performance indicators for the company in 2026, and

quality performance metrics are part of the remuneration of all Philips

executives. Additionally, every Philips employee has a patient safety

and quality goal as part of annual people performance management.

Quality

We strive to continuously raise our performance to deliver safe and

high-quality products, services, and solutions, which are compliant with

quality and safety standards and all applicable laws. We have

undertaken a top-to-bottom review and renewal of our systems and

processes in collaboration with global regulatory agencies, and these

efforts continue. In 2025, we continued to simplify how we work and

improve accountability and ownership, and further strengthened our

engineering capabilities for product development in areas such as

quality systems engineering, reliability and software design.

We further reduced the number of QMSs in which we operate and

continued our investment in systems, capabilities and training to

reduce complexity and improve execution effectiveness.

FDA regulatory actions

Our commitment to patient safety and quality remains our highest

priority and is embedded in our corporate strategy. This commitment

includes engagement with global regulatory bodies, including the US

Food and Drug Administration (FDA). In 2025, we hosted 10 FDA

inspections, and six resulted in zero observations. The remaining four

resulted in a total of 14 observations. We are addressing regulatory

enforcement actions, including one formal warning letter and ongoing

recalls of our medical devices. In 2025, we addressed two Class I and 38

Class II recalls.

Philips Group

US FDA regulatory actions


Patient Safety and Quality	2025	2024	2023
Total Class I Recalls	2	5	6
Total Class II Recalls	38	31	40
Warning letters issued (FDA)	1	2	0


	55

In early 2025, the FDA conducted intensive inspections of nine of our

facilities. Three of these inspections led to observations relating to

documentation, processes and procedures. These relate to Philips

Ultrasound facilities in the US, and a Philips site in the Netherlands that

manufactures two products for the Enterprise Informatics business. The

observations materialized in a warning letter. Philips submitted a

response to the agency in accordance with regulatory requirements,

and we are determined to resolve these issues to the full satisfaction of

the FDA with the needs of patients and clinicians central to our focus.

We are committed to continuously improving our documentation,

processes and procedures in close collaboration with all relevant global

regulators.

Regulatory Affairs

Regulatory Affairs, with representation on the leadership team of each

Business and Region, further strengthened internal governance and

requirements for engagements with national regulatory authorities,

such as the FDA, European Medicines Agency (EMA), China's National

Medical Products Administration, notified bodies, and national

competent authorities in the EU.

As Philips is a global business in a dynamic regulatory environment,

Regulatory Affairs bolsters our compliance with evolving regulations

related to innovations in areas such as AI, healthcare informatics, and

software design. Sought as strategic partners, the Regulatory Affairs

team participated in international consensus standards groups

alongside regulators and engaged with international regulators as

invited experts and speakers at the International Medical Device

Regulators Forum, Global Harmonization Working Party, and other

meetings. Regulatory Affairs is working with the National Institutes of

Health in the US to establish ethical applications of AI in medical

devices.

Medical Office

The Medical Office focuses on supporting our Businesses; navigating

the intricacies of addressing patients’ and customers’ unmet needs

across a variety of ecosystems; and helping teams develop solutions

that are safe, effective, and relevant for patients and healthcare

providers.

The Medical Office is a global team of medical and scientific experts

working within and across Businesses and is led by the Chief Medical

Officer, who reports directly to the Chief Executive Officer.

The team is responsible for the design, generation, and sharing of

clinical and economic evidence to show the value of our innovations in

terms of enhancing the patient and care provider experience,

improving patient outcomes, and increasing healthcare system

productivity. The team collaborates with healthcare providers, and

medical and scientific communities, as well as with private healthcare

payers, governments and policy makers to expand access to, and ensure

widespread use of, our innovations.

In 2025, we expanded the Philips Medical Office, further enhancing our

own expertise and adding clinical partnership and public-private

partnership expertise, to help accelerate innovation and business

growth. We continued with the Philips Safety Board as a cross-

functional forum, led by the Philips Medical Office, to provide

independent expert advice to guide and support the Businesses on pre-

and post-market product safety and risk evaluations.

The team continued advocacy and investment to combat non-

communicable diseases, including cardiovascular disease and stroke, as

well as to promote radiation safety, medical device testing, and

improved access to physician and staff training, among others. The

health economics team continued to contribute economic evidence to

support innovation and expand access to high-quality care.

General Business Principles (GBP)

While pursuing our business objectives, we aim to be a responsible

partner in society, acting with integrity towards our employees,

customers, patients, business partners and shareholders, as well as the

wider community in which we operate. To that end, our GBP – part of

the Philips operating model – and their underlying policies incorporate

and represent the fundamental principles by which all Philips

Businesses and employees around the globe must abide. They set the

minimum standard for our business conduct as a health technology

company, for our individual employees and for our subsidiaries, and

Philips rigorously enforces compliance. Our GBP also serve as a

reference for the business conduct we expect from all our business

partners. The GBP and underlying policies, including the Finance Code

of Ethics and Procurement Code of Ethics, are published on the

company website at www.philips.com/gbp.

The GBP (updated in 2024) include legal developments and input from

stakeholders, including internal Functions (e.g., Group Sustainability,

People, Legal). The Universal Declaration of Human Rights, the UN

Convention against Corruption and other standards served as a

reference. The GBP include principles of doing business with integrity

at work, integrity in the market, and professional integrity outside

work. They set our integrity standard on inside information, aiming to

prevent trading on or improper disclosure of non-public, price-sensitive

information related to Philips securities or securities of companies that

Philips is seeking to acquire. More specifically, Philips has adopted rules

of conduct, governing the purchase, sale and other dispositions of

Philips securities, that are designed to promote compliance with

applicable insider trading and other market abuse laws, rules and

regulations (in particular the EU Market Abuse Regulation) and

applicable listing standards. The rules of conduct which apply to all

employees, the members of the Board of Management and the

Supervisory Board of Royal Philips. The GBP also include principles on

conducting business with honesty and integrity, and they explicitly

prohibit corrupt practices, acts of bribery and facilitation payments.

More detailed guidance is included in the Anti-Bribery, Anti-Corruption

and Anti-Money Laundering Policy, which is explicitly referenced in and

forms an integral part of the GBP.

The GBP are referenced and included in labor contracts and business

partner agreements. Translations of the GBP are available in 30

languages, allowing almost every employee to read the GBP in their

native language. Detailed underlying policies, manuals, training, and

tools are in place to give employees practical guidance on how to apply

and uphold the GBP in their daily work environment. Each year,

employees reconfirm their commitment to the code of conduct after

completing their GBP e-learning, and there is an additional annual

signed commitment for executives. A similar signed commitment is in

place for finance and procurement staff for their respective codes of

conduct. In 2025, the Supervisory Board was also trained on the GBP

through the Blue Heart Series, focusing on patient safety, quality and

integrity.


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The Executive Committee is responsible for the effective deployment of

the GBP and for promoting a culture of compliance and ethics. At least

twice a year, the Executive Committee and Audit Committee of the

Supervisory Board are informed on relevant GBP metrics, cases, trends

and learnings. Furthermore, at least two times a year, our Regions

convene market compliance committees dealing with GBP-related

matters in the local context. They are also responsible for the design

and execution of localized compliance plans that are tailored to their

risks and organizational set-up, and regularly review the relevant

compliance metrics for their respective markets through dashboards

delivered by the legal compliance monitoring team. The GBP program

office, together with a worldwide network of GBP compliance officers,

supports the implementation of GBP initiatives.

As part of our continual effort to raise GBP awareness and foster

dialogue throughout the organization, each year a global GBP

communications and training plan is deployed, including structured

dialogues led by managers where patient safety, quality, integrity and

speaking up are discussed. This year’s Blue Heart Series aimed at

reinforcing a culture of dialogue using ethical dilemma case studies

that are relevant to our workforce. Almost 97% of our assigned

employees completed their yearly GBP e-learning. All Functions at risk

(including those with customer-facing roles, such as sales and

marketing, clinical and technical consultants and employees that

provide customer-facing training) also receive, via tailored case studies,

annual training. The training includes content on anti-bribery and anti-

corruption practices and healthcare compliance.

The GBP monitoring and reporting program, part of our internal

control framework, measures implementation of our GBP. In addition,

we continue to expand the capabilities of our legal compliance

monitoring team, serving our Business stakeholders as well as our

compliance networks with actionable data, thus further improving our

internal control framework.

The Philips SpeakUp program, and its underlying policies and

procedures, supports the GBP and aligns with relevant legislation on

whistleblowing (including but not limited to Directive (EU) 2019/1937)

to ensure reporters are protected from (attempted) retaliation.

SpeakUp ensures standardized reporting and enables employees and

third parties to escalate concerns 24/7. Concerns raised through the

SpeakUp program are registered consistently in a single database

hosted outside of Philips servers to ensure confidentiality and security

of identity and information. Further details on how Philips ensures the

protection of reporters of potential GBP violations, and ensures an

independent and impartial review of concerns, can be found in the

Philips SpeakUp Policy. Encouraging people to speak up through the

available channels if they have a concern will continue to be a

cornerstone of our GBP training, communications and awareness

campaigns.

GBP compliance officers and SpeakUp investigators receive training in

line with the Philips SpeakUp Policy and investigation standards and

procedures. Specifically in 2025, we again focused on increasing

awareness about integrity and on emphasizing the importance of

speaking up, through the deployment of our biennial Business Integrity

Survey. Through this survey, more than 20,100 employees trusted us

with their views and opinions on integrity within Philips. The results

showed 91% of the respondents expressed the belief that we act with

integrity at Philips. To gain deeper insights into the results of the

Business Integrity Survey, we execute deep-dive initiatives among our

employees. The next Business Integrity Survey will be deployed in 2027,

along with an updated GBP e-learning.

In 2025, 992 concerns were reported via Philips SpeakUp and through

our network of GBP compliance officers. This represents an increase of

23% from the 805 concerns in the previous reporting period (2024).

This is a continuation of a year-on-year upward trend.

Through the Audit Committee of the Supervisory Board, there are also

procedures in place for the receipt, retention and treatment of

complaints specifically relating to accounting, internal accounting

controls, or auditing matters, enabling the confidential, anonymous

submission of complaints.

Philips has adopted a Code of Ethics (as defined in Item 16B of Form

20-F) that applies to Philps’ principal executive officer, principal

financial officer and principal accounting officer. The provisions of

Philips’ Code of Ethics are contained in the Finance Code of Ethics,

which is published on the company website at www.philips.com/gbp

under “Policies”.

In 2025, there were no material amendments to the provisions of the

Finance Code of Ethics. In 2025, Philips did not grant any waivers

(including implicit waivers) under the Finance Code of Ethics.

Cybersecurity

Failure to meet cybersecurity standards may cause patient harm,

negatively impact customer operations and their ability to provide

healthcare, or provide unauthorized access to patient records and

medical devices. Philips relies on information technology to operate

and manage its Businesses, as well as store and process confidential

data (relating to patients, employees, customers, intellectual property,

suppliers and other partners). For a discussion of cybersecurity risks

facing our business, see ‘Products and services may fail quality or

security standards, which could adversely affect patient safety or

customer operations’ and ‘Philips could be exposed to a significant

enterprise cybersecurity breach’ in section Operational risks. As of the

date of this Annual Report, we have not identified any breaches of

cybersecurity or other related risk threats that have materially affected

or are reasonably likely to materially affect our business.

The aim of our security risk management is to protect the

confidentiality, integrity, and availability of Philips’ products and

services, and it is part of the framework described in Risk management

and internal control. The Board of Management is responsible for the

design and management of Philips’ cybersecurity, which is ultimately

overseen by the Supervisory Board (and specifically its Audit

Committee). Quarterly reports on cybersecurity risks and incidents are

prepared by the IT Audit & Risk Committee (consisting of

representatives from the Group Security and Group IT Functions and

Philips Internal Audit) and submitted to the Board of Management and

the Supervisory Board. This reporting includes the overall risk level,

relevant changes in the risk environment, challenges in reaching and/or

maintaining current risk levels, and actual risk responses in the form of

actions and owners.

The Group Security Function maintains a security management

framework, which includes processes, requirements and controls for the


	57

assessment, identification and management of material risks from,

among others, cybersecurity threats. The framework, including

cybersecurity policies and procedures, is designed to promote

implementation of security requirements in all applicable processes,

information processing systems and infrastructure pertaining to our

products and services and our supporting and enabling Functions. The

framework includes risk, vulnerability and penetration assessments;

mandatory yearly security training for all employees (including phishing

simulations for all employees multiple times a year); and monitoring

and response activities for vulnerabilities identified in products, services

and infrastructure.

Our Head of Group Security, reporting to our Chief Financial Officer,

leads the Group Security Function in supporting the Board of

Management in evaluating and setting the security strategy, issuing

security policies, and evaluating the progress and effectiveness of the

deployment of our security management framework. Our Chief

Information Security Officer, reporting to our Head of Group Security,

has nearly 28 years of technology and information security

management experience in the industry, including prior roles with the

Dutch Government and multinationals in the consumer goods,

manufacturing, chemical and food processing industries, in various

roles ranging from chief information security officer to IT security

officer and security architect. Our Chief Information Security Officer is

informed of and monitors the management of cybersecurity incidents

through the Global Security Operations Center.

Group Security is also responsible for addressing security risks, including

monitoring cybersecurity threats and responding to cybersecurity

incidents. The Philips Global Security Operations Center is the hub for

the prevention, detection, mitigation and remediation of cybersecurity

incidents on global enterprise systems, supported by certain external

services and periodic/intermittent assessments. The severity and

materiality of incidents are assessed through a dedicated security

incident reporting process and, if necessary, incidents are escalated to

the major event team that may hand off to central crisis management

and (potentially) to the Philips Disclosure Committee, which assesses

the need for public disclosure of (material) incidents. When needed,

incidents are further escalated to Global Crisis Management.

Security controls are also part of our due diligence in case of mergers,

acquisitions and divestments. Furthermore, they are embedded in our

procurement and supplier management processes when engaging with

new suppliers and entering into new contracts, monitoring and

managing existing supplier relationships, and terminating any of these

dealings. These security controls include assessing existing security

certificates and assurances reports for the services in scope, validating

suppliers’ answers to security questionnaires in due diligence, and

ensuring that security schedules are part of the signed contracts.

Remuneration framework

Aligned with one of our key ESG commitments, the objectives of our

remuneration framework are to focus employees on pursuing our

purpose and delivering on our strategy, and to motivate them to create

superior, long-term stakeholder value. Thus, our remuneration

framework is designed to support our overall performance and our

commitment to drive progressive value creation through a strategy of

focused organic growth, scalable patient- and people-centric

innovation, and reliable execution.

We aim to attract, retain and motivate world-class talent by offering

market-competitive and fair compensation. We position ourselves

competitively against our peers through external benchmarking, and

we offer ranges that enable us to reward exceptional performance. We

also set fair and internally consistent pay levels by taking into account

internal relativities, and we are committed to equal pay and ensuring

that all employees receive at least a living wage.

Employee share ownership is stimulated through our employee share

purchase plan, to create alignment with shareholder value and to

encourage employees to act as stewards and ambassadors of the

company.

A part of remuneration of Philips executives is variable and linked to

achieving our strategic imperatives through the criteria and targets

included in the Annual and Long-Term Incentives. The achievement/

payout of the Annual Incentive is partly based on a financial element

(70% weighting), with financial performance metrics that are aligned

with the strategic priorities for the year. The non-financial element of

the Annual Incentive (30% weighting) is tied to individual people

performance management, measuring deliverables across core

priorities of patient safety and quality, customer experience, execution

excellence and simplification, and People Development and ESG

priorities. The achievement/vesting of LTI is also partly based (20%

weight) on ESG objectives, reflecting the importance of ESG and its

increasing relevance to our stakeholders (as a strategic matter and in

the context of our risk management), and to incentivize management’s

focus on our policy objective to deliver superior, long-term value to our

stakeholders, while acting responsibly towards our planet and society.

Annual Incentives and Long-Term Incentives paid to the members of

our Board of Management and other executives are subject to claw-

back provisions. These allow us to recoup variable remuneration in case

of (among others) violations of the Philips General Business Principles.

The remuneration and benefit arrangements applicable to the broader

executive and/or employee population in the Netherlands largely also

apply to the members of the Board of Management. The remuneration

of the individual members of the Board of Management is determined

by the Supervisory Board, taking into account the Remuneration Policy

for the Board of Management adopted by the General Meeting of

Shareholders in 2024. A description of the composition of the

remuneration paid and owed to the individual members of the Board

of Management (and the Supervisory Board) is included in the

Remuneration Report 2025.

Tax contribution

We fully acknowledge our societal role when it comes to paying taxes

in the geographies where value is created. We consider our tax

payments as an indirect contribution to the communities in which we

operate, and part of our social value creation, whilst not paying our

taxes might harm our reputation and our geopolitical position.

Our approach to tax sets the standard for our conduct, by which

individual employees, the company and its subsidiaries must abide. We

consider tax in the context of the broader society, inspired by our

stakeholder dialogues, human rights advocacy, international tax laws

and regulations, relevant codes of conduct, and global initiatives of the

Organization for Economic Cooperation and Development and the

United Nations.

1Compared to the 2015 baseline


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Our Chief Financial Officer annually reviews, evaluates, approves and,

where necessary, adjusts our approach to tax. Part of our approach is to

acknowledge the importance of transparency with respect to our tax

contributions.

Philips has a tax control framework that forms part of its standard set

of Internal Controls over Financial Reporting (ICFR). Philips' tax position

is therefore reflected in its financial statements and covered by the

Board of Management's report on ICFR. For more on the Board of

Management’s assessment of the effectiveness of ICFR, refer to Risk

management and internal control.

In 2025, Philips contributed to the communities where we operate

through taxes paid (e.g., corporate income tax) and taxes collected

(e.g., payroll tax). Philips’ total tax contribution in 2025, amounting to

EUR 3,337 million, is presented by tax type in the accompanying table.

For more details please refer to our 2025 Country Activity and Tax

Report, which has been published on our website in addition to, and

simultaneously with, the disclosures on tax included in this Annual

Report.

Philips Group

Total contribution per tax type in millions of EUR


	2025	2024
Corporate income tax paid	218	186
Customs duty	351	131
Value-added tax ¹	724	717
Payroll tax	2,001	2,154
Other taxes	44	76
Philips Group	3,337	3,263

1Includes VAT, GST and sales tax.

Philips supports and participates in transparency initiatives, such as the

Dow Jones Sustainability Index and the Tax Transparency Benchmark of

the Dutch Association of Investors for Sustainable Development

(VBDO).

For the third year in a row, Philips was named – among 51 Dutch

companies and 65 EU listed companies from Belgium, Denmark, France,

Germany, Italy, Spain, and Sweden – the winner of the VBDO Tax

Transparency Benchmark. In addition, Philips scored a top score (100

out of 100) in the Tax Strategy section of the 2025 Dow Jones

Sustainability Index.

Philips also endorses the ambitions expressed in the Tax Governance

Code published by the Dutch employers organization VNO-NCW. We

comply with the principles prescribed in the code, available at VNO-

NCW, and we have touched upon the elements of this code in our

Country Activity and Tax Report.

ESG governance

Our previous ESG commitments were operationalized by the underlying

business strategies, roadmaps, goals, targets and metrics, and that will be

the case for the 2030 Impact Ambitions. The Board of Management is

responsible for the design and management of our ambitions, and it

typically convenes the Group Sustainability team and (where relevant)

Business, Region or Function leaders four times per year on ESG matters.

During these meetings, the Board of Management defines Philips’ ESG

strategy, ambitions, programs, action plans and policies, as well as oversees

major transactions, monitors progress on ESG priorities, and takes

corrective action where needed. Progress on our social and environmental

performance is communicated internally and externally on our website on

a quarterly basis and at least annually to the Executive Committee and the

Supervisory Board. The oversight of the ESG dimensions, and their

integration into our overarching strategy, is a responsibility of the

Supervisory Board as a whole because of the significance of ESG matters.

While retaining this overall responsibility, the Supervisory Board is

supported by the Audit Committee, which meets quarterly to discuss

significant developments in impacts, risks and opportunities, developments

in sustainability reporting, and other relevant topics. Please refer to the

Supervisory Board report for the Supervisory Board members with specific

ESG and sustainability expertise, and the Supervisory Board's ESG-related

activities during the year. The Supervisory Board as a whole has sufficient

ESG and sustainability-related expertise relevant to the sector in which

Philips is operating, also considering the way we address impacts, risks and

opportunities with respect to the material topics identified through our

Double Materiality Assessment. Furthermore, both our Board of

Management and our Supervisory Board leverage all relevant expertise

through their direct access to the Group Sustainability team and (where

relevant) external experts.

Our 2030 Impact Ambitions

After our 2020-2025 Environmental Social Governance (ESG) program

ended in December 2025, we announced our 2030 Impact Ambitions as

an integral part of the next phase of Philips’ strategy. These ambitions

announced in February 2026 mark a step-up from our previous

commitments, and they underpin the company’s global strategy and

purpose to improve people’s health and well-being through

meaningful innovation while acting responsibly towards society and

the planet.

To help drive long-term value creation the ambitions have been

embedded in Business strategies, performance management and

incentives, and include roadmaps per Business. They bring an increase

in focus, simplification, measurability and accountability. Importantly,

the ambitions are aligned with globally recognized, science-based

frameworks, where available.

Ambitions for lives improved and carbon emission reductions (as part of

its Science Based Targets) have been carried over from the previous ESG

program.

Through our 2030 Impact Ambitions, we aim to:

Improve health and well-being

•2.5 billion lives improved, including 400 million in underserved

communities

•best place to work for our employees

•1.5 million supply chain workers with improved working conditions

Reduce absolute environmental impact

•90% reduction in Scope 1 and 2 CO2-e emissions and remain carbon

neutral in our own operations 1


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Risk appetite	Averse	Prudent	Balanced	Considerable	Seeking

Strategic e.g., macro-economics, geopolitics, informatics and AI, M&A, IP, ESG
Operational e.g., product safety and quality, supply chain, (cyber)security, people
Financial and reporting e.g., treasury and financing, tax, accounting
Compliance with our General Business Principles and regulations

Risk appetite

We have set different levels of risk appetite, ranging from an averse to

a seeking approach. The dark blue areas in the visual below indicate

the risk appetite per risk category (Strategic, Operational, Financial and

reporting and Compliance). For more detail on our risk appetite, refer

to Risk factors.

Key elements of our risk management framework

Philips approaches risk management and internal control (RMIC) as a

value-creating activity that is integral to innovation and

entrepreneurship. More specifically, the purpose of our risk

management is to identify and analyze the risks Philips faces in

executing its strategy and activities, to set the risk appetite, to take

appropriate risk responses, and to monitor the effectiveness of

responses. Our internal controls aim to maintain integrated

management control of our operations and reporting, and to

safeguard compliance with applicable laws and regulations. As such,

RMIC forms an integral part of our strategy-setting, business planning

and performance review cycles.

Key elements of the RMIC framework are our strategic plan; the Philips

integrated operating model; our business review cycle; the General

Business Principles (GBP) and supportive enterprise-wide policies and

culture framework; and (as further described below in this section) our

enterprise risk management governance and process standard and

internal controls over financial and non-financial reporting.

In alignment with and complementary to our risk management process

standard, our Functions and departments (such as Finance; Accounting,

Reporting and Internal Controls (ARICOps); Legal; Sustainability; Patient

Safety & Quality; Enterprise Operations & Services; Tax; and Group

Security) support the Executive Committee and management in specific

risk areas. These Functions maintain and deploy designated frameworks

to structurally manage specific risk areas. Philips Internal Audit executes

a risk-based audit plan. The Philips Control Framework (PCF) provides

an integral and summarized overview of our RMIC framework and

main risk management measures taken in response to the risk factors

described in this report.

Please refer to Risk factors for a description of the material risk factors

that we have identified in four main categories: strategic, operational,

compliance and financial and reporting.

It is noted that although our RMIC system is designed with the intent to

manage risks within our appetite, they cannot provide certainty that

this is being achieved. It is also noted that, in view of the inherent

practical limitations associated with any risk management and internal

control system, our RMIC framework has not provided and cannot

provide certainty that it has been or will be effective, nor can it

guarantee the realization of the operational and financial business

objectives, and prevent all misstatements, inaccuracies, errors, fraud or

non-compliances with rules and regulations. Certain risks remain

outside Philips’ direct control, as they depend on third parties or

external circumstances beyond our influence. We also note we may not

be successful in deploying some or all of our mitigating actions

effectively, and such actions may not achieve the anticipated effect.

Risk management governance

The Philips Risk Management Policy sets the high-level mandatory

governance and process that lie at the core of our enterprise risk

management: overall approach, governance, risk appetite and the risk

management process standard.

Management and oversight responsibilities apply to identifying,

analyzing and managing the risks Philips faces in executing its strategy

and activities, for setting the risk appetite of the company, and for the

design, implementation and maintenance of a fit-for-purpose RMIC

system. The system balances risk and opportunity in line with risk

appetite, including the monitoring of its effectiveness. The Executive

Committee, several experts, enterprise Functions and committees

support the Board of Management in the discharge of its

responsibilities.

The Executive Committee is tasked with the identification and

mitigation of material risks. It is supported by the Enterprise Risk

Management Support Team, consisting of experts on various categories

of risk, through regular analysis of the enterprise risk profile and

enhancement of the RMIC framework.


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Management across the company is first-line responsible for identifying

critical risks and implementing appropriate risk responses within their

areas of responsibility.

Functions, as a second line, support and challenge first-line

management to structurally manage specific risk areas. To ensure

clarity and alignment on the status of, and to make recommendations

on, key risk areas, these Functions have recurring items on the meeting

agenda of the Board of Management. The Board of Management

discusses the relevant topics with participation from relevant members

of the Executive Committee and other senior executives and subject

matter experts. Furthermore, dedicated reports on our key risk areas

are shared and discussed with the Supervisory Board and with the

external auditor.

Our Disclosure Committee seeks to ensure that the company

implements and maintains internal procedures for the timely collection,

evaluation, and disclosure of information potentially subject to public

disclosure under legal, regulatory and stock exchange requirements.

The Internal Audit Function, as a third line, has an independent role to

evaluate and improve the effectiveness of the organization's

governance, risk management and internal controls. Internal Audit

assesses the quality of risk management and controls through the

execution of a risk-based audit plan, as approved by the Board of

Management and the Audit Committee of the Supervisory Board. The

Board of Management and leadership from Businesses, Regions/Zones

and key Functions meet quarterly with Internal Audit in Audit & Risk

Committees to discuss strengths and weaknesses of risk management

and controls – as evaluated by internal auditors and by means of other

(self) assessments – and take corrective action where necessary.

At least once a year, the Supervisory Board discusses the general

strategy of the company, the main risks associated with its business

activities, as well as the results of the assessment by the Board of

Management and the Executive Committee of the structure and

operation of the systems of internal business controls and any

significant changes therein. The Audit Committee and the Quality &

Regulatory Committee of the Supervisory Board assist the full

Supervisory Board in fulfilling its risk management oversight

responsibilities. The Audit Committee reviews the quality of risk

management and controls, and the reported findings of internal and

external audits. The Quality & Regulatory Committee’s role particularly

relates to the compliance of the company’s products (including

software), services, and systems throughout their life cycle.

Enterprise risk management process

To develop a comprehensive overview of Philips’ risks, structured risk

assessments take place according to the Philips risk management

process standard. Our process standard distinguishes several stages that

are generally accepted, as it is based on the COSO framework

‘Enterprise Risk Management - Integrating with Strategy and

Performance’ and the ISO standard 31000 - Risk management.

Our enterprise risk management process furthermore includes the

following elements:

•At least once a year, senior management from Businesses, Zones/

Regions and key Functions perform a risk assessment as part of their

strategic plan update. Risk workshops are facilitated by Internal

Audit with senior management across the company to further

support these risk assessments. Twelve such risk workshops were held

in 2025.

•At least quarterly, senior management discusses and monitors the

risk profile and risk response effectiveness in its performance reviews

and during Audit & Risk Committees, which cover all Businesses,

Zones/Regions and selected Functions.

•During the quarterly Audit and Risk update session, the Board of

Management discusses developments in the enterprise risk profile

and management’s initiatives to improve risk responses.

•Each year the Executive Committee assesses the enterprise risk profile

as an integral part of its strategy review and the potential risk impact

versus risk appetite. The assessment also covers the effectiveness of

the enterprise risk management framework and potential

improvements thereto.

•Once a year, the updated risk profile and the enterprise risk

management framework, including the outcomes of the annual

Executive Committee risk workshop, are presented to the full

Supervisory Board. The underlying risks and response plans are

discussed at the end of the year with the Audit Committee of the

Supervisory Board.

We continuously seek to improve our RMIC framework. Measures taken

during 2025 to further strengthen it include:

•The enterprise policies and underlying policies and standards were

reviewed and updated.

•A working group was established to ensure readiness for the RMIC-

related best practices as introduced in the Dutch Corporate

Governance Code in 2025. Part of our preparations was a COSO-

based review of the PCF and an extension of its scope to support the

new statements.

•We improved the alignment of our risk and compliance dialogues

with business reviews.

•Further improvements were made in our governance and process,

system and data requirements in the Philips integrated operating

model.

•We strengthened our integrated Governance, Risk, and Compliance

(GRC) capabilities via upgrades to our integrated GRC tooling.

•Our regulatory landscape intelligence was further developed to

enhance foresight in, and internal communication on, upcoming

regulatory change.

•We improved our screening of business partner integrity and of

transactions to ensure Export Control compliance.


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•Improved master data facilitated sustainability reporting and several

other types of data automation, relating to (among others) VAT and

customs, and product regulations.

•We continued our analysis of global warming and weather scenarios

against the geographical footprint of our facilities as well as

suppliers’ base, in line with the recommendations of the Task Force

on Climate-Related Financial Disclosures.

Annual financial statements and external audit

The annual financial statements are drawn up by the Board of

Management and reviewed by the Supervisory Board upon the advice

of its Audit Committee, taking into account the report of the external

auditor. Upon approval by the Supervisory Board, the accounts are

signed by all members of both the Board of Management and the

Supervisory Board and are published together with the opinion of the

external auditor. The Board of Management is responsible, under the

supervision of the Supervisory Board, for the quality and completeness

of such publicly disclosed financial reports. The annual financial

statements are presented for discussion and adoption at the Annual

General Meeting of Shareholders, to be convened subsequently.

The external auditor is appointed by the General Meeting of

Shareholders in accordance with the Articles of Association. Philips’

current external auditor, PricewaterhouseCoopers Accountants N.V.

(PwC), an independent registered public accounting firm, was

appointed at the Annual General Meeting of Shareholders held on May

9, 2023, for a term of four years starting January 1, 2025. Information

regarding the change in external auditor and the appointment of PwC

was previously reported in the company’s Annual Report on Form 20-F

for the year ended December 31, 2024.

European and Dutch law requires the separation of audit and certain

non-audit services. The external auditor may only provide audit and

audit-related services and is prohibited from providing any other

services. This is reflected in the Auditor Policy, which is published on

the company’s website. The policy is also in line with (and in some ways

stricter than) applicable US rules, under which the appointed external

auditor must be independent from the company both in fact and

appearance.

The Auditor Policy specifies certain audit services and audit-related

services (also known as assurance services) that will or may be provided

by the external auditor, and includes rules for the pre-approval by the

Audit Committee of such services. Audit services must be pre-approved

on the basis of the annual audit services engagement agreed with the

external auditor. Proposed audit-related services may be pre-approved

at the beginning of the year by the Audit Committee (annual pre-

approval) or may be pre-approved during the year by the Audit

Committee with respect to a particular engagement (specific pre-

approval). The annual pre-approval is based on a detailed, itemized list

of services to be provided, which is designed to ensure that there is no

management discretion in determining whether a service has been

approved, and to ensure that the Audit Committee is informed of each

of the services it is pre-approving. Unless pre-approval with respect to a

specific service has been given at the beginning of the year, each

proposed service requires specific pre-approval during the year. Any

annually pre-approved services where the fee for the engagement is

expected to exceed pre-approved cost levels or budgeted amounts will

also require specific pre-approval. The term of any annual pre-approval

is 12 months from the date of the pre-approval unless the Audit

Committee states otherwise. During 2025, there were no services

provided to the company by the external auditor that were not pre-

approved by the Audit Committee.

Financial reporting and sustainability reporting

As part of its RMIC framework, Philips has implemented a standard set

of Internal Controls over Financial Reporting (ICFR). Philips has

designed its ICFR framework based on the COSO Internal Control-

Integrated Framework (2013). Together with Philips' established

accounting procedures, this standard control framework is designed to

provide reasonable assurance that assets are safeguarded, that the

books and records properly reflect transactions necessary to permit

preparation of financial statements, that policies and procedures are

carried out by qualified personnel, and that published financial

statements are properly prepared and do not contain any material

misstatements.

Since 2012, we have been engaging external auditors to issue reports

on our sustainability information. Originally, the sustainability

reporting and the audit thereof were referencing GRI Universal

Standards and Philips-specific criteria. This is the second year that the

sustainability statement included in our Annual Report has been

written to comply with disclosure requirements of the European

Sustainability Reporting Standards (ESRS), although the Corporate

Sustainability Reporting Directive ((EU) 2022/2464) has not been

implemented into Dutch law yet. To develop our controls for

sustainability reporting we are leveraging the established ICFR

framework and processes. Philips continued further development of an

Internal Control over Sustainability Reporting (ICSR) framework and

included sustainability-related risks in our risk management processes.

New sustainability-related controls continue to be deployed for internal

and external sustainability reporting.

A structured monitoring process is deployed company-wide to assess,

document, review and monitor compliance within ICFR and (as it

continues to evolve and mature) ICSR. Management of each relevant

reporting unit is responsible for assessing the effectiveness of controls

applicable to their business, risk profile, and operations. Where

required by the governance framework, this includes completing an in-

control statement or equivalent certification process. Deficiencies noted

in the design and/or operating effectiveness of ICFR that were not

remediated at year-end are reviewed by the Board of Management

and the outcome is reported to the Supervisory Board.


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Letter from the Chairman of the Supervisory Board

Dear stakeholder,

Philips has much to look forward to, but for the moment, I would like

to look back. Look back at the past three years of Philips’ plan to create

value with sustainable impact. And reflect on the evolution of a

company that has, in recent years, taken its place among the leaders in

the healthcare industry across the globe.

Philips has built on its strengths in innovation, to develop and expand a

portfolio of patient- and people-centric innovations in hardware,

software, AI and services, supporting care in the hospital and in the

home. It has also made significant progress on its execution priorities –

patient safety and quality, supply chain resilience, and operational

simplification.

This period has not been without its challenges: not only a competitive

healthtech landscape but also the Respironics recall and litigation in

the US. And of course there is the volatile geopolitical environment,

particularly in the past year. Philips has a strong presence in both the

US and China, two places where local-first policies can have a large

impact on supply chains and our manufacturing footprint. And conflicts

and political climates make logistics difficult in other locations. That’s

why Philips has supported global trade in a multilateral framework that

allows operating as efficiently as possible. On the Supervisory Board,

we have witnessed how the company's leadership has been carefully

monitoring these challenges, and actively addressing them through

collaboration and advocacy, as well as strategic planning.

In this challenging climate, Philips has delivered on its plan to create

value out of its portfolio of leadership positions by driving operational

improvements and scaling innovation leadership. As we close the book

on the three-year plan, it is notable that Philips:

•Developed a stronger leadership team with deeper medtech

experience

•Established a culture shift to ‘impact with care’

•Reduced its operational carbon footprint compared to the baseline

2020

•Made significant progress on simplification to increase efficiency

•Announced innovations in AI-enabled technology and acquired

SpectraWAVE, helping deliver better care for more people

Learn more in Strategy u and Business u

The Supervisory Board sees accompanying improvements in the

financial results. For example, Philips’ sales and order intake grew

consistently, and the company achieved margin expansion throughout

the year, reflecting strong demand for its innovations and operational

discipline.

Read more in Financial performance u

As explained in more detail in the Supervisory Board report, our focus

in 2025 was on patient safety and quality, performance and outlook,

value acceleration and succession planning. Of note is that the

Remuneration Committee of the Supervisory Board has been

monitoring the target levels for the Long-Term Incentive for the Board

of Management. More broadly, the Remuneration Committee intends

to evaluate the Remuneration Policy for the Board of Management in

the course of 2026, which may result in proposals to revise the

Remuneration Policy.

At the Annual General Meeting of Shareholders in May 2025, the

Supervisory Board took the opportunity to thank David Pyott for his

commitment and service to the board for the past 10 years, and we

welcomed our new member, Bob White.

Now, looking to the future.

The Supervisory Board remains fully committed to its responsibilities to

supervise and advise management in leading the company toward a

future of progressive value creation with sustainable impact. Together

with my fellow members of the board, I express my full confidence in

CEO Roy Jakobs and the rest of the Philips Executive Committee. We

will propose Roy’s reappointment as our CEO at the upcoming Annual

General Meeting of Shareholders 2026. Under his leadership, the

company enters the next phase of its strategy, aiming to deliver on the

2026-2028 outlook and pursuing the 2030 Impact Ambitions. Together

we can build upon the company’s strong foundation, and the

Supervisory Board looks forward to providing continued oversight as

Philips delivers on its purpose of improving people’s health and well-

being through meaningful innovation.

Thank you to our shareholders and key partners for your support.

Feike Sijbesma

Chairman of the Supervisory Board


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Members of the

Supervisory Board

In the two-tier corporate structure under Dutch law, the Supervisory

Board is a separate body that is independent of the Board of

Management and the company. The Supervisory Board supervises the

policies, management and general affairs of Philips, and assists the

Board of Management and the Executive Committee with advice where

required or requested. Please also refer to Supervisory Board within the

company's Corporate governance report.

Feike Sijbesma 2 3

Born 1959, Dutch

Chairman of the Supervisory Board since May 2021

Chairman of the Corporate Governance and Nomination &

Selection Committee

Member of the Supervisory Board since 2020; second term

expires in 2028

Former CEO of Koninklijke DSM N.V. (Honorary Chairman), non-

executive Director of Unilever N.V., member of the Supervisory Board

of Dutch Central Bank and of Utrecht University. Currently Co-Chair of

the Global Climate Adaptation Center and Member of the Board of

Trustees of the World Economic Forum.

1 Member of the Audit Committee

2 Member of the Remuneration Committee

3 Member of the Corporate Governance and Nomination & Selection Committee

4 Member of the Quality & Regulatory Committee

Chua Sock Koong 1

Born 1957, Singaporean

Member of the Supervisory Board since 2021; second term

expires in 2029

Former Group CEO of Singapore Telecommunications Limited and

currently member of the Board of Directors of Prudential plc, Bharti

Airtel Limited, Bharti Telecom Limited and Ayala Corporation.

Member of the Council of Presidential Advisors of Singapore, the

Securities Industry Council and the Dubai Financial Services Authority,

Deputy Chairman of the Public Service Commission of Singapore.

Liz Doherty 1

Born 1957, British/Irish

Chairwoman of the Audit Committee

Member of the Supervisory Board since 2019; second term

expires in 2027

Member of the Supervisory Board and Chairwoman of the audit

committee of Novartis AG and of Corbion N.V. Member of the

advisory committee of Freya Holdco S.à r.l. Fellow of the Chartered

Institute of Management Accountants. Former CFO and board

member of Reckitt Benckiser Group PLC, former CFO of Brambles Ltd,

former non-executive director and audit committee member at

Delhaize Group, Nokia Corp., SABMiller PLC and Dunelm Group PLC.

Former non-executive board member of the UK Ministry of Justice and

of Her Majesty’s Courts and Tribunals Service (UK) and advisor to

GBfoods SA and Affinity Petcare SA (subsidiaries of Agrolimen SA).

Marc Harrison 4

Born 1964, American

Member of the Supervisory Board since 2018; second term

expires in 2026

Former President and Chief Executive Officer of Intermountain

Healthcare, former Chief of International Business Development for

Cleveland Clinic, former Chief Executive Officer of Cleveland Clinic

Abu Dhabi, and co-Founder and former CEO of HATCo (Health

Assurance Transformation Company) at General Catalyst. Currently

Chair of TowerBrook Healthcare Institute, Senior Advisor of

TowerBrook Capital Partners and Strategic Advisor of General

Catalyst.

Peter Löscher 1 4

Born 1957, Austrian

Member of the Supervisory Board since 2020; second term

expires in 2028

Former President and CEO of Siemens AG, President of Global Human

Health and Member of the Executive Board of Merck & Co., President

and CEO of GE Healthcare Bio-Sciences and member of GE’s Corporate

Executive Council, CEO and Delegate of the Board of Directors of

Renova Management AG. Currently member of the Board of Directors

of Telefónica S.A. and CaixaBank S.A. and Chairman of the

Supervisory Board of Telefónica Deutschland Holding AG, Non-

Executive Director of Thyssen-Bornemisza Group AG.


	67

Indra Nooyi 3

Born 1955, American

Member of the Supervisory Board since 2021; second term

expires in 2029

Former CFO, President, Chairman and CEO of PepsiCo. Currently

member of the Board of Directors and Chair of the Audit Committee

of Amazon, Inc. and member of the Board of Directors of Honeywell

Inc. Member of the Board of Trustees of the Memorial Sloan Kettering

Hospital, trustee of the National Gallery of Art.

Sanjay Poonen 2

Born 1969, American

Member of the Supervisory Board since 2022; first term expires in

2026

Former Chief Operating Officer at VMware and President at SAP.

Currently CEO and President of Cohesity and member of the Board of

Directors of Snyk.

1 Member of the Audit Committee

2 Member of the Remuneration Committee

3 Member of the Corporate Governance and Nomination & Selection Committee

4 Member of the Quality & Regulatory Committee

For a current overview of the Supervisory Board members, please refer to

our website.

Benoît Ribadeau-Dumas 3

Born 1972, French

Member of the Supervisory Board since 2024; first term expires in

2028

Former deputy CEO at SCOR, former Chief of Staff to the French Prime

Minister, former CEO of Aerosystems, member of the Management

Board of Zodiac Aerospace, former SEVP CGG Veritas and former CEO

of Thales Underwater Systems. Currently Chief Companies Officer at

Exor, member of the Board of Directors of Stellantis, Institut Merieux,

Merieux Nutrisciences, bioMerieux, TagEnergy and Welltec. Member

of the Board of Directors of Galileo Global Education.

Paul Stoffels 3 4

Born 1962, Belgian

Vice-Chairman and Secretary

Chairman of the Quality & Regulatory Committee

Member of the Supervisory Board since 2018; second term

expires in 2026

Former worldwide Chair of Pharmaceuticals at Johnson & Johnson and

Chief Scientific Officer & member of the Executive Committee at

Johnson & Johnson, CEO and Chairman of the Board of Directors of

Galapagos NV, CEO of Virco and Chairman of Tibotec.

Herna Verhagen 1 2

Born 1966, Dutch

Chairwoman of the Remuneration Committee

Member of the Supervisory Board since 2022; first term expires in

2026

Former CEO of PostNL, member of the Supervisory Board of Het

Concertgebouw N.V. and member of the Advisory Board of

Goldschmeding Foundation. Currently member of the Supervisory

Board of ING Groep N.V.

Bob White 4

Born 1962, American

Member of the Supervisory Board since 2025; first term expires in

2029

Former Executive Vice President and President at Medtronic plc,

Senior Vice President at Chemdex Corporation, Accelrys Inc.,

SourceOne Healthcare Technologies, Inc., GE Healthcare Technologies

Inc. (leading the Diagnostic Imaging business) and Covidien plc

(President for Emerging Markets and President for Respiratory and

Monitoring Solutions). He also formerly held board positions as non-

executive member of the public board of Smith & Nephew plc.

Currently Director, Representative Executive Officer, President and

Chief Executive Officer of Olympus Corporation.

* Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.


	68

Supervisory Board report

The Supervisory Board supervises, advises and challenges the Board of

Management in performing its management tasks as well as setting

and executing the strategy of the Philips Group with a focus on long-

term and sustainable value acceleration and securing its business

leadership positions. The members of the Supervisory Board act in the

interests of Philips, its Businesses and its stakeholders in accordance

with good governance practices. This report includes a description of

the Supervisory Board’s activities during the financial year 2025 and

other relevant information on its composition and its functioning.

2025 focus areas and activities

In 2025, the Supervisory Board’s focus was on patient safety and

quality, the company’s performance and outlook, the long-term value

acceleration strategy (including the strategy for 2026-2028), and

succession planning. The related near-term and longer-term actions

were extensively reviewed and discussed with management, against

the geopolitical background and the external environment in which

the company operates, including tariffs, and the impact that the macro-

economic outlook has on the company’s performance.

Patient safety and quality – Being a material risk area for the

company, patient safety and quality across all Businesses remained a

recurring agenda item for each of the (regular) meetings. The

Supervisory Board challenged management to remain focused on the

safety of patients as the main priority and driver, despite operational

and supply challenges. In that context, the Supervisory Board reviewed

the process framework for product design and production controls in

the company (and other mitigation of quality-related risks and

challenges) and monitored progress on resolving product quality issues.

This included the execution of the company-wide program to improve

and foster a culture, behaviors and a mindset that put patient safety

and quality first. The Supervisory Board also focused on the ongoing

engagements with the US Food & Drug Administration (FDA) and other

competent authorities globally. A particular area of attention has been

the site inspections at various company sites, including the preparations

for and outcomes thereof. Though no material commercial impact is

expected from the warning letter that the company received from the

FDA in September 2025, it underscores the importance of the

company’s comprehensive change program that has made steady and

transparent progress over the past several years.

The Supervisory Board was regularly updated on the management of

the consequences of the Respironics recall. This oversight included,

among other things: the finalization of the master personal injury

settlement and the medical monitoring claims in the US, including the

funding thereof; progress under the agreement with the US

Department of Justice (DOJ) and FDA on the Respironics consent

decree; the continued execution of the economic loss class action

settlement; the ongoing criminal and civil investigation by the DOJ’s

Consumer Protection Branch and Civil Fraud Section; the investigation

by more than 30 US state Attorneys General into possible violations of

state deceptive practices statutes; as well as the securities claims in the

US and the Netherlands, the ongoing SEC investigation, and the

enforcement proceedings initiated by the Therapeutic Goods

Administration (TGA) in Australia. The Supervisory Board expresses

confidence in these developments and acknowledges the significant

time and effort that management is devoting to resolving them.

Performance and outlook – The Supervisory Board reviewed and

tracked progress on 2025 performance, including relevant key

performance indicators, such as comparable order intake, comparable

sales growth*, Adjusted EBITA* and free cash flow*. The company

ended 2025 with strong order growth and sales, robust margin

expansion despite tariffs, solid cash generation, exiting the year with a

robust balance sheet. The Supervisory Board engaged with

management on the quarterly performance and outlook, particularly

on phasing and predictability, and acceleration of sales, the quality of

earnings, margin improvement, and risk management, including the

company’s risk appetite.

Value acceleration – In 2025, the Supervisory Board reviewed and

tracked progress on the execution of the 2023-2025 strategy. The

company’s strategic focus remains on organic growth and scalable

innovation with improved execution as key value driver, as well as the

main priorities for each of the segments, Regions and Functions.

In multiple deep-dive sessions, the Supervisory Board and management

dedicated substantial time to review the company’s plan to drive

profitable growth to deliver sustainable value including the outlook for

2026-2028. The strategy emphasizes innovation, execution

improvement, expansion in the segments and regions, and leveraging

AI platforms. In this context, the financial ambitions were considered

together with the execution risks, market uncertainties, and the plans

to offset growth delays and tariff impacts. Seeking reassurance that the

company is capable of delivering on this plan, the Supervisory Board

met with several senior leaders in key roles essential to the 2026-2028

plan, also providing them with support and encouragement.

As an integral part of the next phase of Philips’ strategy, the

Supervisory Board reviewed the 2030 Impact Ambitions, which mark an

evolution from the company’s previous ESG commitments. The plan,

including our 2026-2028 outlook and the 2030 Impact Ambitions, was

announced at Capital Markets Day in February 2026.

The Supervisory Board’s strategic oversight included the company’s

agreement to acquire SpectraWAVE, as it expands the company’s next-

generation coronary intravascular imaging and physiological

assessment capabilities with AI.

Succession planning – The Supervisory Board spent time in 2025

considering its composition, as well as the composition of the Board of

Management and the Executive Committee. Attracting candidates with

expertise in (consumer) healthtech and AI continues to be part of the

Supervisory Board’s succession planning. This report includes

information on the composition of the Supervisory Board.


	69

The Supervisory Board is very pleased with the re-appointment of

Marnix van Ginneken as a member of the Board of Management, the

re-appointments of Indra Nooyi and Chua Sock Koong as members of

the Supervisory Board, and the appointment of Bob White as member

of the Supervisory Board (succeeding David Pyott), all at the 2025 AGM.

The Supervisory Board is grateful to Mr Pyott for his long-term service

and leadership. Refer to Report of the Corporate Governance and

Nomination & Selection Committee for more information.

Other key matters that were reviewed and/or discussed during one or

more meetings in the course of 2025 include:

•geopolitical developments – particularly the tariffs imposed by

various administrations, as well as the Russia-Ukraine war and the

situations in Israel and the Middle East – and their impact on Philips’

business and on Philips employees, and the (potential) implications

on the continuity of Philips’ business in these countries

•the deterioration in market developments in the China consumer

and professional health businesses

•enterprise risk management, including updates on and

improvements to the relevant processes; the outcome of the annual

risk assessment dialogue with the Executive Committee; and an

update of the top risks faced by the Philips Group, including the

possible impact of such risks, as well as control and mitigation

measures (refer to Risks related to our strategy)

•capital allocation, including the dividend policy and pay-out and

M&A, and specifically the company’s flexibility under its capital

structure and credit ratings to pay future dividends and to fund

capital investments, including share repurchases and other corporate

finance initiatives

•the company’s liquidity position and leverage, including the

measures taken to strengthen it considering the financial

performance of the company. These measures included the issuance

of two EUR 500 million fixed rate notes under the existing Euro

Medium Term Note program in May 2025 to be used for general

corporate purposes as well as for the repayment of 2026 debt

maturities

•the effectiveness of the design and operation of the company’s risk

management and internal control framework, including Internal

Control over Financial Reporting

•the market environment for global M&A activities that offered

limited opportunities in 2025, driven by growing macro-economic

challenges, inflationary pressure and elevated interest rates, as well

as the company’s selective strategic M&A approach going forward

and the (business) performance of companies previously acquired by

the company

•the geopolitical tax changes, including the One Big Beautiful Bill Act,

the Base Erosion Anti-Abuse Tax, tariffs, and the Global Minimum

Tax, as well as the new public country-by-country reporting that

enhances tax transparency reporting

•Philips’ Environmental, Social and Governance (ESG) approach,

including an update on progress made with respect to its 2025 ESG

commitments (launched in 2020), and the key ESG programs

•the appointment of PricewaterhouseCoopers Accountants N.V. (PwC)

as the external provider of assurance on the company’s sustainability

statements for the years 2025-2028

•evaluation of the Board of Management and the Executive

Committee and its members, based on the achievement of specific

group and individual targets approved by the Supervisory Board at

the beginning of the year, as well as the assessment of the main

findings and conclusions of last year’s evaluation and the related

follow-up

•regular review of the annual management commitments, including

the 2025 key performance indicator dashboard, tracking the

performance of the 2025 indicators for the Executive Committee

versus target

•the company’s People strategy and priorities, employee engagement

and retention of employees, review of talent management,

leadership and talent development, leadership culture, and equal

opportunities for all employees

•the company’s innovation and AI strategy and the related roadmap

of each business

•the overall Philips IT landscape and related strategy, including IT

simplification and experience improvement

•the approach to information security, focused on protecting the

company, its research and development, and its production, as well

as its products, software and services

•significant civil litigation claims against, and public investigations

into, Philips

•the agenda for the 2025 AGM (held on May 8, 2025) and the

proposed agenda for the upcoming 2026 AGM (to be held on May 8,

2026).

The Supervisory Board reviewed Philips’ annual and interim financial

statements, including information related to sustainability, prior to

publication.

Supervisory Board meetings and attendance

In 2025, the members of the Supervisory Board convened for seven

regular meetings and one extraordinary meeting. Moreover, the

Supervisory Board members collectively and individually interacted with

members of the Board of Management, with members of the Executive

Committee, and with senior management outside the formal

Supervisory Board meetings. The Chairman of the Supervisory Board

and the CEO frequently had bilateral discussions about the company’s

progress on a variety of matters.

The Supervisory Board meetings held in 2025 were generally very well

attended. The Committees of the Supervisory Board also convened

regularly (see the separate reports of the Committees in the following

pages), and the Committees reported back on their activities to the full

Supervisory Board. In addition, the Supervisory Board and Committees

held private meetings. The members of the Supervisory Board

concluded that they devoted sufficient time to engage (proactively, if

the circumstances so required) in their supervisory responsibilities.

In March 2025, one Supervisory Board member visited the Healthcare

Information and Management Systems Society event in Las Vegas, US,

and one Supervisory Board member visited the European Congress of

Radiology in Vienna, Austria. In April 2025, two Supervisory Board

members, and in July 2025, one Supervisory Board member visited the

company’s offices in Pittsburgh, US. In September 2025, one Supervisory

Board member visited Philips’ Image Guided Therapy-Devices

manufacturing site in Plymouth, US, and two Supervisory Board

members visited the Monitoring site in Cambridge, US. In December

2025, one Supervisory Board member visited the Radiological Society of

North America annual meeting in Chicago, US.


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Supervisory Board: composition, diversity and self-

evaluation

The Supervisory Board is a separate corporate body that is independent

of the Board of Management and the company. The Supervisory Board

currently consists of 11 members, and it retained critical knowledge

and capabilities with the re-appointment of Indra Nooyi and Chua Sock

Koong and the appointment of Bob White for a term of four years as

per the end of the 2025 AGM.

Anticipating the expiry of the second terms of appointment of Paul

Stoffels and Marc Harrison, and the expiry of the first term of

appointment of Herna Verhagen and Sanjay Poonen, at the end of the

2026 AGM, the Supervisory Board evaluated the qualifications of

Supervisory Board members whose terms are set to conclude, as well as

potential successors, with the aim of maintaining a suitable mix of skills

and expertise in the medical, medtech, consumer, and AI domains on

the Supervisory Board. The resulting proposals will be included in the

agenda for the AGM 2026.

The selection of candidates for appointments is always based on merit.

The Supervisory Board also attaches value to diversity and has adopted

a Diversity Policy to promote diversity at board level. For more

information, please refer to section Other Board-related matters in the

company’s Corporate governance report. The composition of the

Supervisory Board furthermore follows its profile as included in the

Rules of Procedure of the Supervisory Board. The profile aims for an

appropriate combination of knowledge and experience among the

members of the Supervisory Board, encompassing general

management, international business, ESG and sustainability, (consumer)

health and medical technology, patient safety, quality and regulatory,

product development, finance and accounting, human resources,

manufacturing and supply chain, information technology and digital,

marketing, and government and public affairs, all in relation to the

global character of Philips’ Businesses. The Supervisory Board also aims

to have members with different nationalities and (cultural)

backgrounds, working experiences or otherwise diverse qualities, as

well as one or more members who have held an executive or similar

position in business or society no more than five years ago. The

composition of the Supervisory Board shall furthermore be in

accordance with the Dutch Corporate Governance Code best practice

provisions on independence, and each member of the Supervisory

Board shall be capable of assessing the broad outline of the overall

policy of the company. The size of the Supervisory Board may vary as it

considers appropriate to support its profile.

Any (re-)appointments of members of the Supervisory Board must meet

the gender quota, as required by Dutch law, requiring that, of the

Supervisory Board members, at least one-third are women and at least

one-third are men. Currently, the statutory quota is met, as out of 11

Supervisory Board members, four members are female and seven

members are male.

In 2025, each member of the Supervisory Board completed a

questionnaire to verify compliance with the applicable corporate

governance rules and the Rules of Procedure of the Supervisory Board.

The outcome of this survey was satisfactory. The 2025 self-evaluation

process for the Supervisory Board and its Committees included

submitting relevant questionnaires and aggregating and reporting on

the results. The members of the Board of Management also provided

their input. The questionnaires covered various topics, such as

composition, size, skills and experience, geographical coverage and

diversity of the Supervisory Board, the effectiveness of the Supervisory

Board’s oversight of various aspects such as strategy, business

performance, risk management, succession planning and people, and

engagement with management. In addition, the questionnaire

reflected on the company’s strategy, innovation, digital and AI

developments, understanding of the market and stakeholder

landscape, and continuing education. All members of the Supervisory

Board were invited to share recommendations to improve the

Supervisory Board’s functioning and ways of working going forward.

Furthermore, the performance of the Chairman, of the other

Supervisory Board members individually, and of the Supervisory Board’s

Committees were evaluated separately.

The reports on the evaluation were discussed in a meeting of the

Supervisory Board and resulted in a collection of positive points to

maintain, as well as priorities for further improvement. The results of

the self-evaluation indicated that the Supervisory Board is a well-

functioning team of appropriate size that benefits from varying

expertise, background and international geographical representation.

Progress has been made in all domains, in particular in terms of

stakeholder understanding, risk and safety, oversight and the proximity

to top talent and succession. The Supervisory Board members assessed

they have struck the right balance between supporting and challenging

management on the company's focus areas, which include setting the

foundation and aspirations for the future, as well as execution of the

value acceleration strategy, and follow-through on patient safety and

quality, culture, and senior executive succession planning. The

Chairman of the Supervisory Board had several meetings with

individual members of the Supervisory Board to discuss ways to further

enhance the functioning of the Supervisory Board and its individual

members going forward. The Chairman also discussed the evaluation of

his own functioning with the Vice-Chairman.


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Supervisory Board composition

Feike Sijbesma

Paul Stoffels

Chua Sock

Koong

Liz Doherty

Marc Harrison

Peter Löscher

Indra Nooyi

Sanjay Poonen

David Pyott

Herna Verhagen

Benoît

Ribadeau-Dumas

Bob White

Year of birth

1959

1962

1957

1964

1957

1955

1969

1953

1966

1972

1962

Gender

Male

Female

Male

Female

Male

Female

Male

Nationality

Dutch

Belgian

Singaporean

British/Irish

American

Austrian

American

British/American

Dutch

French

American

Initial appointment date

2020

2018

2021

2019

2018

2020

2021

2022

2015

2022

2024

2025

Date of (last) (re-)appointment

2024

2022

2025

2023

2022

2024

2025

n/a

2023

n/a

End of current term

2028

2026

2029

2027

2026

2028

2029

2026

2025

2026

2028

2029

Independent

Committee memberships ¹

RC & CGNSC

RC & CGNSC &

QRC*

QRC

AC & QRC

CGNSC

QRC

AC & RC

CGNSC

QRC

Attendance at Supervisory Board

meetings

8/8 (100%)

7/8 (87,5%)

8/8 (100%)

4/8 (50%)**

8/8 (100%)

6/8 (75%)**

Attendance at Committee

meetings

RC 3/3 CGNSC

3/3 (100%)

RC 1/3*

(33,33%) CGNSC

3/3 QRC 5/5

(100%)

AC 7/7 (100%)

QRC 5/5 (100%)

AC 7/7 (100%)

QRC 4/5 (80%)

CGNSC 3/3

(100%)

RC 3/3 (100%)

QRC 2/5** (40%)

RC 3/3 (100%)

AC 7/7 (100%)

CGNSC (3/3)

(100%)

QRC 5/5 (100%)

General management

International business

ESG and sustainability

(Consumer) health and medical

technology

Patient safety, quality and

regulatory and product

development

Finance and accounting

Human resources

Manufacturing and supply chain

Information technology and

digital

Marketing

Governmental and public affairs

1CGNSC: Corporate Governance and Nomination & Selection Committee; AC: Audit Committee; RC: Remuneration Committee; QRC: Quality & Regulatory Committee

* Mr Stoffels joined the QRC as per February 1, 2025, and left the RC as per June 1, 2025.

** Mr Pyott left the Supervisory Board as of the end of the AGM 2025 on May 8, 2025. Mr White joined the Supervisory Board as an observer as of February 20, 2025, and was appointed on May 8, 2025.


	72

Supervisory Board Committees

While retaining overall responsibility, the Supervisory Board has

assigned certain tasks to the three long-standing Committees, also

referred to in the Dutch Corporate Governance Code: the Corporate

Governance and Nomination & Selection Committee, the Remuneration

Committee and the Audit Committee. In 2015, the Supervisory Board

also established the Quality & Regulatory Committee. The separate

reports of these Committees are part of this Supervisory Board report

and are published below. The function of all of the Supervisory Board’s

Committees is to prepare the decision-making of the full Supervisory

Board, and the Committees currently have no independent or assigned

powers. The full Supervisory Board retains overall responsibility for the

activities of its Committees.

In light of the significance of the ESG dimensions to Philips and their

integration into the company’s overarching strategy, the Supervisory

Board as a whole is conducting oversight and advising executive

management on the company’s ESG approach. Also refer to ESG

governance.

Financial statements and sustainability report 2025

The financial statements of the company for 2025, as presented by the

Board of Management, have been audited by PricewaterhouseCoopers

Accountants N.V. (PwC), the independent external auditor appointed

by the General Meeting of Shareholders. The Supervisory Board has

approved these financial statements, and all individual members of the

Supervisory Board have signed these documents (as did the members of

the Board of Management). The Supervisory Board has also approved

the company’s sustainability statement for 2025, on which assurance

was provided by PwC as well.

Finally, the members of the Supervisory Board would like to express

their thanks to the members of the Board of Management, the

Executive Committee and all other employees for their continued

contributions throughout 2025.

Report of the Corporate Governance and

Nomination & Selection Committee

The Corporate Governance and Nomination & Selection Committee is

chaired by Feike Sijbesma. Its other members are Paul Stoffels, Indra

Nooyi and Benoît Ribadeau-Dumas. The Committee is responsible for

the review of the overall corporate governance, and the selection

criteria and appointment procedures for the Supervisory Board, Board

of Management, the Executive Committee, and certain other key

management positions. The Committee held three meetings in 2025.

The Committee devoted time to the appointment or reappointment of

candidates to fill current and future vacancies on the Supervisory

Board. Following those consultations, it prepared decisions and advised

the Supervisory Board, which resulted in the re-appointments of Indra

Nooyi and Chua Sock Koong and the appointment of Bob White as

members of the Supervisory Board at the 2025 Annual General Meeting

of Shareholders (AGM).

Under its responsibility for the selection criteria and appointment

procedures for Philips’ senior management, the Committee reviewed

the functioning of the Board of Management and its individual

members, the Executive Committee succession plans, and emergency

candidates for key roles in the company. The review and evaluation

consist of periodic performance review meetings with the individual

members of the Board of Management and the Executive Committee,

and evaluation of the results of these meetings by the Committee. The

main findings and conclusions from these reviews were also shared

with the Supervisory Board and the Remuneration Committee and

were considered in the performance evaluation of the Board of

Management and Executive Committee members and the selection of

succession candidates. Reference is made to the 2025 Annual Incentive,

setting out the performance review of the Board of Management

members by the Remuneration Committee.

The Committee devoted time in 2025 to the selection and/or

appointment of candidates to fill other current and future vacancies on

the Board of Management and the Executive Committee. This resulted

in the re-appointment of Marnix van Ginneken as a member of the

Board of Management. The Committee’s work furthermore resulted in

the appointment, effective January 1, 2025, of two new members of

the Executive Committee. Özlem Fidanci succeeded Edwin Paalvast as

Chief of International Region. Jie Xue was appointed Chief Business

Leader Precision Diagnosis, which had been under the extended

leadership of Bert van Meurs (Chief Business Leader Image Guided

Therapy). Bert and Jie became jointly responsible for the Diagnosis &

Treatment segment.

With respect to corporate governance matters, the Committee

discussed recent developments in the Netherlands, and ESG reporting

and due diligence developments in Europe. Finally, the Committee

reviewed the Charter of the Corporate Governance and Nomination &

Selection Committee and concluded it remains appropriate.

With respect to the productivity initiatives and other actions to improve

the company’s performance (including the unfortunate but necessary

reduction of roles), the Committee was updated by management on

the impact on employees and the phased deployment approach, and

members reviewed the simplification of the organization.

Finally, the Committee reviewed and updated the Corporate

Governance and Nomination & Selection Committee Charter.

Report of the Remuneration Committee

The Remuneration Committee is chaired by Herna Verhagen, who

succeeded Paul Stoffels on June 1, 2025. Its other members are Feike

Sijbesma and Sanjay Poonen. The Committee is responsible for

preparing decisions of the Supervisory Board on the remuneration of

individual members of the Board of Management and the Executive

Committee, as well as the policies governing this remuneration. The

annual cycle of the Remuneration Committee enables it to have an

effective decision-making process supporting the determination, review

and implementation of the Remuneration Policy. The Committee met

three times in 2025.

In performing its duties and responsibilities, the Remuneration

Committee is assisted by an external consultant and in-house

remuneration experts. For a full overview of the responsibilities of the

Committee, please refer to the Charter of the Remuneration

Committee, as set forth in Chapter 3 of the Rules of Procedure of the

Supervisory Board (which are published on the company’s website).


	73

The Remuneration Report 2024 was submitted for an advisory vote at

the AGM 2025 and the Remuneration Committee is thankful for the

shareholders’ favorable vote by a 98.86% majority.

In 2025, the Committee devoted time to determining appropriate

Annual Incentive target levels for the Board of Management. As

explained in the Letter from the Remuneration Committee Chair

accompanying the Remuneration Report 2025, the Remuneration

Committee advised the Supervisory Board to maintain the Annual

Incentive target levels for performance year 2025, and to increase the

Annual Incentive target as of 2026 to 120% (from 100%) for the CEO

and to 100% (from 80%) for the CFO and CLO, respectively, enabling to

reward at market median level. The Committee also confirmed the

2026 non-financial Annual Incentive objectives and Board of

Management goal-setting.

Furthermore, the Remuneration Committee prepared an update of the

services agreement (overeenkomst van opdracht) of the Chief Executive

Officer, as it is typically published on the company’s website ahead of a

(binding) proposal for re-appointment at the AGM.

Finally, the Remuneration Committee initiated stakeholder

engagement to discuss a proposal for new Supervisory Board fees, as

expected to be submitted for approval at the upcoming AGM 2026. The

engagement also included preliminary discussions to evaluate the

Remuneration Policy for the Board of Management in the course of

2026.

Please refer to the Remuneration Report 2025, in which the Supervisory

Board provides a comprehensive overview, as prepared by the

Remuneration Committee, of the remuneration paid and owed to the

individual members of the Board of Management and the Supervisory

Board in the year 2025.

Finally, the Committee reviewed and updated the Remuneration

Committee Charter.

Report of the Audit Committee

The Audit Committee is chaired by Liz Doherty. Its other members are

Peter Löscher, Chua Sock Koong and Herna Verhagen. The Committee

assists the Supervisory Board in fulfilling its supervisory responsibilities,

including ensuring the integrity of the company’s financial statements,

reviewing the company’s internal controls and overseeing the

enterprise risk management process.

In 2025, the Committee held five regular meetings and two

extraordinary meetings, which were also attended by the Chairman of

the Supervisory Board. The Board of Management, Head of Internal

Audit, Chief Accounting Officer and the external auditors of EY

Accountants B.V. (EY) and PricewaterhouseCoopers Accountants N.V.

(PwC) were also invited and attended all meetings. In accordance with

the resolution at the 2023 AGM, PwC succeeded EY as the auditor of

the company’s financial statements. The Committee expresses its

gratitude for EY’s longstanding service, and thanks both EY and PwC

for their cooperation in facilitating a seamless transition. The

Committee recommended and the Supervisory Board approved the

appointment of PwC as assurance provider with respect to the

company’s sustainability statements for the years 2025-2028, in line

with PwC’s appointment as auditor of the company’s financial

statements.

The Committee met separately in private sessions with the CEO, CFO,

Head of Internal Audit and external auditor after the regular quarterly

meeting of the Committee. Prior to the Committee meetings, the Audit

Committee chair met one-on-one with the Group Treasurer as well as

with each member of management who regularly attends the Audit

Committee meetings, and with the external auditor.

The following overview highlights matters that were reviewed and/or

discussed during Committee meetings in the course of, or with respect

to, the financial year 2025:

•The company’s 2025 annual and interim financial statements and

non-financial information (prior to publication), the restructuring

provision, the FCO provisions, the goodwill impairment tests, deferred

tax assets and legal matters. In each of the regular quarterly meetings

of the Committee, the Committee reviewed the draft of the press

release on the company’s annual or interim financial statements.

•Matters relating to accounting policies, financial risks, reporting, and

compliance with accounting standards. Key accounting judgments

were discussed in-depth, and treatments were challenged, as were

quality of earnings. Compliance with statutory and legal

requirements and regulations, particularly in the financial domain,

was also reviewed. Furthermore, the Committee reviewed the

goodwill impairment tests performed in the fourth quarter, risk

management, tax matters, legal compliance, and developments in

(regulatory) investigations and legal proceedings and the related

provisions, if any. Important ﬁndings, Philips’ top and emerging

areas of risk (including the internal auditor’s reporting thereon, and

the Chief ESG & Legal Officer’s review of litigation and other claims

as well as material investigations), and follow-up actions and

appropriate measures were examined thoroughly.

•The geopolitical tax changes, including the One Big Beautiful Bill Act,

Base Erosion Anti-Abuse Tax, tariffs, and Global Minimum Tax, as

well as the new public country-by-country reporting enhancing tax

transparency reporting.

•The company’s policy on business controls, legal compliance and the

General Business Principles (including deployment). The Committee

reviewed, discussed and monitored closely the company’s internal

control certification processes, and in particular, compliance with

section 404 of the US Sarbanes-Oxley Act and its requirements

regarding assessment, review and monitoring of internal controls. It

also discussed on a regular basis the developments in, and findings

relating to, conduct resulting from investigations into alleged

violations of the General Business Principles and, if required, any

measures taken. More generally, the Committee reviewed the

company’s Risk Management and Internal Control (RMIC) framework

and the assessment of the Board of Management regarding the


	74

effectiveness of the internal risk management and control systems

with respect to the operational, compliance and reporting risks.

•The company’s cash ﬂow generation, liquidity and financing

headroom, and its ability under its capital structure and credit ratings

to pay dividends and to fund capital investments, including share

repurchases and other corporate finance initiatives.

•Specific finance topics, capital spending and the company’s debt

financing strategy (including the issuance of two EUR 500 million

fixed rate notes under the existing Euro Medium Term Note program

in May 2025 to be used for general corporate purposes as well as for

the repayment of 2026 debt maturities).

•A post-investment review of projects in the areas of information

technology, Research & Development, real estate, operations and

restructuring, and assessment of the actual spend and timing of such

projects against the original budget and timing.

•The quarterly Internal Audit reports in which the Head of Internal

Audit highlighted key findings of internal audits and fraud

investigations, as well as the Advisory reports, Risk Workshops, and

Quarterly Closed Action Check Sample completed by the Internal

Audit Function in the previous quarter. The Committee discussed the

adequacy of the remediation actions agreed with management and

accountabilities for executing on these actions. In each meeting the

Head of Internal Audit also presented the audit schedule for the

upcoming quarter. The Committee also reviewed and approved of

the revised Internal Audit charter, annual audit plan and budget,

audit scope, and its coverage in relation to the scope of the external

audit, as well as the stafﬁng, independence, performance and

organizational structure of the Internal Audit Function.

•Review and approval of the revised Philips Auditor Policy.

•The proposed 2025 external audit scope, including key audit areas,

approach and fees, and non-audit services provided by the external

auditor in conformity with the Philips Auditor Policy. It also reviewed

and challenged the independence of the external auditor and its

engagement partners. For information on the fees of the Group

auditor, please refer to Audit fees in the note Income from

operations. The Committee reviewed the execution of the external

auditor transition plan.

•The company’s structure and system for compliance with export

controls and international sanctions.

•A review of the quarterly reports on sustainability-related

developments, including the EU Corporate Sustainability Reporting

Directive and EU Sustainability Reporting Standards, the company's

progress on the implementation thereof, and the impact thereof on

reporting by the Philips Group. The Committee also discussed the

level of assurance to be provided in respect of the sustainability

statement by the external assurance provider.

•Philips’ information security risk approach (including cybersecurity),

at an enterprise level as well as at product and service levels,

comprising an update on the mitigation of cybersecurity risks and

actions taken to comply with relevant laws and regulations,

including the Cybersecurity Risk Management, Strategy, Governance,

and Incident Disclosure requirements issued by the US Securities and

Exchange Commission (SEC).

In February 2026, the Committee reviewed, together with the other

members of the Supervisory Board, the draft of the Annual Report 2025,

as well as the key audit matters and the critical audit matters identified

by the external auditor in relation to the 2025 financial statements

included in the Annual Report 2025 and the Annual Report on Form

20-F, respectively. In February 2026, the Committee also reviewed the

draft of the company’s 2025 Country Activity and Tax Report.

During each regular quarterly Audit Committee meeting, the

Committee reviewed the quarterly report from the external auditor, in

which the auditor set forth its ﬁndings and attention points during the

relevant period. The annual audit report was circulated to the full

Supervisory Board, and planned actions to address the items raised

were discussed with management in the subsequent Audit Committee

meetings as well as in private sessions with management.

Finally, the Committee reviewed and updated the Audit Committee

Charter.

Report of the Quality & Regulatory Committee

The Quality & Regulatory Committee was established in view of the

importance of patient safety and the quality of the company’s

products, systems, services and solutions. The Committee provides

broad oversight of compliance with the regulatory requirements that

govern the development, manufacturing, marketing and servicing of

the company’s products, systems, services and solutions. The Committee

assists the Supervisory Board in fulfilling its oversight responsibilities in

these areas. The Committee is chaired by Paul Stoffels, who replaced

David Pyott on May 8, 2025, after the AGM. Its members are Marc

Harrison, Peter Löscher and Bob White.

In 2025, the Committee held five meetings. Quality-related matters were

a regular item on the agenda of the Supervisory Board meeting. The

CEO, the Chief ESG & Legal Officer, the Chief Operations Officer, the

Chief Patient Safety & Quality Officer and the Chief Medical Officer

were present during these meetings. The following overview indicates

some of the matters that were discussed during meetings in the course

of 2025.

•Review of progress on the company’s Quality & Regulatory strategy.

The Committee focused on the strategy to ensure the safety and

efficacy of the company’s products and solutions for patients and

customers. In that context, the Committee reviewed the status and

progress of the company’s Patient Safety and Quality program, which

includes enhancement of the engagement with regulators, ensuring

sustainability and predictable performance, and the Patient Safety &

Quality Culture Intervention. Specific attention was given to the

Quality Management System (QMS) transformation to drive process

simplification in a tailored manner, and Product Quality Reviews

(PQRs) to ensure the installed base meets patient safety and design

control standards, as well as compliance requirements. For more

information, please refer to Patient safety, quality and regulatory

and the Medical Office.

•The Philips Respironics voluntary recall notification related to the

sound abatement foam in certain sleep and respiratory care products

(announced in June 2021) in the company’s Sleep & Respiratory Care

Business. The Committee reviewed aspects of this issue, such as the

program governance to enable effective execution, ongoing

engagements with the FDA, among others, the investigation

initiated by the DOJ to which Philips Respironics is subject, and the


	75

execution of the agreed consent decree. The Committee reviewed

the engagements with other regulatory authorities globally.

Furthermore, the Committee reviewed and discussed with

management the engagement with and communication efforts to

patients, physicians, customers and durable medical equipment

providers; the testing program and its outcomes; and health hazard

evaluations. The Committee also discussed the level of related field

action provisions, as set out in more detail in the report of the Audit

Committee (see previous section).

•Review of other quality issues (other than the Philips Respironics

voluntary recall), including site inspections and warning letters, and

the progress made with resolving and closing such other issues.

•Review of progress in the transformation of the company’s Patient

Safety & Quality Function, aimed at further strengthening expertise

and capabilities within the Function, including upscaling Patient

Safety & Quality talent at mid-level leadership positions.

•Review of the progress made with global initiatives around the

transformation, standardization and simplification of the company’s

structure and organizational processes relating to QMSs (the

reduction of the current QMSs to one quarter versus the baseline),

management systems, regulated manufacturing sites (legal

manufacturers), Corrective and Preventive Action (CAPA) and

complaint management.

•Review of the implementation of a Patient Safety & Quality IT

roadmap and adoption of the IT and data enhancements.

•The status and outcome of quality- and regulatory-related

investigations and inspections by regulatory authorities and notified

bodies globally across the organization. Management also regularly

provided the Committee with an overview of upcoming scheduled

inspections across company sites by the FDA, as well as other

regulatory authorities and notified bodies, and the actions taken to

prepare for such inspections.

•Review of the product risk per Business based on a product

assessment approach and remediation across the company, including

findings resulting from internal audits.

•Review of the 2025 dashboard of quality and regulatory key

performance indicators, showing the trend of performance. The

Committee also reviewed the key performance indicators for 2026.


	76

Remuneration Report 2025

Letter from the Remuneration Committee Chair

Dear stakeholder,

On behalf of the Remuneration Committee, I am pleased to present the

2025 Remuneration Report, providing an overview of the remuneration

paid and owed to the individual members of the Board of

Management and the Supervisory Board.

The 2024 Remuneration Report was approved at the Annual General

Meeting of Shareholders (AGM) held in May 2025, with a majority of

94.21% of the votes cast. We did not receive any substantive comments

on this report. For transparency purposes we have added the voting

outcome percentages for the Remuneration Policies and Remuneration

Report, as well as a visualization in the Board of Management

remuneration overview.

Company performance in 2025 and incentive plan realization

Over the past year, the geopolitical environment remained volatile.

Philips has significant presence in both the US and China, where local-

first politics continue to influence global supply chains and our

manufacturing footprint. In several other regions, conflicts and political

tensions added further complexity to logistics and operations. Despite

these headwinds, Philips’ sales and order intake grew consistently

during 2025. The company achieved margin expansion throughout the

year, reflecting strong demand for its innovations and operational

discipline.

In this challenging climate, Philips has delivered on its plan to create

value out of its portfolio of leadership positions by driving operational

improvements and scaling innovation leadership. Significant progress

was made on its execution priorities including patient safety and

quality.

For the awards granted under our Long-Term Incentive (LTI) plan in

2023, the company performance resulted in a realization above target

for the relative Total Shareholder Return (TSR) and adjusted Earnings

Per Share (EPS) metrics. For the sustainability objectives there was also

an above target performance. With respect to the financial metrics of

the 2025 Annual Incentive, performance was at target for the Adjusted

EBITA metric, and above target for the free cash flow and comparable

sales growth metrics. Please refer to the subsequent pages of the

report for more details.

Other matters prepared by the Remuneration Committee

During the AGM 2025, our Chief ESG & Legal Officer Marnix van

Ginneken was re-appointed, adding a four-year term to his

membership of the Board of Management that started in 2017. The

company and Mr Van Ginneken entered into a new services agreement

that was prepared by the Remuneration Committee and published on

the company’s website.

Looking ahead

As included in the 2024 Remuneration Policy for the Board of

Management, the Annual Incentive target levels could be increased as

of 2025. The Supervisory Board noted that in 2024, the company

delivered on its commitments regarding profitability, free cash flow

and ESG. Nevertheless, the Supervisory Board decided to maintain the

current target levels for another year. Now, at the close of the

company's three-year plan 2023-2025, the Supervisory Board assessed

the progress that was made on the company's performance trajectory.

The Supervisory Board notes that the company delivered on its

commitments also in 2025. Therefore it decided that as of performance

year 2026 the Annual Incentive target will be increased to 120% (from

100%) for the CEO, and to 100% (from 80%) for the CFO and CLO,

enabling to reward at market median level for the Annual Incentive.

The Remuneration Policy (including fee levels) for the Supervisory

Board, is reviewed in principle every two years. The current fee levels

were adopted at the AGM 2024. The Remuneration Policy is aimed at

attracting and retaining Supervisory Board members internationally, of

the highest caliber and with relevant expertise and experience.

Therefore the Supervisory Board intends to submit a proposal for new

Supervisory Board fees to the upcoming AGM 2026. Building on our

stakeholder engagements during the past years, we took a careful

approach and engaged with relevant stakeholders to solicit their

feedback on, and support for the proposal.

The Remuneration Committee will evaluate the Remuneration Policy

for the Board of Management in the course of 2026, which may result

in proposals to revise the Remuneration Policy to the Supervisory Board

and ultimately to our shareholders. The Remuneration Committee

notes that, since the current Long-Term Incentive target levels for the

Board of Management were set in 2024, the median LTI target levels

continued to increase within our Quantum Peer Group, widening the

gap with Philips’ target levels.

I look forward to presenting our Remuneration Report 2025 and the

2026 Supervisory Board Remuneration Policy at the AGM 2026.

Furthermore I would like to extend my gratitude to Paul Stoffels, who

concluded his tenure as Chair of the Remuneration Committee this

year.

Herna Verhagen

Chair of the Remuneration Committee


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Main elements of the Remuneration Policy


Compensation element	Purpose and link to strategy	Operation	Policy level
Total Direct Compensation	To support the Remuneration Policy’s objectives, the Total Direct Compensation includes a significant variable part in the form of an Annual Incentive (cash bonus) and Long- Term Incentive in the form of performance shares. As a result, a significant proportion of pay is ‘at risk’.	The Supervisory Board ensures that a competitive remuneration package for board-level executive talent is maintained and benchmarked. The positioning of Total Direct Compensation is reviewed against benchmark data on an annual basis and is recalibrated if and when required. To establish this benchmark, research is carried out each year on the compensation levels in the Quantum Peer Group.	Total direct remuneration is aimed at or close to the median of the Quantum Peer Group.
Annual Base Compensation	Fixed cash payments intended to attract and retain executives of the highest caliber and to reflect their experience and scope of responsibilities.	Annual Base Compensation levels and any adjustments made by the Supervisory Board are based on factors including the median of Quantum Peer Group data and performance and experience of the individual member. The annual review date for the base salary is typically before April 1.	The individual salary levels are shown in this Remuneration Report.
Annual Incentive	Variable cash incentive of which achievement is tied to specific financial and non-financial targets derived from the company’s annual strategic plan.	The payout in any year relates to the achievements of the preceding year. Metrics and their weighting are disclosed ex-ante in the Remuneration Report and there will be no retroactive changes to the selection of metrics used in any given year once approved by the Supervisory Board and disclosed.	Policy (maximum) level: President & CEO On-target: 120% Maximum: 240% of Annual Base Compensation. Other BoM members On-target: 100% Maximum: 200% of Annual Base Compensation.
Long-Term Incentive	Variable equity incentive of achievement is tied to targets reflecting long-term stakeholder value creation and delivered in the form of performance shares.	The annual award size is set by reference to a multiple of base salary. The actual number of performance shares to be awarded is determined by reference to the average closing price of the Royal Philips share measured over the last month of the quarter preceding the actual grant of performance shares (the day of publication of the relevant quarterly results). Dependent upon the achievement of the performance conditions, cliff-vesting applies three years after the date of grant. During the vesting period, the value of dividends will be added to the performance shares in the form of shares. These dividend-equivalent shares will only be delivered to the extent that the award actually vests.	President & CEO Annual grant size: 200% of Annual Base Compensation. Other BoM members Annual grant size: 150% of Annual Base Compensation. Maximum vesting opportunity is 200% of the number of performance shares granted.
Mandatory share ownership and holding requirement	To further align the interests of executives to those of stakeholders and to motivate the achievement of sustained performance.	The guideline for members of the Board of Management is to hold at least a minimum shareholding in the company. Until this level has been reached the members of the Board of Management are required to retain all after- tax shares derived from any Long-Term Incentive plan. The shares granted under the Long-Term Incentive plan shall be retained for a period of at least five years or until at least the end of their contract period if this period is shorter. The guideline does not require members of the Board of Management to purchase shares in order to reach the required share ownership level.	The minimum shareholding requirement is 400% of Annual Base Compensation for the CEO and 300% for other members of the Board of Management.
Pension	Participation in the Philips Flex ES pension plan in the Netherlands (applicable for all executives) combined with a fixed pension contribution intended to result in an appropriate level at retirement.	Defined Contribution plan with fixed contribution (applicable to all executives in the Netherlands – capped at EUR 137,800). Gross allowance of 25% of Annual Base Compensation exceeding EUR 137,800.


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Compensation element	Purpose and link to strategy	Operation	Policy level
Additional arrangements	To aid retention and remain competitive within the marketplace.	Additional arrangements include expense and relocation allowances, medical insurance, accident insurance, Philips product arrangements and company car arrangements. The members of the Board of Management also benefit from coverage under the company’s Directors & Officers (D&O) liability insurance. The company does not grant personal loans to members of the Board of Management.	Cash value (grossed up) of the benefits received, which are in line with other Philips executives in the Netherlands.
Clawback	Risk management and accountability mechanism.	Annual incentives and long-term incentives are subject to claw-back provisions, which allow the Supervisory Board to recoup some or all of the relevant payments.	Clawback provisions are further specified in the Remuneration Policy.

Peer Groups

We use a Quantum Peer Group for remuneration benchmarking

purposes, and therefore we aim to ensure that it includes business

competitors, with an emphasis on companies in the healthcare,

technology-related or consumer products area, and other companies

we compete with for executive talent. The Quantum Peer Group

consists of predominantly Dutch and other European companies, plus a

minority (up to 25%) of US-based global companies of comparable size,

complexity and international scope. In 2025 no changes were made in

the Quantum Peer Group.

Philips Group

Quantum Peer Group 2025


European companies		Dutch companies	US companies
Alcon	Lonza	Ahold Delhaize	Baxter
BAE Systems	Nokia	AkzoNobel	Becton Dickinson
Dräger	Reckitt Benckiser	ASML	Boston Scientific
Ericsson	Roche	Heineken	GE Healthcare
Fresenius Medical Care	Siemens Healthineers		Medtronic
Getinge	Smith & Nephew		Stryker
GSK	Thales

In addition, we use a TSR Performance Peer Group to benchmark our

relative Total Shareholder Return performance against peers in health

technology and other sectors. The companies we have selected for this

peer group include predominantly US-based healthcare companies.

Given that a substantial number of relevant competitors are US-

headquartered, the weighting of US-based healthcare companies is

more notable than for the Quantum Peer Group.

Philips Group

TSR Performance Peer Group 2025


US companies	European companies	Japanese companies
Baxter	Alcon	Canon
Becton Dickinson	Elekta	Terumo
Boston Scientific	Fresenius Medical Care
Danaher	Getinge
GE Healthcare	Reckitt Benckiser
Hologic	Siemens Healthineers
Johnson & Johnson	Smith & Nephew
Medtronic
Resmed
Stryker

The Remuneration Policy and the LTI plan allow changes to the peer

groups to be made by the Supervisory Board without further approval

from the General Meeting of Shareholders for up to three companies

on an annual basis (for instance: following a delisting of a company or

a merger of two peer companies), or six companies in total during the

four years following adoption and approval of the Remuneration Policy

and the LTI plan, respectively (or, if earlier, until the adoption or

approval of a revised Remuneration Policy or revised LTI plan).

Service agreements

The members of the Board of Management are engaged by means of a

services agreement (overeenkomst van opdracht). Termination of the

contract by either party is subject to six months’ notice period. The

severance payment is set at a maximum of one year’s Annual Base

Compensation. In the event of a period of garden leave, no Annual

Incentive entitlement will accrue in respect of such period. No

severance payment is due if the agreement is terminated early on

behalf of the Board of Management member or in the case of urgent

cause (dringende reden) as defined in article 7:678 and further of the

Dutch Civil Code. The term of the services agreement is aligned with

the term for which the relevant member has been appointed by the

General Meeting of Shareholders (which is a maximum period of four

years, it being understood that this period expires no later than at the

end of the AGM held in the fourth year after the year of appointment).

Philips Group

Contract terms for current members 2025


	end of term
Roy Jakobs	AGM 2026
Charlotte Hanneman	AGM 2028
Marnix van Ginneken	AGM 2029

Remuneration of the Board of Management in 2025

The Supervisory Board has determined the 2025 pay-outs to the

members of the Board of Management, upon the proposal of the

Remuneration Committee, in accordance with the 2024 Remuneration

Policy.

The Remuneration Committee annually conducts a scenario analysis.

This includes the calculation of remuneration under different scenarios,

whereby different performance assumptions and corporate actions are

examined. The Supervisory Board concluded that the relationship

between the strategic objectives and the chosen performance criteria

for the 2025 Annual Incentive, as well as for the 2023 LTI grants, were

adequate. The variable remuneration awards are considered fair and

appropriate under the various scenarios.


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Annual Base Compensation

As part of the regular remuneration review, Annual Base

Compensation for the members of the Board of Management is being

reviewed every year. This year, the Annual Base Compensation has

been increased per April 1, 2025, as follows: for Roy Jakobs from EUR

1,250,000 to EUR 1,300,000; for Charlotte Hanneman from EUR 700,000

to EUR 725,000; and for Marnix van Ginneken (as disclosed before his

re-appointment at the AGM 2025) from EUR 660,000 to EUR 725,000,

respectively. This increase was made to move the total compensation

level closer to the market median level, as well as to reflect internal

relativities.

2025 Annual Incentive

The Annual Incentive performance has been assessed based on

company financial results as well as non-financial results.

Financial element (70% weighting)

In line with the 2024 Remuneration Policy, the company sets financial

performance metrics and targets in advance of the year for all members

of the Board of Management. For the year 2025, the financial targets

set at Group level cover comparable sales growth1, Adjusted EBITA1 and

free cash flow1. For the comparable sales growth metric, the realized

performance was above target, which resulted in a 115% payout for

this metric. For the Adjusted EBITA metric, the realized performance

was at target performance level, which resulted in a 100% payout for

this metric. For the free cash flow metric, the realized performance of

512 million EUR results in a 137.4% payout for this metric. The financial

realization fully includes the impact of tariffs announced in 2025 after

targets were set.


Financial performance metric	Weighting as % of target Annual Incentive	Assessment of performance					Weighted pay-out as % of target Annual Incentive
Financial performance metric	Weighting as % of target Annual Incentive	Threshold performance	Target performance	Maximum performance	Realized performance	Resulting payout as % of target	Weighted pay-out as % of target Annual Incentive
Comparable Sales Growth ¹	35%	1.0%	2.0%	4.0%	2.3%	115.0%	40.3%
Adjusted EBITA margin ¹	20%	10.8%	12.3%	13.8%	12.3%	100.0%	20.0%
Free Cash Flow ¹	15%	100	400	700	512	137.4%	20.6%
Total	70%						80.9%

1Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.


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Non-financial element (30% weighting)

The non-financial performance categories and objectives were set at the beginning of the year and disclosed in the 2024 Remuneration Report.

As per remuneration policy, each selected performance category received an equal weighting. The Supervisory Board has assessed performance

and granted a pay-out between 0% and 200% per selected category.


Member of Board of Management	Performance category	Performance objective	Assessment of performance	Weighted pay-out as % of target Annual Incentive
Roy Jakobs	Patient safety and quality	Drive patient safety and quality as highest priority in the organization	Overall improvement in processes, controls and culture reflecting commitment to patient safety and quality. Significant progress made on addressing consent decree requirements. FDA inspection resulted in a warning letter. It remains of crucial importance to further resolve the related causes.	34.5%
	Customer	Improve market share and customer experience	Strong progress made on gaining Market share.
	Customer	Improve supply chain reliability	On-time delivery of orders as per customer expectations further improved.
	Strategy and execution	Drive focused strategy to win in the market	Accelerated growth in strategic growth businesses and launched several world-first innovations.
	Strategy and execution	Establish simplified, more agile operating model	Strong progress on execution priorities with simplification of how work, improved operational performance and rigorous cost management and productivity.
	ESG	Deliver on ESG commitments	ESG index realization ahead of target. Employee engagement in line with target. Talent building as per plan.
Charlotte Hanneman	Patient safety and quality	Drive patient safety and quality as highest priority in the organization	Overall improvement in processes, controls and culture reflecting commitment to patient safety and quality. Significant progress made on addressing consent decree requirements. FDA inspection resulted in a warning letter. It remains of crucial importance to further resolve the related causes.	34.5%
	Customer	Improve market share and customer experience	Strong progress made on gaining Market share.
	Customer	Improve financial forecasting	Improved predictability on Margin, while opportunity to further improve Sales predictability.
	Strategy and execution	Drive focused strategy to win in the market	Accelerated growth in strategic growth businesses and launched several world-first innovations.
	Strategy and execution	Establish simplified, more agile operating model	Strong progress on execution priorities with simplification of how work, improved operational performance and rigorous cost management and productivity.
	ESG	Deliver on ESG commitments	ESG index realization ahead of target. Employee engagement in line with target. Talent building as per plan.
Marnix van Ginneken	Patient safety and quality	Drive patient safety and quality as highest priority in the organization	Overall improvement in processes, controls and culture reflecting commitment to patient safety and quality. Significant progress made on addressing consent decree requirements. FDA inspection resulted in a warning letter. It remains of crucial importance to further resolve the related causes.	33.0%
	Customer	Manage legal issues	In 2025 important milestones were achieved in resolving the Respironics recall related legal proceedings including the resolution of the US personal injury and medical monitoring litigation.
	Strategy and execution	Drive focused strategy to win in the market	Accelerated growth in strategic growth businesses and launched several world-first innovations.
	Strategy and execution	Establish simplified, more agile operating model	Strong progress on execution priorities with simplification of how work, improved operational performance and rigorous cost management and productivity.
	ESG	Deliver on ESG commitments	ESG index realization ahead of target. Employee engagement in line with target. Talent building as per plan.


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2026 Annual Incentive

Financial element (70% weighting):

For the year 2026, the following financial performance metrics are

selected to ensure alignment with the key (strategic) priorities in the

year:

•35% weighting: Comparable Sales Growth*

•20% weighting: Adjusted EBITA* margin

•15% weighting: Free Cash Flow*

For each of the selected performance metrics, the Supervisory Board

sets challenging but realistic target levels which will be disclosed ex-

post in the subsequent Remuneration Report.

Non-financial element (30% weighting):

At the start of each year, two to four performance categories are

selected from the following list, whereby each selected category

receives an equal weighting:

•Patient safety and quality

•Customer

•Strategy and execution

•ESG

For each selected category, one or more performance objectives are

determined at the start of the year for each of the members of the

Board of Management.

For the year 2026, the following categories and objectives were

selected to ensure alignment with the key (strategic) priorities in the

year:


Performance category	Performance objective	Applicable for	Weighting	Measurement description
Patient safety and quality	Drive patient safety and quality as highest priority in the organization	All members of Board of Management	7.50%	This objective measures delivery on our company-wide program to strengthen our patient safety and quality culture, capabilities and performance.
Customer	Improve market share and customer experience	Roy Jakobs	7.50%	This objective is measured by the market share gain and delivery on prioritized innovations
	Improve market share and customer experience	Charlotte Hanneman		This objective is measured by the market share gain and by a reliable forecast as per plan.
	Manage legal issues	Marnix van Ginneken		This objective measures the extent to which litigation strategy is developed and potential liabilities are managed.
Strategy and execution	Drive focused strategy to win in the market and simplify the operating model	All members of Board of Management	7.50%	This objective measures delivery on our value creation plan and delivery on our operating model simplification plan.
ESG	Deliver on ESG commitments	All members of Board of Management	7.50%	This objective measures: •performance on our Impact index (which includes various elements such as emission targets) •our capacity to grow and retain talent and further improve employee engagement

*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.


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2023 Long-Term Incentive

The 3-year performance period of the 2023 LTI grant, consisting of

performance shares, ended on December 31, 2025. The realization of

this grant is based on TSR achievement, adjusted EPS growth and

sustainability objectives. The following performance achievement and

vesting levels have been determined by the Supervisory Board with

respect to the 2023 grant of performance shares:

Philips Group

Performance achievement and vesting levels


	achievement	weighting	vesting level
TSR	200%	50%	100%
EPS	200%	40%	80%
Sustainability objectives	140%	10%	14%
Total			194%

TSR (50% weighting)

A ranking approach to TSR applies, with Philips itself included in the

TSR Performance Peer Group. TSR scores are calculated based on a local

currency approach and by taking a three-month averaging period prior

to the start and end of the three-year performance period. The

performance incentive pay-out zone applicable to the 2023 LTI grant

(based on the 2020 LTI Plan) is outlined in the following table. This

results in zero vesting for performance below the 40th percentile and

200% vesting for performance levels above the 75th percentile. The

incentive zone range has been constructed such that the average pay-

out over time is expected to be approximately 100%.

Philips Group

Performance-incentive zone for TSR in %


Position	20-14	13	12	11	10	9	8	7	6	5-1
Vesting %	0	60	80	90	100	120	140	160	180	200

The TSR achieved by Philips during the performance period was

93.52%, using a start date of October 2022 and end date of December

2025. This resulted in Philips being positioned at rank 2 in the TSR

performance peer group shown in the following table, resulting in a

TSR achievement of 200%.

LTI Plan TSR realization 2023 grant: 93.52%)


	total return	rank number
Boston Scientific	126.42%	1
Philips	93.52%	2
Stryker	65.33%	3
Fresenius Medical Care	60.52%	4
Canon	60.46%	5
GE HealthCare Technologies	44.57%	6
Smith & Nephew	32.54%	7
Medtronic	32.31%	8
Johnson & Johnson	25.40%	9
Terumo	22.00%	10
ResMed	19.67%	11
Reckitt Benckiser	13.51%	12
Hologic	2.60%	13
Getinge	2.16%	14
Alcon	1.09%	15
Siemens Healthineers	(0.08%)	16
Danaher	(3.75%)	17
Elekta	(6.96%)	18
Becton Dickinson	(15.10%)	19
Baxter	(59.70%)	20

Adjusted EPS growth (40% weighting)

The LTI Plan EPS payouts and targets set at the beginning of the

performance period were as follows:

Philips Group

LTI Plan EPS payouts


	Below threshold	Threshold	Target	Maximum	Actual
LTI plan EPS (euro)	<0.54	0.54	0.64	0.83	1.26
Vesting %	-%	40%	100%	200%	200%

In respect of the 2023 LTI grant, the LTI Plan EPS is calculated based on

a reported net income attributable to shareholders divided by the

number of common shares outstanding (after deduction of treasury

shares) on the day prior to the beginning of the performance period

(to eliminate the impact of any share buyback, stock dividend, etc.),

resulting in an EPS of EUR 1.02. Furthermore, as per the 2020 LTI Plan,

the LTI Plan EPS includes adjustments to account for events that were

not planned when targets were set or were outside management’s

control, such as the profit and loss impact of acquisitions and

divestments (balance is neutral), the profit and loss impact of

unhedged foreign exchange variations versus plan (positive

adjustment), the profit and loss impact of legacy legal proceedings

(positive impact), and the profit and loss impact of Respironics-related

charges (positive impact). Overall, this resulted in an LTI Plan EPS of

EUR 1.26 based on adjusted net income from continuing operations,

leading to a realization of 200% of target.

The historic EPS realization was 0% of target for the LTI grants related

to the years 2020, 2021 and 2022.


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Philips Group

LTI Plan EPS realization in millions of EUR unless otherwise stated


	Net income	EPS (euro)
Income from continuing operations attributable to shareholders	899	1.02
Profit and loss impact of:
- Foreign exchange variations versus plan ¹	65	0.07
- Respironics-related charges ²	147	0.17
Adjusted net income from continuing operations	1,111	1.26

1Impact of variations of unhedged volatile currencies compared to the

performance period plan.

2Impact of Respironics field-action running costs and consent decree charges.

Sustainability objectives (10% weighting)

In order to further align the remuneration package for the Board of

Management with our purpose and our ESG commitments, a

sustainability criterion was introduced in the 2020 LTI Plan. Philips

believes that ESG performance will improve the company’s

performance as a whole and, therefore, that it should be explicitly

linked to (long-term) remuneration. The criteria are based on three

Sustainable Development Goals (SDGs) as defined by the United

Nations that are included in Philips’ strategy on sustainability (no. 3, 12

and 13). These three SDGs are translated in five underlying objectives,

which are measured against a specific target range.

At the beginning of the performance period, challenging target ranges

are set for each of the five objectives. Based on a point-to-point

method, performance achievement is measured at the end of the

performance period (i.e., three years) versus the beginning of the

performance period. The vesting level is determined based on the

following scheme:


No. of measures achieved on or above target	Vesting %
1	0%
2	0%
3	50%-100%
4	100%-150%
5	150%-200%

The realized performance is described in the following table. As 4 out

of 5 objectives are achieved within or better than target range, the

vesting % lies between 100% and 150% of target. Based on target

range performance of one and outperformance of three objectives, the

Supervisory Board has assessed that a vesting level of 140% would

reflect an appropriate position within the vesting range.


Sustainability category	Underlying objective	Target range	Realized performance
Ensure healthy lives and promote well-being for all at all ages (SDG3) Lives improved	Targeted # of lives improved in year 3 1	1.92 – 2.14 billion	2.0 billion	Within target range
Ensure sustainable consumption and production patterns (SDG12) Circularity	Targeted circular revenue in year 3 ²	22.5% – 25.0%	27.9%	Better than target range
	Targeted waste to landfill in year 3 ³	2.5% – 0.1%	<0.01%	Better than target range
	Targeted closing the loop in year 3 ⁴	34.0% – 42.0%	20.2%	Below target range
Take urgent action to combat climate change and its impacts (SDG13) Carbon footprint	Targeted CO2 -equivalent (in kilotonnes) in year 3	483 – 433 kilotonnes CO2	372 kilotonnes CO2	Better than target range

1Lives improved by Philips products, solutions and services and care to those in

underserved markets

2Revenue from products, services and solutions contributing to circularity (e.g.,

optimizing and re-using materials)

3Avoiding production of waste materials

4Taking back healthcare equipment

2026 Long-Term Incentive

The 2026 Long-Term Incentive grant consists of 100% performance

shares of which vesting is subject to performance over a period of three

years, whereby performance is measured based on the following

performance metrics and weighting:

•40% weighting: Relative Total Shareholder Return (‘TSR’)

•40% weighting: Adjusted Earnings per Share growth* (‘EPS’)

•20% weighting: ESG performance


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ESG performance (20% weighting)

At the start of each performance year, we select four ESG objectives in

line with our long-term strategic priorities. There is no exhaustive list of

objectives that can be selected. To ensure that all objectives are

material, auditable and measurable, we only select objectives which are

reported in our Annual Report (in preparation for the Corporate

Sustainability Reporting Directive) and therefore are subject to

assurance from our external provider of assurance with respect to the

company's sustainability reporting. Furthermore, we make sure that in

any measurement year, the ESG objectives do not overlap with our

non-financial performance objectives for the Annual Incentive.

The objectives selected for the 2026 LTI grant are shown in the

following table, including the rationale for selecting these objectives

and more details on the measurement approach.

2026-2028


ESG objective	Rationale	Measurement approach
Targeted # of lives improved in year 3 1	Ensure healthy lives and promote well-being for all at all ages (SDG3) Lives improved	We have a lives improved calculation methodology, which follows a three-step approach. 1) We first determine the installed base of our health- and well-being solutions, 2) We determine the number of touchpoints per product per year, and 3) To avoid double- counting, we eliminate all direct- and indirect double-counts between products and solutions.
Inclusion and belonging score	Aim to be the best place to work for our employees	Inclusion and belonging score in the Philips Engagement Survey
Targeted full value chain CO2-equivalent (in kilotonnes) in year 3	Take urgent action to combat climate change and its impacts (SDG13) Carbon footprint	Total greenhouse gas emissions caused by Philips, expressed in kilotonnes CO2- equivalent, which is the sum of our Scope 1, 2 and material Scope 3 (at least 95% coverage) emissions according to the Greenhouse Gas Protocol.
Virgin non-renewable materials (in kilotonnes)	Aim to use less virgin non-renewable materials and make more materials available for re-use (SDG12) Circularity	Total weight (in kilotonnes) of virgin non-renewable materials which is measured as part of the Philips materials balance

1Lives improved by Philips products, solutions and services and care to those in

underserved markets

Pension

The following pension arrangement is in place for the members of the

Board of Management working under a services agreement governed

by Dutch law:

•Flex ES Pension Plan in the Netherlands, which is a Collective Defined

Contribution plan with a fixed contribution of (currently) 30.3%

(including an own contribution of 8%) of the maximum pensionable

salary of EUR 137,800 (effective January 1, 2025) minus the offset.

The Flex ES Plan has a target retirement age of 68 and a target

accrual rate of 1.85%;

•A gross Pension Allowance equal to 25% of the base compensation

exceeding EUR 137,800.

Total remuneration costs in 2025

The table on the following page gives an overview of the costs incurred

by the company in 2025 and 2024 in relation to the remuneration of

the Board of Management. Costs related to performance shares are

based on accounting standards (IFRS), which prescribe that costs for

each LTI grant are recognized over the full (multi-year) vesting period,

proportionate to the relevant fiscal year. Therefore, the costs for any

year reflect costs of multiple LTI grants, as opposed to the actual value

for the holder of an LTI grant at the vesting date. Please refer to

section 2023 Long-Term Incentive for more details on the actual vesting

of the performance shares.

1 Charlotte Hanneman joined on October 1, 2024


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Philips Group

Remuneration Board of Management 1 in EUR


			Accounting costs in the year
	reported year	annual base compensation ²	base compensation	realized annual incentive	performance shares ³	pension allowances	pension scheme costs	other compensation ⁴	total cost	Fixed-variable remuneration ⁵
Roy Jakobs	2025	1,300,000	1,287,500	1,499,680	3,772,196	287,425	26,609	96,386	6,969,796	24%-76%
Roy Jakobs	2024	1,250,000	1,237,500	927,750	1,692,087	274,925	32,218	83,870	4,248,350	38%-62%
Charlotte Hanneman	2025	725,000	718,750	669,088	835,637	145,237	26,609	108,598	2,503,919	40%-60%
	2024	700,000	175,545	98,372	104,606	35,247	7,775	23,089	444,633	54%-46%
Marnix van Ginneken	2025	725,000	708,750	660,388	1,531,456	142,737	26,609	62,090	3,132,030	30%-70%
Marnix van Ginneken	2024	660,000	652,500	422,374	740,101	128,675	32,218	74,227	2,050,095	43%-57%
Total	2025		2,715,000	2,829,156	6,139,289	575,399	79,827	267,074	12,605,745	29%-71%
Total	2024		2,065,545	1,448,496	2,536,794	438,847	72,211	181,186	6,743,078	41%-59%

1Reference date for board membership is December 31, 2025.

2Annual Base Compensation as incurred in the year, base compensation increases are reflected proportionally.

3The value of the performance shares that vested during the year is as follows, for Roy Jakobs EUR 241,089 (2024:EUR 77,227), Charlotte Hanneman EUR 0 (2024: EUR 0), Marnix van Ginneken EUR 141,783 (2024: EUR 94,985). Values are determined at vesting date.

Taking the vesting value into account for the performance shares (instead of IFRS expenses) results in the following total remuneration, for Roy Jakobs EUR 3,438,688, Charlotte Hanneman EUR 1,668,282, Marnix van Ginneken EUR 1,742,357.

4The stated amounts mainly concern (share of) allowances to members of the Board of Management that can be considered as remuneration. In a situation where such a share of an allowance can be considered as (indirect) remuneration (for example, private use of

the company car), then the share is both valued and accounted for here. The method employed by the fiscal authorities is the starting point for the value stated.

5Fixed remuneration is determined as the sum of base compensation, pension allowances, pension scheme costs and other compensation. Variable remuneration is determined as the sum of realized annual incentive and performance shares.

Philips Group

Total remuneration Board of Management in EUR

Roy Jakobs

2025

2024

Charlotte Hanneman 1

2025

2024

Marnix van Ginneken

2025

2024

Base compensation

Annual incentive

Performance shares

Pension

Other compensation


	88

Five-year development of CEO and Board of Management versus

average employee remuneration costs compared to company

performance

Internal pay ratios are a relevant input factor for determining the

appropriateness of the implementation of the Remuneration Policy, as

recognized in the Dutch Corporate Governance Code. Following the

European Sustainability Reporting Standards (ESRS), this disclosure

enhances transparency in income distribution and aligns with our

commitment to fair remuneration practices. For the 2025 financial year,

the ratio between the annual total compensation for the CEO, which is

the highest paid individual, and the average annual total remuneration

for an employee was 70:1. The ratio increased from 43:1 in 2024. The

increase is mainly caused by the 194% vesting of the 2023 LTI grant for

the CEO. Furthermore, the ratio between the CEO and median annual

total remuneration for all employees (excluding the highest-paid

individual) was 83:1. Further details on the development of these

amounts and ratios over time can be found in the following table.

Please note that the amounts presented in the table reflect total

remuneration costs to the company, which differ from the actual

payouts to the members of the Board of Management.

Philips Group

Remuneration costs* in EUR


	2025	2024	2023	2022	2021	2020
Remuneration
CEO Total Remuneration Costs (A) ¹	6,969,796	4,248,350	4,582,347	5,133,659	5,452,299	6,153,067
CFO Total Remuneration Costs	2,503,919	3,517,514	3,002,907	1,896,081	2,652,864	3,007,990
CLO Total Remuneration Costs	3,132,030	2,050,095	2,302,397	1,416,837	2,029,054	2,203,160
Average Employee (FTE) Total Remuneration Costs (B) ²	99,667	99,091	99,866	93,373	86,853	91,455
Ratio A versus B ⁴	70:1	43:1	46:1	55:1	63:1	67:1
Median Employee Total Remuneration Costs (C) ³	83,708	89,103
Ratio A versus C ⁴	83:1	48:1
Company performance
Annual TSR ⁵	(5.5)%	43.3%	42.9%	(60.0)%	(14.5)%	6.2%
Comparable Sales Growth% ⁶	2.3%	1.2%	6.0%	(2.8)%	(1.2)%	2.9%
Adjusted EBITA% ⁶	12.3%	11.5%	10.6%	7.4%	12.0%	13.2%
Free Cash Flow ⁶	512	906	1,582	(961)	900	1,635

*The Dutch implementation of SRDII requires disclosure of the compensation of the Supervisory Board members in a way that allows comparison. The members of the Supervisory Board received fixed remuneration during the years covered by the table above in line

with the Remuneration Policy for the Supervisory Board as approved by the AGM, ranging from 116,269 (lowest full-time amount in 2020) to 225,845 (highest full-time amount in 2025). They are not entitled to any variable remuneration. For more information, see

“Remuneration of the Supervisory Board in 2025”.

1For 2022, CEO refers to Frans van Houten for the period up to October 15, 2022, and to Roy Jakobs for the period from October 15, 2022, onward. For 2020 and 2021, CEO refers to Frans van Houten.

2Based on Employee benefit expenses (EUR 6.7 billion) divided by the average number of employees (67,033 FTE) as reported in Income from operations. This results in an average annual total compensation cost of EUR 99,667 per employee.

3Median Employee Total Remuneration Costs are based on the full salary and wage expenses to the company, including base salary, social security, benefits in cash, benefits in kind, Annual Incentive and Long Term Incentives.

4A consideration when interpreting the ratios between CEO (i.e., highest paid individual) and average and median employee remuneration is that the remuneration of the CEO is more heavily dependent on variable compensation than the remuneration of the typical

employee at Philips. Furthermore, the costs of performance shares are based on accounting standards (IFRS) and the specific allocation of these costs to the year. As such, the total remuneration level and costs applicable to the CEO will vary more with Philips’

financial performance than the remuneration level and costs applicable to the typical employee. As a consequence, the ratio will increase when financial performance is strong and conversely decrease when financial performance is not as strong.

5Annual TSR was calculated in line with the method used for the LTI Plan (i.e., based on reinvested dividends and three-month averaging)

6Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.


	89

Historical LTI grants and holdings

Number of performance shares (holdings)

Under the LTI Plan the current members of the Board of Management

were granted 222,428 performance shares in 2025. The following table

provides an overview at the end of December 2025 of performance

share grants.

Philips Group

Number of performance shares (holdings) in number of shares unless otherwise stated


	Grant date	Number of shares originally granted	Value at grant date	Vesting date	End of holding period	Unvested opening balance at Jan. 1, 2025	Number of shares awarded in 2025	(Dividend) shares awarded	Number of shares vested in 2025 ¹	Value at vesting date in 2025	Unvested closing balance at Dec. 31, 2025
Roy Jakobs	4/29/2022	37,630 ²	930,000	4/29/2025	4/29/2025	42,148	-	-	6,322	139,532	-
	10/28/2022	24,279	314,137	10/28/2025	10/28/2027	26,233	-	1,112	4,102	101,557	-
	4/28/2023	124,538	2,400,000	4/28/2026	4/28/2028	134,560	-	5,702	-	-	140,261
	7/5/2024	131,443	2,500,000	5/7/2027	5/7/2029	135,939	-	5,760	-	-	141,700
	6/5/2025	120,686	2,580,000	6/5/2028	6/5/2030	-	120,686	5,114	-	-	125,800
Charlotte Hanneman	7/29/2024	25,346	613,934	7/29/2027	7/29/2029	25,346	-	1,074	-	-	26,420
	7/29/2024	37,982	920,000	7/29/2027	7/29/2029	37,982	-	1,609	-	-	39,591
	6/5/2025	50,871	1,087,500	6/5/2028	6/5/2030	-	50,871	2,156	-	-	53,027
Marnix van Ginneken	4/29/2022	38,237	945,000	4/29/2025	4/29/2027	42,828	-	-	6,424	141,783	-
	4/28/2023	49,037	945,000	4/28/2026	4/28/2028	52,983	-	2,245	-	-	55,228
	5/7/2024	52,051	990,000	5/7/2027	5/7/2029	53,832	-	2,281	-	-	56,113
	6/5/2025	50,871	1,087,500	6/5/2028	6/5/2030	-	50,871	2,156	-	-	53,027

1The shares vested in 2025 are subject to a two-year holding period.

2Awarded before date of appointment as a member of the Board of Management

Share ownership guidelines

To further align the interests to those of stakeholders and to motivate

the achievement of sustained performance, the members of the Board

of Management are bound to a minimum shareholding requirement.

The following table shows the minimum shareholding requirement,

Annual Base Compensation, (vested) shares held, and share ownership

ratio of each Board of Management member as of December 31, 2025.

Until the minimum shareholding requirement is reached, the members

of the Board of Management are required to retain all after-tax


	90

performance shares that have vested, but they are not required to

make additional share purchases.

Philips Group

Share ownership Board of Management


	Minimum shareholding requirement ¹	Annual Base Compensation	(Vested) shares held	Ownership ratio ²
Roy Jakobs	4.0x	1,300,000	147,397	2.7x
Charlotte Hanneman	3.0x	725,000	-	0x
Marnix van Ginneken	3.0x	725,000	147,126	4.8x

1As ratio of Annual Base Compensation

2The ownership ratio is calculated by multiplying the total shares held by the share

price of EUR 23.663 (the average closing share price from November 1, 2025, to

December 31, 2025) and dividing this by the base compensation.

Remuneration of the Supervisory Board in 2025

Summary of Remuneration Policy

The Remuneration Policy for the Supervisory Board was also adopted at

the AGM 2024, with a majority of 98.94% of the votes cast.

The overarching objective of the 2024 Remuneration Policy for the

Supervisory Board is to enable its members to fulfill their duties, acting

independently: supervising the policies and management and the

general affairs of Philips, and supporting the Board of Management

and the Executive Committee with advice. Also, the members of the

Supervisory Board are guided by the company’s long-term interests,

with due observance of the company’s mission, vision and strategy,

taking into account the interests of shareholders and all other

stakeholders.

As reflected in the profile of the Supervisory Board (as updated early

2024 and included in the Rules of Procedure of the Supervisory Board),

the selection of candidates for appointment to the Supervisory Board

will be based on merit. The profile aims for an appropriate

combination of knowledge and experience among its members,

encompassing a wide range of proficiencies and capabilities, all in

relation to the global character of Philips’ Businesses. The Supervisory

Board furthermore aims to have members with a diverse set of

qualities, including different nationalities and (cultural) backgrounds.

To support the objectives mentioned previously, the 2024

Remuneration Policy is aimed at attracting and retaining Supervisory

Board members internationally, of the highest caliber and with

experience and expertise relevant to our health technology Businesses.

To enable more gradual increases in the future, the 2024 Remuneration

Policy includes the Supervisory Board’s intention to review the fee

levels, in principle, every two years, to monitor and take account of

market developments and to manage expectations from our key

stakeholders. In these reviews we will, in principle, apply a consistent

approach using the same Quantum Peer Group for our Supervisory

Board as is used for the Board of Management.

The accompanying table provides an overview of the current

remuneration structure. The fee levels were set below median market

levels paid in the Quantum Peer Group used in the 2024 Remuneration

Policy for the Board of Management.

Philips Group

Remuneration Supervisory Board in EUR


Fee type (amounts in EUR)	Chairman		Vice Chair		Member
	As of 2025	2024	As of 2025	2024	As of 2025	2024
Supervisory Board (annual fee)	175,000	166,500	130,000	123,500	113,000	107,500
Audit Committee	30,500	29,000	n.a.		20,250	19,250
Remuneration Committee	23,750	22,500	n.a.		15,750	15,000
Corporate Governance and Nomination & Selection Committee	23,750	22,500	n.a.		15,750	15,000
Quality and Regulatory Committee	23,750	22,500	n.a.		15,750	15,000

In accordance with the Dutch Corporate Governance Code, the

remuneration for the members of the Supervisory Board is not

dependent on the results of the company and does not include any

shares (or rights to shares). Nevertheless, members of the Supervisory

Board are encouraged to hold shares in the company for the purpose

of long-term investment to reflect their confidence in the future course

of the company. The company does not grant personal loans to

members of the Supervisory Board.


	91

Attendance fees, entitlement to Philips product arrangements and

fixed net expense allowances are as follows:

Philips Group

Fee and reimbursement type in EUR


	Chairman	All members
Attendance fee per inter-European trip	2,750	2,750
Attendance fee per intercontinental trip	5,500	5,500
Entitlement to Philips product arrangement	2,000	2,000
Annual fixed net expense allowance	11,345	2,269
Other travel expenses	As reasonably incurred

The members of the Supervisory Board benefit from coverage under

the company’s Directors and Officers (D&O) liability insurance.

Remuneration of the Supervisory Board in 2025

The individual members of the Supervisory Board received, by virtue of

the positions they held, the following remuneration in 2025:

Philips Group

Remuneration of the Supervisory Board in EUR


	membership	committees	other compensation ¹	total 2025	total 2024
F. Sijbesma	175,000	39,500	11,345	225,845	232,945
P.A. Stoffels	130,000	39,500	16,019	185,519	174,269
S.K. Chua	113,000	20,250	15,088	148,338	152,857
M.E. Doherty	113,000	30,500	11,718	155,218	156,789
A.M. Harrison	113,000	15,750	18,769	147,519	130,269
P. Löscher	113,000	36,000	10,519	159,519	160,519
I. Nooyi	113,000	15,750	15,064	143,814	142,654
S. Poonen	113,000	15,750	20,500	149,250	143,538
D. Pyott	39,627	8,329	13,992	61,948	155,019
B. Ribadeau-Dumas	113,000	15,750	15,270	144,020	98,198
H. Verhagen	113,000	41,195	2,847	157,042	149,996
R.J. White	97,521	13,592	12,958	124,071
Total	1,346,148	291,866	164,089	1,802,103	1,697,054

1The amounts mentioned under other compensation relate to the fee for

intercontinental travel, inter-European travel, the Philips product arrangement

and the annual fixed net expense allowance.


	93

Controls and Procedures

Disclosures controls and procedures

The Company’s Chief Executive Officer and Chief Financial Officer have

evaluated the effectiveness of the design and operation of the

company’s disclosure controls and procedures (as defined in Rules

13a15(e) and 15d15(e) under the Securities Exchange Act of 1934) as of

the end of the period covered by the Annual Report. Based on that

evaluation, the Chief Executive Officer and Chief Financial Officer have

concluded that these disclosure controls and procedures are effective as

of December 31, 2025.

Management's annual report on internal control

over financial reporting

The Board of Management of Koninklijke Philips N.V. (Royal Philips) is

responsible for establishing and maintaining an adequate system of

internal control over financial reporting (as such term is defined in Rule

13a-15 (f) under the US Securities Exchange Act). Internal control over

financial reporting is a process to provide reasonable assurance

regarding the reliability of our financial reporting for external purposes

in accordance with IFRS Accounting Standards as issued by the IASB.

Internal control over financial reporting includes maintaining records

that, in reasonable detail, accurately and fairly reflect our transactions;

providing reasonable assurance that transactions are recorded as

necessary for preparation of our financial statements; providing

reasonable assurance that receipts and expenditures of company assets

are made in accordance with management authorization; and

providing reasonable assurance that unauthorized acquisition, use or

disposition of company assets that could have a material effect on our

financial statements would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial

reporting may not prevent or detect all misstatements. Also,

projections of any evaluation of the effectiveness of internal control to

future periods are subject to the risk that controls may become

inadequate because of changes in conditions, or that the degree of

compliance with the policies or procedures may deteriorate.

The Board of Management conducted an assessment of Royal Philips'

internal control over financial reporting based on the “Internal Control

Integrated Framework (2013)” established by the Committee of

Sponsoring Organizations of the Treadway Commission (COSO).

Based on the Board of Management’s assessment of the effectiveness

of Royal Philips' internal control over financial reporting as of

December 31, 2025, it has concluded that, as of December 31, 2025,

Royal Philips' internal control over Group financial reporting is

effective.

Attestation report of the registered public

accounting firm

The effectiveness of the Royal Philips’ internal control over financial

reporting as of December 31, 2025, as included in this section Group

financial statements, has been audited by PricewaterhouseCoopers

Accountants N.V. (PCAOB ID: 1395), an independent registered public

accounting firm, as stated in their report included herein.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting

during 2025 that have materially affected, or are reasonably likely to

materially affect, our internal control over financial reporting.


	94

Independent auditor’s report - PricewaterhouseCoopers Accountants N.V.

(PCAOB ID: 1395)

Report of Independent Registered Public Accounting

Firm

To the Supervisory Board and Shareholders of Koninklijke Philips N.V.

Opinions on the Financial Statements and Internal Control over

Financial Reporting

We have audited the accompanying consolidated balance sheet of

Koninklijke Philips N.V. and its subsidiaries (the “Company”) as of

December 31, 2025, and the related consolidated statements of income,

comprehensive income, cash flows and changes in equity for the year

then ended, including the related notes (collectively referred to as the

“consolidated financial statements”). We also have audited the

Company’s internal control over financial reporting as of December 31,

2025, based on criteria established in Internal Control - Integrated

Framework (2013) issued by the Committee of Sponsoring

Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above

present fairly, in all material respects, the financial position of the

Company as of December 31, 2025, and the results of its operations and

its cash flows for the year then ended, in conformity with (i) IFRS

Accounting Standards as issued by the International Accounting

Standards Board and (ii) IFRS Accounting Standards as adopted by the

European Union. Also in our opinion, the Company maintained, in all

material respects, effective internal control over financial reporting as

of December 31, 2025, based on criteria established in Internal Control -

Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated

financial statements, for maintaining effective internal control over

financial reporting, and for its assessment of the effectiveness of

internal control over financial reporting, included in Management's

Annual Report on Internal Control over Financial Reporting appearing

under Item 15B. Our responsibility is to express opinions on the

Company’s consolidated financial statements and on the Company's

internal control over financial reporting based on our audit. We are a

public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (PCAOB) and are required to be

independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the

PCAOB. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the consolidated financial

statements are free of material misstatement, whether due to error or

fraud, and whether effective internal control over financial reporting

was maintained in all material respects.

Our audit of the consolidated financial statements included performing

procedures to assess the risks of material misstatement of the

consolidated financial statements, whether due to error or fraud, and

performing procedures that respond to those risks. Such procedures

included examining, on a test basis, evidence regarding the amounts

and disclosures in the consolidated financial statements. Our audit also

included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall

presentation of the consolidated financial statements. Our audit of

internal control over financial reporting included obtaining an

understanding of internal control over financial reporting, assessing

the risk that a material weakness exists, and testing and evaluating the

design and operating effectiveness of internal control based on the

assessed risk. Our audit also included performing such other procedures

as we considered necessary in the circumstances. We believe that our

audit provides a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial

Reporting

A company’s internal control over financial reporting is a process

designed to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements for

external purposes in accordance with generally accepted accounting

principles. A company’s internal control over financial reporting

includes those policies and procedures that (i) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly

reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as

necessary to permit preparation of financial statements in accordance

with generally accepted accounting principles, and that receipts and

expenditures of the company are being made only in accordance with

authorizations of management and directors of the company; and (iii)

provide reasonable assurance regarding prevention or timely detection

of unauthorized acquisition, use, or disposition of the company’s assets

that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial

reporting may not prevent or detect misstatements. Also, projections of

any evaluation of effectiveness to future periods are subject to the risk

that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or

procedures may deteriorate.


	95

Critical Audit Matters

The critical audit matters communicated below are matters arising from

the current period audit of the consolidated financial statements that

were communicated or required to be communicated to the audit

committee and that (i) relate to accounts or disclosures that are

material to the consolidated financial statements and (ii) involved our

especially challenging, subjective, or complex judgments. The

communication of critical audit matters does not alter in any way our

opinion on the consolidated financial statements, taken as a whole,

and we are not, by communicating the critical audit matters below,

providing separate opinions on the critical audit matters or on the

accounts or disclosures to which they relate.

Contingent Liabilities from Legal Proceedings Related to the Respironics Recall

As described in Notes 19 and 24, the Company recognizes provisions for legal claims and litigation when it has a present obligation, it is probable that an outflow of resources embodying economic benefits will be required to

settle the obligation, and the amount can be estimated reliably. The Company is under criminal and civil investigation by the Department of Justice ("DOJ") and certain US state Attorneys General related to the events leading

to the Respironics Recall. As of December 31, 2025, management assessed the outflow of economic resources in connection with these investigations as probable, but is not able to reliably estimate the financial impact.

Furthermore, a securities class action complaint in the United States has been filed alleging violations of the Securities and Exchange Act of 1934 causing damage to investors. In the Netherlands, two parties have filed a civil

complaint with the Amsterdam District Court. Three parties have filed a request for inquiry proceedings with the Enterprise Chamber of the Amsterdam Court Appeal. Additionally, the Company is subject to an SEC

investigation related to the Respironics Recall. As of December 31, 2025, management assessed that it is possible but not probable that these cases could lead to an outflow of economic resources. The Company is not able to

reliably estimate the financial impact, if any.

The principal considerations for our determination that performing procedures relating to the contingent liabilities from legal proceedings related to the Respironics Recall is a critical audit matter are (i) the significant

judgment by management when assessing whether outflow of resources embodying economic benefits is probable or possible and when determining whether the outflow of resources embodying economic benefits can be

reasonably estimated; (ii) a high degree of auditor judgment and effort in performing procedures and evaluating audit evidence related to management’s assessment of the contingent liabilities; and (iii) the audit effort

involved in the use of professionals with specialized skills and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the

effectiveness of controls relating to management’s assessment of contingencies, including controls over assessing whether an outflow of resources embodying economic benefits is probable and when determining whether

the amount can be reasonably estimated, as well as the related financial statement disclosures. These procedures also included, among others (i) the involvement of professionals with specialized skill and knowledge to assist

in confirming with internal and external legal counsel the possibility or probability of an unfavorable outcome and the extent to which the outflow of resources embodying economic benefits is reasonably estimable; (ii)

evaluating the reasonableness of management’s assessment regarding whether an unfavorable outcome is reasonably possible or probable and reasonably estimable; and (iii) evaluating the sufficiency of the Company’s

contingent liability disclosure related to the Respironics Recall.


	96

Goodwill Impairment Assessments – Connected Care Segment Businesses

As described in Note 11, goodwill is allocated to Businesses (groups of cash-generating units (CGUs)). The Connected Care Segment is composed of the Monitoring, Sleep & Respiratory Care, and Enterprise Informatics CGUs.

The goodwill allocated to these CGUs is EUR 3,752 million, EUR 625 million and EUR 248 million, respectively, as of December 31, 2025. Management performs an impairment test in the fourth quarter of each year, or more

frequently if indicators of potential impairment exist. The carrying amount of each group of CGUs is compared to the recoverable amount of the group of CGUs. An impairment loss is recognized in the Consolidated

statements of income whenever and to the extent that the carrying amount of a group of CGUs exceeds the recoverable amount for the group of CGUs, whichever is the greater, its value-in-use or its fair value less cost of

disposal. Significant assumptions used in the value-in-use calculations include compound sales growth rates, EBITA in the terminal value, and the rates used for discounting the projected cash flows. Philips defines EBITA as

income from operations excluding amortization and impairment of acquired intangible assets and impairment of goodwill.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments - Connected Care Segment Businesses is a critical audit matter are (i) the significant judgment

by management when developing the fair value estimate of the CGUs; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to

the compound sales growth rates, EBITA in the terminal value and the rates used for discounting the projected cash flows; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

effectiveness of controls relating to management’s goodwill impairment assessments for the Connected Care Segment CGUs. These procedures also included, among others, (i) testing management’s process for developing the

fair value estimate of the Connected Care Segment CGUs; (ii) evaluating the appropriateness of the value-in-use approach used by management; (iii) testing the completeness and accuracy of underlying data used in the value-

in-use approach; (iv) and evaluating the reasonableness of the significant assumptions used by management; compound sales growth rates, EBITA in the terminal value, and the rates used for discounting the projected cash

flows. Evaluating management’s significant assumptions related to the compound sales growth rates, and EBITA in the terminal value involved evaluating whether the assumptions used by management were reasonable

considering (i) the current and past performance of the Connected Care Segment CGUs; (ii) the consistency with external market and industry data; and (iii) whether the assumption was consistent with evidence obtained in

other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the value-in-use model and ii) the reasonableness of significant assumptions; compound

sales growth rates, EBITA in the terminal value, and the rates used for discounting the projected cash flows.

/s/PricewaterhouseCoopers Accountants N.V.

Amsterdam, The Netherlands

February 19, 2026

We have served as the Company’s auditor since 2024.


	97

Independent auditor’s report - EY Accountants B.V. (PCAOB ID: 1396)

Report of Independent Registered Public Accounting

Firm

To: the Supervisory Board and Shareholders of Koninklijke Philips N.V.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of

Koninklijke Philips N.V. (the Company) as of December 31, 2024, the

related consolidated statements of income, comprehensive income,

cash flows and changes in equity for each of the two years in the

period ended December 31, 2024, and the related notes (collectively

referred to as the group financial statements). In our opinion, the

group financial statements present fairly, in all material respects, the

financial position of the Company at December 31, 2024, and the

results of its operations and its cash flows for each of the two years in

the period ended December 31, 2024, in conformity with IFRS

Accounting Standards as issued by the International Accounting

Standards Board.

Basis for Opinion

These financial statements are the responsibility of the Company‘s

management. Our responsibility is to express an opinion on the

Company‘s financial statements based on our audit. We are a public

accounting firm registered with the PCAOB and are required to be

independent with respect to the Company in accordance with the US

federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the

PCAOB. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud. Our

audit included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks. Such

procedures included examining, on a test basis, evidence regarding the

amounts and disclosures in the financial statements. Our audit also

included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall

presentation of the financial statements. We believe that our audit

provides a reasonable basis for our opinion.

We served as the Company’s auditor from 2016 to 2025.

EY Accountants B.V.

/s/ EY Accountants B.V.

Amsterdam, the Netherlands

February 21, 2025


	98

Consolidated statements of income

Philips Group

Consolidated statements of income in millions of EUR

for the year ended December 31,


	Note	2025	2024	2023
Sales	6	17,834	18,021	18,169
Cost of sales		(9,776)	(10,248)	(10,721)
Gross margin		8,058	7,773	7,448
Selling expenses		(4,342)	(4,486)	(4,524)
General and administrative expenses		(628)	(582)	(608)
Research and development expenses		(1,700)	(1,747)	(1,890)
Other business income	6	87	590	112
Other business expenses	6	(51)	(1,019)	(652)
Income from operations	6	1,424	529	(115)
Financial income	7	113	105	63
Financial expenses	7	(346)	(387)	(376)
Results of associates		(9)	(124)	(98)
Income before taxes		1,182	123	(526)
Income tax (expense) benefit	8	(282)	(963)	73
Income from continuing operations		901	(840)	(454)
Discontinued operations, net of income taxes	3	(4)	142	(10)
Net income		897	(698)	(463)

Attribution of net income:
Net income attributable to shareholders of Koninklijke Philips N.V.		895	(702)	(466)
Net income attributable to non-controlling interests		1	3	2

Philips Group

Earnings per common share attributable to shareholders of Koninklijke Philips N.V. in EUR

for the year ended December 31,


	2025	2024	2023
Basic earnings per common share
Income from continuing operations	0.95	(0.90)	(0.48)
Net income	0.94	(0.75)	(0.49)
Diluted earnings per common share
Income from continuing operations	0.93	(0.90)	(0.48)
Net income	0.93	(0.75)	(0.49)

Consolidated statements of

comprehensive income

Philips Group

Consolidated statements of comprehensive income in millions of EUR

for the year ended December 31,


	Note	2025	2024	2023
Net income		897	(698)	(463)

Pensions and other-post employment plans:	20
Remeasurement, before tax		8	(18)	(26)
Income tax effect on remeasurements	8	(3)	12	3

Financial assets fair value through OCI:
Net current-period change, before tax		(20)	(21)	(20)
Income tax effect on net current-period change		-	9	3
Total of items that will not be reclassified to Income Statement		(15)	(17)	(40)

Currency translation differences:
Net current period change, before tax		(1,641)	768	(579)
Reclassification adjustment for (gain) loss realized		(33)	(7)	(26)
Income tax effect on net current-period change and reclassification	8	3	(8)	-
Cash flow hedges:
Net current-period change, before tax		73	21	29
Reclassification adjustment for (gain) loss realized		(29)	(29)	(19)
Income tax effect on net current-period change and reclassification	8	(12)	3	(2)
Total of items that are or may be reclassified to Income Statement		(1,638)	748	(597)

Other comprehensive income		(1,653)	731	(637)

Total comprehensive income		(757)	33	(1,100)

Total comprehensive income attributable to:
Shareholders of Koninklijke Philips N.V.		(754)	27	(1,101)
Non-controlling interests		(2)	6	1

Amounts may not add up due to rounding.


	99

Consolidated balance sheets

Philips Group

Consolidated balance sheets in millions of EUR

as of December 31,


	Note		2025	2024
Non-current assets
Property, plant and equipment	2	10	2,217	2,452
Goodwill	2	11	9,271	10,383
Intangible assets excluding goodwill	2	12	2,569	2,982
Non-current receivables		16	210	208
Investments in associates		5	148	257
Other non-current financial assets		13	704	631
Deferred tax assets		8	1,773	1,916
Other non-current assets		14	119	127
Total non-current assets			17,012	18,955

Current assets
Inventories		15	2,870	3,198
Other current assets		14	529	588
Current derivative financial assets		28	81	69
Income tax receivable			60	94
Current receivables		16	3,530	3,672
Assets classified as held for sale		3	67	-
Cash and cash equivalents		29	2,794	2,401
Total current assets			9,932	10,022
Total assets			26,944	28,976


	Note		2025	2024
Equity
Shareholders’ equity		17	10,957	12,006
Non-controlling interests		17	32	37
Group equity			10,990	12,043

Non-current liabilities
Long-term debt		18	6,934	7,113
Long-term provisions		19	915	996
Deferred tax liabilities		8	93	81
Non-current contract liabilities		22	458	431
Other non-current liabilities		22	47	167
Total non-current liabilities			8,446	8,787

Current liabilities
Short-term debt		18	1,151	526
Current derivative financial liabilities		28	34	59
Income tax liabilities		8	174	71
Accounts payable			1,927	1,830
Accrued liabilities		21	1,616	1,630
Current contract liabilities		22	1,490	1,699
Short-term provisions		19	712	1,977
Liabilities directly associated with assets held for sale		3	9	-
Other current liabilities		22	395	354
Total current liabilities			7,509	8,146
Total liabilities			15,954	16,933
Total liabilities and group equity			26,944	28,976

Amounts may not add up due to rounding.


	100

Consolidated statements of cash flows

Philips Group

Consolidated statements of cash flows in millions of EUR

for the year ended December 31,


	Note		2025	2024	2023
Cash flows from operating activities
Net income			897	(698)	(463)
Results of discontinued operations, net of income tax			4	(142)	10
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation, amortization, and impairment of assets			1,125	1,390	1,261
Impairment of goodwill			-	-	8
Share-based compensation			141	96	88
Net loss (gain) on sale of assets			23	(19)	(71)
Interest income			(85)	(81)	(46)
Interest expense on debt, borrowings, and other liabilities			273	270	255
Results of associates			9	126	107
Income tax expense (benefit)			282	964	(71)
Decrease (increase) in working capital			(26)	(355)	913
Decrease (increase) in receivables and other current assets			(9)	(1)	298
Decrease (Increase) in inventories			(115)	230	257
Increase (decrease) in accounts payable, accrued and other current liabilities			97	(583)	358
Decrease (increase) in non-current receivables and other assets			(44)	(5)	(33)
Increase (decrease) in other liabilities			54	(51)	(38)
Increase (decrease) in provisions		19	(1,215)	316	422
Other items			104	101	129
Interest received			83	83	53
Interest paid			(253)	(261)	(250)
Dividends received from investments in associates			13	8	13
Income taxes paid			(213)	(173)	(152)
Net cash provided by (used for) operating activities			1,172	1,569	2,136


	Note		2025	2024	2023
Cash flows from investing activities
Net capital expenditures			(660)	(663)	(554)
Purchase of intangible assets			(136)	(118)	(96)
Expenditures on development assets			(263)	(241)	(203)
Capital expenditures on property, plant and equipment			(269)	(317)	(345)
Proceeds from sales of property, plant and equipment			9	13	90
Net proceeds from (cash used for) derivatives and current financial assets		23	(67)	38	(46)
Purchase of other non-current financial assets		23	(46)	(123)	(92)
Proceeds from other non-current financial assets		23	61	57	48
Purchase of businesses, net of cash acquired	5	4	(3)	(8)	(73)
Sale of interests in businesses, net of cash disposed			(22)	126	80
Net cash provided by (used for) for investing activities			(737)	(573)	(636)
Cash flows from financing activities
Proceeds from issuance (payments on) short-term debt	23	18	(24)	(30)	29
Principal payments on current portion of long-term debt	23	18	(609)	(763)	(754)
Proceeds from issuance of long-term debt	23	18	1,057	710	544
Re-issuance of treasury shares			13	-	-
Purchase of treasury shares		17	-	(411)	(662)
Dividends paid to shareholders of Koninklijke Philips N.V.			(328)	(1)	(2)
Dividends paid to shareholders of non-controlling interests			(2)	(2)	(3)
Net cash provided by (used for) financing activities			107	(496)	(848)
Net cash provided by (used for) continuing operations			542	500	652
Net cash provided by (used for) discontinued operations		3	(10)	(13)	123
Net cash provided by (used for) continuing and discontinued operations			532	487	776
Effect of changes in exchange rates on cash and cash equivalents			(139)	45	(79)
Cash and cash equivalents at the beginning of the period			2,401	1,869	1,172
Cash and cash equivalents at the end of the period			2,794	2,401	1,869

Amounts may not add up due to rounding.


	101

Consolidated statements of changes in equity

Philips Group

Consolidated statements of changes in equity in millions of EUR

for the year ended December 31,


	Common shares	Capital in excess of par value	Cash flow hedges	Currency translation differences	Treasury shares	Share-based compensation	Fair value through OCI	Retained earnings	Total shareholders' equity	Non-controlling interests	Group equity
			Reserves

Balance as of January 1, 2023	178	5,253	(2)	1,866	(275)	(228)	(376)	6,832	13,249	34	13,283
Net income	-	-	-	-	-	-	-	(466)	(466)	2	(463)
Other comprehensive income (loss)	-	-	8	(604)	-	-	(17)	(23)	(635)	(1)	(637)
Total comprehensive income (loss)	-	-	8	(604)	-	-	(17)	(488)	(1,101)	1	(1,100)
Dividend distributed	8	741	-	-	-	-	-	(816)	(68)	(3)	(70)
Transfer on disposal of equity investments at FVTOCI	-	-	-	-	-	-	4	(4)	-	-	-
Forward contracts	-	-	-	-	(608)	-	-	465	(143)	-	(143)
Cancellation of treasury shares	(3)	-	-	-	566	-	-	(563)	-	-	-
Share-based compensation plans	-	-	-	-	54	61	-	(24)	91	-	91
Balance as of December 31, 2023	183	5,994	6	1,263	(262)	(166)	(390)	5,402	12,028	33	12,061
Net income	-	-	-	-	-	-	-	(702)	(702)	3	(698)
Other comprehensive income (loss)	-	-	(5)	751	-	-	(11)	(6)	729	2	731
Total comprehensive income (loss)	-	-	(5)	751	-	-	(11)	(707)	27	6	33
Dividend distributed	6	762	-	-	-	-	-	(799)	(31)	(2)	(32)
Transfer on disposal of equity investments at FVTOCI	-	-	-	-	-	-	311	(313)	(2)	-	(2)
Purchase of treasury shares	-	-	-	-	(60)	-	-	-	(60)	-	(60)
Forward contracts	-	-	-	-	(310)	-	-	251	(59)	-	(59)
Cancellation of treasury shares	(1)	-	-	-	167	-	-	(166)	-	-	-
Share-based compensation plans	-	-	-	-	54	65	-	(18)	101	-	101
Balance as of December 31, 2024	188	6,755	1	2,014	(411)	(102)	(90)	3,650	12,006	37	12,043
Net income	-	-	-	-	-	-	-	895	895	1	897
Other comprehensive income (loss)	-	-	32	(1,667)	-	-	(19)	4	(1,649)	(4)	(1,653)
Total comprehensive income (loss)	-	-	32	(1,667)	-	-	(19)	900	(754)	(2)	(757)
Dividend distributed	5	457	-	-	-	-	-	(789)	(328)	(2)	(330)
Transfer on disposal of equity investments at FVTOCI	-	-	-	-	-	-	21	(21)	-	-	-
Forward contracts	-	-	-	-	-	-	-	(125)	(125)	-	(125)
Share-based compensation plans	-	-	-	-	113	85	-	(39)	159	-	159
Balance as of December 31, 2025	193	7,212	33	347	(298)	(17)	(89)	3,575	10,957	32	10,990


	102

Notes to the Consolidated financial

statements

1General information to the Consolidated financial statements

Reporting entity and its operations

Koninklijke Philips N.V. (‘Royal Philips’), incorporated and domiciled in the Netherlands, is a public limited

liability company organized under Dutch Law (registration number 17001910). Philips is headquartered at

Prinses Irenestraat 59, 1077 WV Amsterdam, the Netherlands and has its registered address at High Tech

Campus 52, 5656 AG Eindhoven, the Netherlands. The consolidated financial statements of Royal Philips as of

December 31, 2025, comprise Royal Philips and its subsidiaries (together referred to as the 'company’ or ‘Philips’

or the 'Group’). Philips is a leading health technology company primarily involved in diagnostic imaging, image-

guided therapy, patient monitoring and health informatics, as well as in consumer health and home care.

Basis of preparation

The Consolidated financial statements are:

•prepared in accordance with International Financial Reporting Standards (IFRS) Accounting Standards as

adopted by the European Union (EU) and comply with the statutory provisions of Part 9, Book 2 of the

Dutch Civil Code. All standards and interpretations issued by the International Accounting Standards Board

(IASB) and the IFRS Interpretations Committee effective in 2025 have been endorsed by the EU. As a result,

Philips’ accounting policies also fully comply with IFRS Accounting Standards as issued by the IASB. These

accounting policies have been applied by group entities

•authorized for issue by the Board of Management of Royal Philips on February 19, 2026

•prepared under the historical cost convention, unless otherwise indicated

•prepared on a going concern basis

•presented in euro, which is the presentation currency

•rounded to the nearest million euro unless stated otherwise

•subject to rounding, whereby amounts may not add up precisely to the totals provided

Accounting estimates and judgments

The preparation of these financial statements requires management to make a number of estimates and

judgments that affect the application of accounting policies and the reported amounts of assets and liabilities,

revenues and expenses, and the disclosure of contingent assets and liabilities. Amounts recognized are based

on factors that are by default associated with uncertainty. Actual results may therefore differ from estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to estimates are recognized

prospectively. Where applicable, the estimates and judgments of specific financial statement items are

described in the respective note to the consolidated financial statements.

The areas involving a higher degree of judgment and complexity in applying accounting principles and for

which changes in the assumptions and estimates could result in significantly different results than those

recorded in the consolidated financial statements are the following:

•judgment applied in determining reportable segments involves evaluating the information reviewed by the

Chief Operating Decision-Maker (the Board of Management) to assess performance and allocate resources

(Information by segment and main country)

•assessment of control (below paragraph Basis of consolidation and Interests in entities)

•revenue recognition (Income from operations)

•for acquisitions, the identification and valuation of acquired assets and liabilities including contingent

considerations provisions (Acquisitions and divestments, Provisions)

•determination of deferred tax assets for losses carried forward and uncertain tax positions (Income taxes)

•assumptions used for impairment testing (Goodwill, Intangible assets excluding goodwill)

•assessments of exposure to credit risk of financial instruments (Other financial assets, Receivables, Debt, Fair

value of financial assets and liabilities, Details of treasury and other financial risks)

•assumptions used to determine the net realizable value of inventories (Inventories)

•actuarial assumptions of future events that are used in calculating post-employment benefit expenses and

liabilities (Post-employment benefits)

•estimates and assumptions regarding the timing and the amount of outflow of resources, as well as

estimating the likelihood of a potential outflow of resources and the ability to make a reliable estimate of

the obligation relating to provisions and contingent liabilities (Provisions, Contingencies)

The company regularly updates its significant assumptions and estimates to support the reported amounts of

assets, liabilities, income and expenses.

Climate change

In preparing the consolidated financial statements, management has considered the impact of climate

change, specifically the financial impact of Philips meeting its internal and external climate-related aims, the

potential impact of climate-related risks, and the costs incurred to pro-actively manage such risks. These

considerations did not have a material impact on the financial reporting judgments, estimates or assumptions.

The financial impacts considered include specific climate mitigation measures, such as the use of lower-carbon

energy sources, the cost of developing more sustainable product offerings, and expenses incurred to mitigate

against the impact of extreme weather conditions. To meet its long-term Science Based Targets and reduce its

full value chain emissions in line with a 1.5 °C global warming scenario, Philips has entered into a number of

Power Purchase Agreements. Philips uses 100% electricity from renewable sources, mainly through long-term

Power Purchase Agreements, thereby mitigating the impact of carbon taxes. The development of more

sustainable products are covered through our EcoDesign program and already included in our R&D expenses.

The physical risk related to climate change on our sites resulting from our Task Force on Climate-Related

Financial Disclosures assessment is currently considered limited.


	103

Material accounting policies

The material accounting policies as generally applied throughout the financial statements are described in

subsequent sections. Material accounting policies relating to specific financial statement items are described in

the respective notes to the financial statements.

Basis of consolidation

The Consolidated financial statements comprise the financial statements of Koninklijke Philips N.V. and all

subsidiaries that the company controls on a consolidated basis. Control exists when the company is exposed or

has rights to variable returns from its involvement with the investee and the company has the ability to affect

those returns through its power over the investee. Generally, there is a presumption that a majority of voting

rights results in control. To support this presumption and in cases where Philips has less than a majority of the

voting or similar rights of an investee, Philips considers all relevant facts and circumstances in assessing

whether it has power over an investee, including the contractual arrangement(s) with the other vote holders

of the investee, rights arising from other contractual arrangements and the company’s voting rights and

potential voting rights. Subsidiaries are fully consolidated from the date that control commences until the

date that control ceases. All intercompany balances and transactions have been eliminated in the

Consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains, but

only to the extent that there is no evidence of impairment.

Foreign currency transactions

The financial statements of all group entities are measured using the currency of the primary economic

environment in which the entity operates (functional currency). The euro (EUR) is the functional currency of

the company and the presentation currency of the consolidated financial statements. Foreign currency

transactions are converted into the functional currency using the exchange rates prevailing at transaction date

or the valuation date in cases where items are remeasured. Gains and losses resulting from the settlement of

foreign currency transactions and those resulting from the conversion of foreign currency denominated

monetary assets and liabilities at period-end exchange rates are recognized in the Consolidated statements of

income, except for qualifying cash flow hedges, qualifying net investment hedges and equity investments

measured at fair value through OCI which are recognized in other comprehensive income.

All foreign exchange differences are presented as part of Cost of sales, apart from tax items and financial

income and expense, which are recognized in the same line item as they relate to in the Consolidated

statements of income.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are

retranslated to the functional currency using the exchange rate at the date the fair value was determined.

Non-monetary items in a foreign currency that are measured based on historical cost are translated using the

exchange rate at the transaction date.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on

acquisition, are translated to euros at the exchange rates prevailing at the reporting date. The income and

expenses of foreign operations are translated to euros at the exchange rates prevailing at the dates of the

transactions.

Foreign currency differences arising upon translation of foreign operations into euros are recognized in Other

comprehensive income and presented as part of Currency translation differences in Equity. However, if the

operation is not a wholly-owned subsidiary, the proportionate share of the translation difference is allocated

to Non-controlling interests.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the

cumulative amount in the Currency translation differences related to the foreign operation is reclassified to

the Consolidated statements of income as part of the gain or loss on disposal. When the company disposes of

only part of its interest in a subsidiary that includes a foreign operation while retaining control, the respective

proportion of the cumulative amount is reattributed to Non-controlling interests. When the company disposes

of only part of its investment in an associate or joint venture that includes a foreign operation while retaining

significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to the

Consolidated statements of income.

New accounting policies effective in 2025

No new IFRS accounting standards or amendments to existing standards, effective in 2025, had a significant

impact on the consolidated financial statements.

New accounting policies effective after 2025

The IASB has issued several IFRS accounting standards, or amendments to standards, with an effective date

after 2025. Considerations relating to IFRS 18 Presentation and Disclosure in Financial Statements are set out

below. The company has not early-adopted any standards or amendments to existing standards. The company

does not anticipate that the application of any other standards, or amendments to standards, will have a

significant impact on the consolidated financial statements upon adoption.

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 18 was issued in April 2024 and is endorsed by the EU. It will supersede IAS 1, Presentation of Financial

Statements. IFRS 18 introduces new requirements for presentation within the Consolidated statement of

income, including specified totals and subtotals. Even though the new standard will not impact the

recognition and measurement of items in the financial statements, the new standard requires entities to use

defined subtotals in the Consolidated statement of income, make disclosures about management-defined

performance measures, and adds new principles for aggregation and disaggregation of information.


	104

IFRS 18 is effective for reporting periods beginning on or after January 1, 2027. Retrospective application is

required; therefore, upon adoption, comparative information will be restated in accordance with IFRS 18. The

company is currently assessing the implications of applying the new standard.

Changes in presentation from the prior year

Accounting policies have been applied consistently for all periods presented in these consolidated financial

statements. Certain prior-year amounts have been reclassified to conform to the current year presentation

due to combining insignificant balances and immaterial organizational changes. In 2025, uncertain tax

liabilities were reclassified from non-current tax liabilities to current income tax liabilities, and non-current

derivative financial assets were combined into other non-current financial assets.

2Information by segment and main country

Accounting policies

Segment accounting policies are the same as the accounting policies applied by the company. Operating

segments are components of the company’s business activities for which separate financial information is

available that is evaluated regularly by the Chief Operating Decision-Maker (the Board of Management of the

company). The Board of Management decides how to allocate resources and assesses performance.

Reportable segments comprise the operating segments Diagnosis & Treatment, Connected Care and Personal

Health. Besides these reportable segments, segment Other comprises Philips’ central Innovation & Design, IP

royalty activities, corporate central costs, and other minor items not allocated to the operating segments.

Accounting estimates and judgments

Determining reportable segments requires significant judgment and involves evaluating the information that

is reviewed by the Chief Operating Decision-Maker (the Board of Management) to assess performance and

allocate resources, in accordance with IFRS 8 'Operating Segments'.

The Philips reportable segments are Diagnosis & Treatment, Connected Care and Personal Health, each being

responsible for the management of its Businesses worldwide.

Philips focuses on improving people’s lives through meaningful innovation. The Diagnosis & Treatment

segment unites the Businesses related to the goal of precision diagnosis and disease pathway selection, and

the Businesses related to image-guided, minimally invasive treatment. The Connected Care segment focuses

on patient care solutions, advanced informatics and analytics, and patient and workflow optimization inside

and outside the hospital, and aims to unlock synergies from integrating and optimizing patient care

pathways, and leveraging provider-payer-patient business models. The Personal Health segment focuses on

healthy living and preventative care.

Transactions between the segments are mainly related to components and parts included in the product

portfolio of the other segments. The pricing of such transactions was at cost or determined on an arm’s length

basis. Philips has no single external customer that represents 10% or more of sales. Sales by country is

presented based on the country of seller.

Philips Group

Information on income statements in millions of EUR


	Sales	Sales including intercompany	Depreciation and amortization ¹	Adjusted EBITA
2025
Diagnosis & Treatment	8,531	8,986	(265)	998
Connected Care	5,076	5,100	(404)	544
Personal Health	3,673	3,765	(112)	662
Other	554	703	(344)	(9)
Inter-segment eliminations		(720)
Philips Group	17,834	17,834	(1,125)	2,195

2024
Diagnosis & Treatment	8,790	9,269	(464)	1,018
Connected Care	5,134	5,163	(403)	494
Personal Health	3,486	3,566	(117)	584
Other	611	750	(406)	(18)
Inter-segment eliminations		(726)
Philips Group	18,021	18,021	(1,390)	2,077

2023
Diagnosis & Treatment	8,825	9,269	(306)	1,028
Connected Care	5,138	5,149	(445)	369
Personal Health	3,602	3,685	(115)	597
Other	604	413	(394)	(73)
Inter-segment eliminations		(346)
Philips Group	18,169	18,169	(1,261)	1,921

1Includes impairments (excluding goodwill impairment); for impairment values please refer to Property, plant and equipment

and Intangible assets excluding goodwill

The term Adjusted EBITA* is used to evaluate the performance of Philips and its segments. Adjusted EBITA*

represents income from operations excluding amortization and impairment of acquired intangible assets and


	105

impairment of goodwill (EBITA) and excluding gains or losses from restructuring costs, acquisition-related

charges and other items.

Adjusted EBITA* is not a recognized measure of financial performance under IFRS. Reconciliations of Adjusted

EBITA* to the most directly comparable IFRS measure, Net income, for the years indicated are presented in the

accompanying tables. Net income is not allocated to segments as certain income and expense line items are

monitored on a centralized basis, resulting in them being shown on a Philips Group level only.

Philips Group

Reconciliation from net income to Adjusted EBITA in millions of EUR


	Philips Group	Diagnosis & Treatment	Connected Care	Personal Health	Other
2025
Net Income	897
Discontinued operations, net of income taxes	4
Income tax expense (benefit)	282
Income before taxes	1,182
Results of associates	9
Financial expenses	346
Financial income	(113)
Income from operations	1,424	804	89	631	(100)
Amortization and impairment of acquired intangible assets	240	73	141	14	12
EBITA	1,665	877	230	645	(88)
Restructuring and acquisition- related charges	260	43	126	17	74
Other items:	270	77	188	-	5
Respironics field-action running costs	112	-	112	-	-
Respironics consent decree charges	97	-	97	-	-
Quality actions	89	77	12	-	-
Contract settlement gain	(27)	-	(27)	-	-
Remaining items	(1)	-	(6)	-	5
Adjusted EBITA *	2,195	998	544	662	(9)

Philips Group

Reconciliation from net income to Adjusted EBITA in millions of EUR


	Philips Group	Diagnosis & Treatment	Connected Care	Personal Health	Other
2024
Net Income	(698)
Discontinued operations, net of income taxes	(142)
Income tax expense (benefit)	963
Income before taxes	123
Results of associates	124
Financial expenses	387
Financial income	(105)
Income from operations	529	592	(466)	544	(142)
Amortization and impairment of acquired intangible assets	392	225	141	15	12
EBITA	921	817	(324)	559	(130)
Restructuring and acquisition- related charges	326	157	53	25	92
Other items:	830	45	765	-	20
Respironics litigation provision	984	-	984	-	-
Respironics insurance income	(538)	-	(538)	-	-
Respironics field-action running costs	133	-	133	-	-
Respironics consent decree charges	113	-	113	-	-
Quality actions	123	45	78	-	-
Remaining items	16	-	(4)	-	20
Adjusted EBITA *	2,077	1,018	494	584	(18)


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Philips Group

Reconciliation from net income to Adjusted EBITA in millions of EUR


	Philips Group	Diagnosis & Treatment	Connected Care	Personal Health	Other
2023
Net Income	(463)
Discontinued operations, net of income taxes	10
Income tax expense (benefit)	(73)
Income before taxes	(526)
Results of associates	98
Financial expenses	376
Financial income	(63)
Income from operations	(115)	721	(1,199)	552	(190)
Amortization and impairment of acquired intangible assets	290	89	178	14	9
Impairment of goodwill	8	8	-
EBITA	183	818	(1,020)	567	(181)
Restructuring and acquisition- related charges	381	118	115	9	140
Other items:	1,358	92	1,275	22	(32)
Respironics litigation provision	575	-	575	-	-
Respironics field-action connected to the proposed consent decree	363	-	363	-	-
Respironics field-action running costs	224	-	224	-	-
Quality actions	175	81	94	-	-
Provision for a legal matter	31	-	31	-	-
Investment re-measurement loss	23	-	-	23	-
Gain on divestment of business	(35)	-	-	-	(35)
Remaining items	2	11	(12)	(1)	3
Adjusted EBITA *	1,921	1,028	369	597	(73)

Philips Group

Main countries in millions of EUR


	Sales	Tangible and intangible assets ¹
2025
Netherlands	2,546	1,592
United States	7,130	10,102
China	1,202	224
Japan	883	359
Germany	652	447
Other countries	5,421	1,333
Total main countries	17,834	14,057

2024
Netherlands	2,506	1,662
United States	7,227	11,607
China	1,153	250
Japan	886	396
Germany	653	392
Other countries	5,596	1,509
Total main countries	18,021	15,816

2023
Netherlands	2,390	1,624
United States	7,178	11,410
China	1,408	234
Japan	941	407
Germany	573	348
Other countries	5,679	1,527
Total main countries	18,169	15,550

1Consists of Property plant and equipment, Intangible assets excluding goodwill and Goodwill

*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to

Reconciliation of non-IFRS information.


	107

3Discontinued operations and assets classified as held for sale

Accounting policies

Assets classified as held-for-sale

Non-current assets (or disposal groups) are classified as held-for-sale if their carrying amounts are expected to

be recovered through a sale transaction rather than through continuing use. Non-current assets (or disposal

groups) classified as held-for-sale are measured at the lower of their carrying amount or the fair value less

costs of disposal. Depreciation or amortization of an asset ceases when it is classified as held-for-sale. When

non-current assets (or disposal groups) are classified as held-for-sale, comparative balances prior to such date

are not represented in the Consolidated balance sheets.

Discontinued operations

A discontinued operation is a component of the company that has either been disposed of or is classified as

held-for-sale and represents a separate major line of business or geographical area of operations or is a part

of a single coordinated plan to dispose of a separate major line of business or geographical area of

operations. Any gain or loss from disposal, together with the results of these operations until the date of

disposal, are reported separately as discontinued operations in the Consolidated statements of income.

The financial information of discontinued operations is excluded from the respective captions in the

Consolidated financial statements and related notes for all periods presented. Comparatives are re-presented

for presentation of discontinued operations in the Consolidated statements of income and Consolidated

statements of cash flows.

Accounting estimates and judgments

The determination of the fair value less costs of disposal involves the use of estimates and assumptions that

tend to be uncertain. Circumstances to which these adjustments may relate include resolution of uncertainties

that arise from the terms of the disposal transaction, such as the resolution of purchase price adjustments and

indemnifications, resolution of uncertainties that arise from and are directly related to the operations of the

component before its disposal, such as environmental and assurance-type product warranty obligations

retained by the company, and the settlement of employee benefit plan obligations provided that the

settlement is directly related to the disposal transaction.

Philips Group

Discontinued operations, net of income taxes in millions of EUR


	2025	2024	2023
Domestic Appliances	(1)	140	(2)
Other	(3)	2	(7)
Discontinued operations, net of income taxes	(4)	142	(10)

In 2024, Discontinued operations related to the Domestic Appliances business included a tax benefit of EUR

140 million relating to tax audit settlements of prior years.

Certain costs related to other divestments, which were previously reported as discontinued operations,

resulted in a net loss of EUR (3) million in 2025, a net gain of EUR 2 million in 2024 and a net loss of EUR (7)

million in 2023.

Philips Group

Net cash provided by (used for) discontinued operations in millions of EUR


	2025	2024	2023
Net cash provided by (used for) operating activities	(10)	(13)	123
Net cash provided by (used for) investing activities	-	-	-
Net cash provided by (used for) discontinued operations	(10)	(13)	123

In 2025 and 2024, net cash used for discontinued operations consisted primarily of cash flows related to the

tax claims from the previously divested business. In 2023, net cash provided by discontinued operations

consisted primarily of a refund of advance tax payments related to a previously divested business.

Assets classified as held for sale

As of December 31, 2025, assets held for sale primary consisted of assets and liabilities of EUR 59 million,

directly associated with a business that is to be sold within the next financial year.

As of December 31, 2024, there were no assets held for sale.


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4Acquisitions and divestments

Accounting policies

Acquisitions

The company accounts for business combinations using the acquisition method when control is transferred to

the group. The consideration transferred in the acquisition is generally measured at fair value, as are the

identifiable net assets acquired and the liabilities assumed. Transaction costs are expensed as incurred. Any

contingent consideration is measured at fair value at the acquisition date. Subsequent changes in the fair

value of the contingent consideration are recognized in the consolidated statements of income. Changes to

the initial fair value of the acquired assets and liabilities, based on new information about the circumstances

at the acquisition date, can be made up to 12 months after the acquisition date.

Divestments

Upon loss of control, the company derecognizes the assets and liabilities of the subsidiary, any non-controlling

interests and the other components of equity related to the subsidiary. Any surplus or deficit arising from the loss of

control is recognized in the Consolidated statements of income. If the company retains any interest in the previous

subsidiary, such interest is measured at fair value at the date the control is lost. Subsequently it is accounted for as

either an equity-accounted investee (associate) or as a financial asset, depending on the level of influence retained.

Further information on loss of control can be found in Discontinued operations and assets classified as held for sale.

Accounting estimates and judgments

Intangible assets acquired in a business acquisition and the financial liability related to non-controlling

interest are measured at fair value at the date of the acquisition.

To determine the fair value of intangible assets at the acquisition date, estimates and assumptions are

required. The valuation of the identifiable intangible assets involves estimates of expected sales, earnings and/

or future cash flows and require use of key assumptions, such as discount rate, royalty rate and growth rates.

Estimates are also applied when determining the fair value of legal cases and tax positions in the acquired entity.

The fair value is based on estimates of the likelihood, the expected timing and the amount of the potential cash

outflow. Contingent liabilities relating to legal cases and non-income tax positions of the acquired entity are

recognized at fair value at the acquisition date in accordance with IFRS 3, irrespective of whether an outflow will

be required to settle the obligation. After initial recognition and until the liability is settled, cancelled or expired,

the liability is measured at the higher of the amount that would be recognized in accordance with IAS 37

'Provisions, contingent liabilities and contingent assets' and the initial liability amount. For income tax positions,

the company applies IAS 12 'Income taxes', which requires recognition of provisions only when the likelihood of

cash outflow is considered probable.

2025

Acquisitions

Philips did not complete any acquisitions during 2025.

Divestments

During 2025, Philips completed two divestments, generating total net consideration of EUR 77 million. The

combined result of these divestments was a loss of EUR (26) million, recognized within Other business

expenses in the Consolidated statement of income. The most notable transaction was the divestment of the

Emergency Care business. On December 31, 2025, Philips completed the sale to Bridgefield Capital, a US-based

investment firm, and the parties entered into an exclusive brand license agreement as well as a transition

service and manufacturing agreement. The divestments were not material in the context of the Group’s

financial position, performance or cash flows and did not meet the quantitative or qualitative thresholds for

separate disclosure under IFRS.

2024

Acquisitions

Philips did not make any acquisitions in 2024.

Divestments

During 2024 Philips completed four divestments, generating net cash consideration of EUR 118 million. These

transactions resulted in EUR 8 million gain, which has been recognized within Other business income in the

Consolidated statements of income. The divestments were individually and collectively not material to the

Group.

5Interests in entities

Accounting policies

Associates are all entities over which the company has significant influence, meaning the power to participate

in the financial and operating policy decisions of the investee without the power to control or jointly control

those procedures. Significant influence is presumed for entities in which the company holds between 20% and

50% of the voting power. This presumption may be rebutted if evidence demonstrates that significant

influence does not exist, or conversely, that it exists despite voting rights of less than 20%. These assessments

involve significant judgment and may require consideration of qualitative factors in addition to quantitative

thresholds. Changes in these factors could lead to reassessment of significant influence and impact the

classification and measurement of the investment.

Investments in associates are accounted for using the equity method of accounting and are initially

recognized at cost. The carrying amount of an investment in an associate includes the carrying amount of


	109

goodwill identified on acquisition. An impairment loss on such investment is allocated to the investment as a

whole.

The company’s share of the net income of these associates is included in Results of associates, in the Consolidated

statements of income, after adjustments to align the accounting policies with those of the company. In addition,

gains or losses from changes in ownership (dilution), impairments, and disposals of associates are recognized

within the same line item. When the company’s share of losses exceeds its interest in an associate, the carrying

amount of that interest is reduced to zero and recognition of further losses is discontinued except to the extent

that the company has an obligation or made payments on behalf of the associate.

The nature of 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 are discussed in the subsequent

paragraphs.

Group companies

In the accompanying table is a list of subsidiaries that, as of December 31, 2025, individually exceed 5% of

either the consolidated group Sales, Income from operations or Income from continuing operations (before

any intra-group eliminations) of Group legal entities. All of the entities are fully consolidated in the Group

financial statements.

Philips Group

Interests in group companies in alphabetical order by country

December 31, 2025


Legal entity name	Principal country of business
Philips (China) Investment Company, Ltd.	China
Philips Medizin Systeme Böblingen GmbH	Germany ¹
Philips Consumer Lifestyle B.V.	Netherlands
ATL International LLC	United States
Braemar Manufacturing, LLC	United States
Philips Medical Systems (Cleveland), Inc.	United States
Philips North America LLC	United States
Philips RS North America LLC	United States

1Application of Sec. 264 (3) and Sec. 264b HGB (German Commercial Code) for fully consolidated legal entities: Philips GmbH,

Hamburg; Philips Medical Systems DMC GmbH, Hamburg; Respironics Deutschland GmbH & Co.KG, München; Philips Medizin

Systeme Böblingen GmbH, Böblingen; TomTec Imaging Systems GmbH, Unterschleißheim; PIP Verwaltungsgesellschaft mbH,

Hamburg; Respironics Deutschland Verwaltungsgesellschaft mbH, Herrsching.

Information related to non-controlling interests

As of December 31, 2025, three consolidated subsidiaries are not wholly owned by Philips (December 31, 2024:

three). In 2025, sales to third parties and Net income for these subsidiaries in aggregate are EUR 479 million

(December 31, 2024: EUR 467 million) and EUR 37 million (December 31, 2024: EUR 10 million), respectively.

Investments in associates

The total value of investments in associates as of December 31, 2025, amounted to EUR 148 million (2024: EUR

257 million, 2023: EUR 381 million).

During the year, the investment in an associate was reclassified to other non-current financial assets measured

at FVTOCI, following the loss of significant influence, resulting in a EUR 2 million gain recognized in results of

associates. Cumulative currency translation gains of EUR 19 million were recycled to the income statement as

part of other business income.

The accompanying table summarizes, on an aggregate basis, the components of results of associates together

with Philips’ share in other comprehensive income.

Philips Group

Results of associates and share in other comprehensive income of associates

December 31, 2025


	2025	2024
Share in profit or loss from continuing operations	(12)	(23)
Impairment	2	(103)
Result on sale of equity accounted investees	1	2
Results of associates	(9)	(124)
Share in other comprehensive income	-	-

In 2024, the impairment mainly included EUR 63 million attributable to B-Soft Co., Ltd.

Cumulative currency translation differences related to investments in associates were EUR (68) million as of

December 31, 2025 (2024: EUR (10) million).

No significant contingent liabilities exist related to associates. None of the associates are considered

individually material to the group.

Involvement with unconsolidated structured entities

Philips founded three Philips Medical Capital (PMC) entities, in the US, France and Germany, in which Philips

holds a minority interest. Philips Medical Capital, LLC in the US is the most significant entity. PMC entities

provide healthcare equipment financing and leasing services to Philips customers for diagnostic imaging

equipment, patient monitoring equipment, and clinical IT systems.


	110

The company concluded that it does not control, and therefore should not consolidate, the PMC entities. In

the US, PMC operates as a subsidiary of De Lage Landen Financial Services, Inc. The same structure and

treatment is applied to the PMC entities in the other countries, with other majority shareholders. Operating

agreements are in place for all PMC entities, whereby acceptance of sales and financing transactions resides

with the respective majority shareholder. After acceptance of a transaction by PMC, Philips transfers control

and does not retain any obligations towards PMC or its customers, from the sales contracts.

As of December 31, 2025, Philips’ shareholding in Philips Medical Capital, LLC had a carrying value of EUR 26

million (December 31, 2024: EUR 31 million).

The company does not have any material exposures to losses from interests in unconsolidated structured

entities other than the invested amounts.

6Income from operations

Accounting policies

Revenue recognition

Goods include consumer-type products in the Personal Health segment, equipment in the Diagnosis &

Treatment and Connected Care segments, and software-related offerings treated as goods. Services include

preventative and corrective maintenance services, as well as related parts and labor, extended warranties,

training, and other service-type offerings (including software). The company recognizes a contract with a

customer when a legally enforceable agreement exists, the rights of both parties are established, the contract

has commercial substance, and the consideration is probable to be collected. Revenue is recognized in the

period when the performance obligation is satisfied and the customer obtains control of the underlying

goods or services, allowing the customer the ability to direct the use of, and obtain substantially all of, the

remaining benefits of such product or service. The revenue reflects the consideration (i.e., transaction price) to

which the company expects to be entitled in exchange for the good or service. The consideration expected by

the company may include fixed and/or variable amounts which can be impacted by sales returns, trade

discounts, volume rebates, credits or Group Purchasing Organization (GPO) fees. The company adjusts the

consideration for the time value of money if the period between the transfer of the promised goods or

services to the customer and payment by the customer exceeds six months. Revenue is either recognized at a

point in time or over time.

Revenues from transactions relating to distinct goods or services are accounted for separately based on their

relative stand-alone selling prices. The stand-alone selling price is the price that would be charged for the

goods or service in a separate transaction under similar conditions to similar customers. The transaction price

is determined (considering variable considerations) and allocated to performance obligations based on their

relative stand-alone selling prices. These transactions mainly occur in the segments Diagnosis & Treatment and

Connected Care and include arrangements that require delivery of goods with subsequent installation and

training activities or future goods and services. Depending on the terms of the contract sale, the installation

and training activities could be considered part of the equipment sales. Revenue is recognized when the

performance obligation is satisfied, i.e., when the installation has been completed and the equipment is ready

to be used by the customer in the way contractually agreed.

Variable consideration is included in the transaction price to the extent that it is highly probable that a

significant reversal in the amount of cumulative revenue recognized will not occur once associated

uncertainties are resolved. Such assessment is performed on each reporting date to check whether it is

constrained. For products for which a right of return exists during a defined period, revenue recognition is

determined based on the historical pattern of actual returns, or in cases where such information is not

available, revenue recognition is postponed until the return period has lapsed. Return policies are typically

based on customary return arrangements in local markets. A provision is recognized for assurance-type

product warranty at the time of revenue recognition and reflects the estimated costs of replacement and free-

of-charge services that will be incurred by the company with respect to the products sold. For certain products,

the customer has the option to purchase the warranty separately, which is considered a separate performance

obligation on top of the assurance-type product warranty. For such warranties which provide distinct service,

revenue recognition occurs on a straight-line basis over the extended warranty contract period. Occasionally,

the company may offer a full or partial refund of consideration previously paid. A provision is recognized for

the amounts expected to be refunded to customers, and remeasured at each reporting date to reflect changes

in the estimated refunds, with a corresponding adjustment to revenue.

In the case of loss under a sales agreement, the loss is recognized immediately. Expenses incurred for sales

commissions that are considered incremental to the contracts are recognized immediately in the consolidated

statements of income as selling expenses as a practical expedient under IFRS 15 Revenue from Contracts with

Customers.

The company receives payments from customers based on a billing schedule or credit period, as established in

our contracts. Credit periods are determined based on standard terms, which vary according to local market

conditions. Amounts posted in deferred revenue for which the goods or services have not yet been

transferred to the customer and amounts that have either been received or are due, are presented as Contract

liabilities in the Consolidated balance sheets. Payment terms typically do not exceed 90 days after invoice.

Revenue from sale of goods

Revenues are recognized at either point in time or over time when control of the goods passes to the buyer,

based on the allocation of the transaction price to the performance obligation.

Revenue from services

Revenues are recognized over time as the company transfers control of the services to the customer, which is

demonstrated by the customer simultaneously receiving and consuming the benefits provided by the company.


	111

The amount of revenues is measured by reference to the progress made toward complete satisfaction of the

performance obligation, which in general is evenly over time. Service revenue related to repair and

maintenance activities for goods sold is recognized ratably over the service period or as services are rendered.

Sales from other sources

Revenue includes consideration received from customers under lease arrangements in which the company acts

as lessor. Lease contracts are classified as either finance leases or operating leases.

Finance leases: When substantially all risks and rewards incidental to ownership of the underlying asset are

transferred to the lessee, the lease is classified as a finance lease. For such leases, revenue is recognized at a

point in time.

Operating leases: When the company retains substantially all risks and rewards incidental to ownership, the

lease is classified as an operating lease. Revenue from operating leases is recognized on a straight-line basis

over the lease term.

Income from royalties

Royalty income from brand license arrangements and from intellectual property rights, such as technology

licenses or patents, is recognized on an accrual basis in accordance with the substance of the relevant

agreement and can be over time or point in time.

Employee benefits expense

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the

related service is provided. The company recognizes a liability and an expense for bonuses and incentives

based on a formula that takes into consideration the profit attributable to the company’s shareholders after

certain adjustments.

Shipping and handling

Expenses incurred for shipping and handling are mainly recorded as cost of sales. When shipping and

handling are part of a project and billed to the customer, then the related expenses are recorded as cost of

sales. Shipping and handling related to sales to third parties are partly recorded as selling expenses. When

shipping and handling billed to customers are considered a distinct and separate performance obligation, the

fees are recognized as revenue and costs included in cost of sales.

Other business income (expenses)

Other business income (expenses) includes gains and losses on the sale of property, plant and equipment,

gains and losses on the sale of businesses, and other gains and losses not related to the company’s operating

activities.

Government grants

Grants from governments are recognized at their fair value when there is a reasonable assurance that the

grant will be received and the company will comply with the conditions. Grants related to costs are deferred

in the consolidated balance sheet and recognized in the consolidated statement of income as a reduction of

the related costs that they are intended to compensate. Grants related to assets are deducted from the cost of

the asset and presented net in the consolidated balance sheets.

Accounting estimates and judgments

Sales-related accruals

The company has sales promotions-related agreements with distributors and retailers designed to promote

the sale of products. Among the programs are arrangements under which rebates and discounts can be

earned by the distributors and retailers by attaining agreed upon sales levels, or for participating in specific

marketing programs. Management estimates the sales-related accruals associated with these arrangements

based on a combination of historical patterns and future expectations regarding which promotional targets

are expected to be met by distributors and retailers. These estimated amounts are recorded as a reduction to

revenue when the related product or service sales are recognized. Accrued customer rebates are presented as

other current liabilities, unless there is a right to offset against the respective accounts receivable.

A breakdown by nature of the income (loss) from operations is:

Philips Group

Sales and costs by nature in millions of EUR


	2025	2024	2023
Sales	17,834	18,021	18,169
Costs of materials used	(4,120)	(4,213)	(4,626)
Employee benefit expenses	(6,681)	(6,641)	(6,903)
Depreciation and amortization ¹	(1,125)	(1,390)	(1,261)
Shipping and handling	(585)	(623)	(668)
Advertising and promotion	(794)	(791)	(700)
Lease expenses	(43)	(54)	(51)
Other operational costs	(3,097)	(3,351)	(3,535)
Other business income (expenses)	36	(429)	(540)
Income from operations	1,424	529	(115)

1Includes impairments. For impairment values please refer to Property, plant and equipment and Intangible assets excluding

goodwill.


	112

Sales composition and disaggregation

For information related to sales on a segment and geographical basis, refer to Information by segment and

main country.

Philips Group

Sales composition in millions of EUR


	2025	2024	2023
Goods	12,089	12,198	12,419
Services	4,938	5,003	4,926
Royalties	434	466	434
Total sales from contracts with customers	17,461	17,667	17,779
Sales from other sources	373	354	390
Total sales	17,834	18,021	18,169

Philips Group

Disaggregation of sales per segment in millions of EUR


	Sales at a point in time	Sales over time	Total sales from contracts with customers	Sales from other sources	Total sales
2025
Diagnosis & Treatment	5,286	3,157	8,443	88	8,531
Connected Care	3,042	1,749	4,792	284	5,076
Personal Health	3,659	13	3,672	1	3,673
Other	232	322	554	-	554
Philips Group	12,219	5,241	17,461	373	17,834

2024
Diagnosis & Treatment	5,655	3,070	8,725	65	8,790
Connected Care	2,959	1,886	4,845	289	5,134
Personal Health	3,471	15	3,486	-	3,486
Other	300	311	611	-	611
Philips Group	12,385	5,282	17,667	354	18,021

2023
Diagnosis & Treatment	5,768	2,980	8,749	76	8,825
Connected Care	2,970	1,854	4,824	314	5,138
Personal Health	3,586	16	3,602	-	3,602
Other	245	360	604	-	604
Philips Group	12,569	5,210	17,779	390	18,169

Philips Group

Disaggregation of sales per geographic area in millions of EUR


	Sales at a point in time	Sales over time	Total sales from contracts with customers	Sales from other sources	Total sales
2025
Western Europe	2,606	1,291	3,897	24	3,921
North America	4,945	2,478	7,423	119	7,542
Other mature geographies	798	425	1,223	229	1,452
Mature geographies	8,349	4,194	12,543	372	12,915
Growth geographies	3,870	1,047	4,917	1	4,919
Sales	12,219	5,241	17,461	373	17,834

2024
Western Europe	2,698	1,254	3,951	28	3,978
North America	4,958	2,602	7,560	93	7,655
Other mature geographies	893	401	1,294	231	1,526
Mature geographies	8,549	4,256	12,805	353	13,159
Growth geographies	3,836	1,026	4,861	1	4,863
Sales	12,385	5,282	17,667	354	18,021

2023
Western Europe	2,552	1,221	3,770	49	3,819
North America	4,859	2,608	7,470	92	7,562
Other mature geographies	980	398	1,378	248	1,626
Mature geographies	8,392	4,227	12,618	389	13,007
Growth geographies	4,177	984	5,161	1	5,162
Sales	12,569	5,210	17,779	390	18,169

Total sales from other sources mainly relates to operating leases of EUR 215 million (2024: EUR 222 million;

2023: EUR 234 million). Sales represent revenue from external customers.

As of December 31, 2025, the aggregate amount of the transaction price allocated to remaining performance

obligations from sales of goods and services was EUR 14,924 million (2024:15,632 million). The company

expects to recognize approximately 45% of the remaining performance obligations within 1 year. Revenue

expected to be recognized beyond 1 year is mostly related to longer term customer service and software

contracts.


	113

Sales over time represents services and Other also includes royalties over time (2025: EUR 301 million; 2024:

EUR 277 million; 2023: EUR 283 million).

Sales per geographic area are reported based on country of destination.

Costs of materials used

Cost of materials used represents the inventory recognized in cost of sales.

Employee benefit expenses

Philips Group

Employee benefit expenses in millions of EUR


	2025	2024	2023
Salaries and wages excluding share-based compensation	5,369	5,356	5,635
Share-based compensation	148	104	97
Post-employment benefit costs	371	388	402
Other social security and similar charges:
Required by law	582	580	567
Voluntary	211	211	202
Employee benefit expenses	6,681	6,641	6,903

The employee benefit expenses relate to employees who are working on the payroll of Philips, both with

permanent and temporary contracts.

For further information on post-employment benefit costs, refer to Post-employment benefits.

For details on the remuneration of the members of the Board of Management and the Supervisory Board,

refer to Information on remuneration.

Employees

The number (full-time equivalents, or FTEs) of employees by category at year-end is summarized as:

Philips Group

Employees by category in FTEs as of December 31


	2025	2024	2023
Production	28,167	27,478	28,640
Research & development	10,248	10,843	12,035
Other	26,402	27,795	26,818
Philips Employees	64,817	66,116	67,493
Third-party workers	1,585	1,708	2,163
Total	66,401	67,823	69,656

Philips employees consist of those persons working on the payroll of Philips and whose costs are reflected in

employee benefit expenses. Other consists of employees in commercial, general and administrative functions.

Third-party workers consist of personnel hired on a per-period basis, via external companies.

Philips Group

Employees by geographical location in average FTEs


	2025	2024	2023
Netherlands	8,342	8,844	9,794
Other countries	58,691	60,113	62,471
Total	67,033	68,956	72,264

Depreciation and amortization

Depreciation of property, plant and equipment and amortization of intangible assets, including impairments,

are:

Philips Group

Depreciation and amortization 1 in millions of EUR


	2025	2024	2023
Depreciation of property, plant and equipment	602	696	689
Amortization of software	104	102	98
Amortization of acquired intangible assets	240	392	290
Amortization of development costs	178	199	184
Depreciation and amortization	1,125	1,390	1,261

1Includes impairments. For impairment values please refer to Property, plant and equipment and Intangible assets excluding

goodwill.


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Depreciation of property, plant and equipment is mainly included in cost of sales. Amortization of software is

mainly included in general and administration expenses. Amortization of other intangible assets is included in

selling expenses for brand names and customer relationships and is included in cost of sales for technology-

based and other intangible assets. Amortization of development costs is included in research and

development expenses.

Shipping and handling

Shipping and handling costs are included in cost of sales and selling expenses in the Consolidated statements

of income.

Advertising and promotion

Advertising and promotion costs are included in selling expenses in the Consolidated statements of income.

Lease expense

Lease expense relates to short-term and low-value leases.

Other operational costs

Other operational costs contain items which are dissimilar in nature and individually insignificant in amount

to disclose separately. These costs contain, among others, expenses for outsourcing services, mainly in IT and

Human Resources, third-party workers, consultants, warranties, patents, costs for travelling and external legal

services. Government grants of EUR 86 million were recognized as a cost reduction in 2025 (2024: EUR 91

million; 2023: EUR 95 million). The grants mainly relate to research and development activities and business

development.

Audit and audit-related fees

The accompanying table shows the fees attributable to the fiscal years 2025, 2024 and 2023 for services

rendered by the external auditors.

Philips Group

Audit and audit-related fees in millions of EUR


	2025			2024
	PwC NL ¹	PwC Network	Total	EY NL ²	EY Network	Total
Audit fees	6.5	6.2	12.7	9.5	5.5	15.0
consolidated financial statements	6.5	2.9	9.4	9.5	3.0	12.5
statutory financial statements	-	3.3	3.3	-	2.5	2.5
Audit-related fees ³	1.3	-	1.3	1.9	0.3	2.2
sustainability assurance	1.3	-	1.3	1.6	-	1.6
other	0.1	-	0.1	0.3	0.3	0.6
Tax fees	-	-	-	-	-	-
All other fees	-	-	-	-	-	-
Fees	7.8	6.2	14.0	11.4	5.8	17.2

1PricewaterhouseCoopers Accountants N.V.

2EY Accountants B.V.

3Also known as Assurance fees

Other business income (expenses)

Other business income (expenses) consists of:

Philips Group

Other business income (expenses) in millions of EUR


	2025	2024	2023
Result on disposal of businesses:
income	2	27	50
expenses	(27)	(14)	-
Result on disposal of fixed assets:
income	3	3	12
expenses	(2)	-	(1)
Result on other remaining businesses:
income	82	560	49
expenses	(21)	(1,005)	(643)
Impairment of goodwill	-	-	(8)
Other business income (expenses)	36	(429)	(540)
Total other business income	87	590	112
Total other business expenses	(51)	(1,019)	(652)

The result on disposal of businesses mainly relates to income (expense) in the respective periods for

divestments of non-strategic businesses. For more information refer to Acquisitions and divestments.


	115

The result on disposal of fixed assets mainly relates to the sale of real estate assets.

The result on other remaining businesses mainly relates to the revaluation of contingent consideration and

various legal matters. In 2024, Respironics recorded a EUR 984 million provision in connection with the

settlement of the Respironics personal injury and the medical monitoring claims in the US. Philips recorded

insurance income of EUR 538 million in connection with the agreement with insurers to partially reimburse

the Respironics recall-related product liability claims. For more information on contingent consideration, refer

to Provisions.

Impairment of goodwill

There were no goodwill impairment charges in 2025 and in 2024. For further information refer to Goodwill.

7Financial income and expenses

Accounting policies

Financial income and expenses are recognized on the accrual basis in the Consolidated statements of income.

Interest income and expense are measured using the effective interest method. Dividend income is recognized

in the consolidated statements of income on the date that the company’s right to receive payment is

established, which in the case of quoted securities is normally the ex-dividend date.

Philips Group

Financial income and expenses in millions of EUR


	2025	2024	2023
Interest income	83	79	46
Interest income from loans and receivables	15	12	13
Interest income from cash and cash equivalents	68	67	33
Dividend income from financial assets	3	3	2
Net gains from disposal of financial assets	1	2	-
Net change in fair value of derivatives	12	-	-
Other financial income	14	21	15
Financial income	113	105	63


	2025	2024	2023
Interest expense	(288)	(288)	(277)
Interest expense on debt and borrowings	(233)	(231)	(229)
Finance charges under lease contract	(38)	(37)	(27)
Interest expense on pensions	(17)	(20)	(21)
Provision-related accretion expenses	(6)	(49)	(29)
Net foreign exchange gains (losses)	(6)	(7)	(23)
Net change in fair value of financial assets through profit or loss	(27)	(18)	(26)
Net change in fair value of derivatives	-	(5)	-
Other financial expenses	(19)	(20)	(21)
Financial expenses	(346)	(387)	(376)
Financial income and expenses, net	(233)	(282)	(314)

In 2025, financial income and expenses net decreased by EUR 49 million year-on-year, mainly due to lower

provision-related accretion costs in 2025 compared to 2024. Net interest expense in 2025 was EUR 4 million

lower than in 2024, driven by a slight increase in interest income, as well as lower interest expense on

pensions. This was partially offset by an increase in interest expense on debt and borrowings as a result of

debt refinancing in 2025.

In 2024, financial income and expenses net decreased by EUR 32 million year-on-year, mainly due to higher

interest income on cash and cash equivalents and net foreign exchange losses in 2023, partly offset by higher

interest expenses and provision-related accretion costs. Net interest expense in 2024 was EUR 22 million lower

than in 2023, mainly due to an increased cash position, which was invested in short-term interest-bearing

assets, partly offset by higher interest expenses. Interest expenses increased as a result of debt refinancing in

2024 and higher finance charges on lease contracts.

8Income taxes

Accounting policies

Income taxes comprise current, non-current and deferred tax. Income tax is recognized in the Consolidated

statements of income except to the extent that it relates to items recognized directly within equity or in other

comprehensive income. Current tax is the expected taxes payable on the taxable income for the year, using

tax rates enacted or substantively enacted by the reporting date, and any adjustment to tax payable in respect

of previous years.

In cases where it is concluded it is not probable that tax authorities will accept a tax treatment, the effect of

the uncertainty is reflected in the recognition and measurement of tax assets and liabilities or, alternatively, a


	116

provision is made for the amount that is expected to be settled, where this can be reasonably estimated. This

assessment relies on estimates and assumptions and may involve a series of judgments about future events.

New information may become available that causes the company to change its judgment regarding the

adequacy of existing tax assets and liabilities. Such changes to tax assets and liabilities will impact the income

tax expense in the period during which such a determination is made.

Deferred tax assets and liabilities are recognized, using the consolidated balance sheet method, for the

expected tax consequences of temporary differences between the carrying amounts of assets and liabilities

and the amounts used for taxation purposes. Deferred tax liabilities are not recognized for the following

temporary differences: (a) the initial recognition of goodwill; or (b) the initial recognition of an asset or

liability in a transaction which: (i) is not a business combination, (ii) at the time of transaction, affects neither

accounting profit nor taxable profit (tax loss), (iii) at the time of the transaction, does not give rise to equal

amounts of taxable and deductible differences; or (c) differences relating to investments in subsidiaries, joint

ventures and associates where the reversal of the respective temporary difference can be controlled by the

company and it is probable that it will not reverse in the foreseeable future. Deferred taxes are measured at

the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws

that have been enacted or substantively enacted by the end of the reporting date. Deferred tax assets and

liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they

relate to income taxes levied by the same tax authority on the same taxable entity or on different taxable

entities, but the company intends to settle current tax liabilities and assets on a net basis or their tax assets

and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences to

the extent that it is probable that there will be future taxable profits against which they can be utilized. The

ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the

countries where the deferred tax assets originated and during the periods when the deferred tax assets

become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future

taxable income, and tax planning strategies in making this assessment.

Deferred tax liabilities are recognized for taxable temporary differences arising from investments in

subsidiaries when those differences are expected to reverse in the foreseeable future, whether due to

withholding taxes or other non-exempt tax consequences. Changes in tax rates and tax laws are reflected in

the period when the change was enacted or substantively enacted by the reporting date. In case of a

subsequent adjustment to a tax asset or liability that originated from a past event for which no specific

arrangements were made at the time of divestment, due to a change in the tax base or its measurement, this

adjustment is allocated back to the component that gave rise to the original component (i.e., backward

tracing). Any subsequent change to the recognition of deferred tax assets is allocated to the component in

which the taxable gain is or will be recognized. The above principles are applied to the extent the

‘discontinued operations’ are sufficiently separable from continuing operations.

Consistent with the IAS 12 amendment regarding Pillar Two taxation as issued by the IASB and adopted by

the EU, Philips does not recognize deferred taxes arising from tax laws that implement Pillar Two model rules

published by the Organisation for Economic Co-operation and Development.

Accounting estimates and judgments

Deferred tax recoverability

Deferred tax assets are recognized to the extent that it is probable that there will be future taxable profits

against which these can be utilized. Significant judgment is involved in determining whether such profits are

probable. Management determines this on the basis of expected taxable profits arising from the reversal of

recognized deferred tax liabilities, on appropriate tax planning opportunities to support business goals and

on the basis of forecasts.

Uncertain tax positions

Uncertain tax positions are recognized as current tax liabilities when it is probable that additional income

taxes will be payable and the amount can be reliably measured. Liability is measured at the amount expected

to be paid to the tax authorities, using either the most likely amount or the expected value, depending on

which method better predicts the resolution of the uncertainty.

The income tax expense of continuing operations amounts to EUR 282 million (2024: EUR 963 million tax

expense; 2023: EUR 73 million tax benefit).

The components of income before taxes and income tax expense are:

Philips Group

Income tax expense in millions of EUR


	2025	2024	2023
Income before taxes	1,182	123	(526)
Results of associates	(9)	(124)	(98)
Income before taxes excluding results of associates	1,191	247	(429)

Current tax (expense) benefit	(305)	(140)	(201)
Deferred tax (expense) benefit	24	(823)	274
Income tax (expense) benefit of continuing operations	(282)	(963)	73

Income tax expense of continuing operations excludes the tax benefit of the discontinued operations of EUR 4

million (2024: EUR 143 million benefit; 2023: EUR 9 million benefit).


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The components of income tax expense of continuing operations are:

Philips Group

Current income tax expense in millions of EUR


	2025	2024	2023
Current year tax (expense) benefit	(304)	(150)	(211)
Prior year tax (expense) benefit	(1)	9	10
Current tax (expense) benefit	(305)	(140)	(201)

Philips Group

Deferred income tax expense in millions of EUR


	2025	2024	2023
Recognition of previously unrecognized tax loss and credit carryforwards	33	5	72
Unrecognized tax loss and credit carryforwards	(26)	(351)	(41)
Changes to recognition of temporary differences	19	(602)	(112)
Prior year tax (expense) benefit	(9)	(13)	(2)
Tax rate changes	(12)	2	4
Origination and reversal of temporary differences, tax losses and tax credits	19	136	353
Deferred tax (expense) benefit	24	(823)	274

The deferred tax expense in 2025 is lower than in 2024, mainly due to one-off de-recognition of deferred tax

assets in the US in 2024.

Philips’ operations are subject to income taxes in various foreign jurisdictions. The statutory income tax rate

varies per country, which results in a difference between the weighted average statutory income tax rate and

the Netherlands’ statutory income tax rate of 25.8% (2024: 25.8%; 2023: 25.8%).

A reconciliation of the weighted average statutory income tax rate to the effective income tax rate of

continuing operations is addressed in the accompanying table.

Philips Group

Effective income tax rate in %


	2025	2024	2023
Weighted average statutory income tax rate in %	25.9	26.6	22.0
Recognition of previously unrecognized tax loss and credit carryforwards	(2.7)	(1.9)	16.8
Unrecognized tax loss and credit carryforwards	2.2	141.8	(9.6)
Changes to recognition of temporary differences	(1.6)	243.6	(26.2)
Non-taxable income and tax incentives	(7.9)	(30.2)	22.8
Non-deductible expenses	2.9	10.0	(10.7)
Withholding and other taxes	1.9	16.0	(5.1)
Tax rate changes	1.0	(0.9)	0.9
Prior year tax	0.8	1.2	1.9
Tax expense (benefit) due to change in uncertain tax treatments	0.9	(20.4)	2.3
Others, net	0.2	3.1	1.9
Effective income tax rate	23.6	389.5	17.0

The effective income tax rate in 2025 is lower than the weighted average statutory income tax rate, primarily

due to recurring tax incentives relating to the innovation box regime in the Netherlands, R&D investments

and export activities, and recognition of previously de-recognized deferred tax assets relating to tax losses and

temporary differences.

The effective income tax rate in 2025 is lower than in 2024, mainly due one-off de-recognition of deferred tax

assets in the US in 2024.

Global minimum tax (Pillar Two)

In December 2021, the OECD model rules introduced a global minimum corporate income tax rate of 15%

applicable to multinational enterprise groups with global revenue over EUR 750 million (Pillar Two). Pillar Two

has been effective in the Netherlands, the EU, and many other jurisdictions since fiscal years beginning on or

after December 31, 2023. As a result, Pillar Two applies to Philips from the financial year 2024 and onwards.

Under this legislation, Philips is generally required to pay top-up taxes on profits from a country that is out of

safe harbor if the country’s Pillar Two jurisdictional effective tax rate is less than 15%.

During 2025, additional OECD administrative guidance and technical amendments to the Dutch MTR Act were

introduced to clarify aspects such as deferred tax treatment, safe harbors and compliance obligations.

Furthermore, the OECD’s January 2026 release of the Pillar Two ‘side‑by‑side’ package has introduced changes

in safe harbors and simplifications applicable in future reporting periods. Philips continues to monitor these

developments and prepare for related reporting requirements, including the GloBE Information Return, which

will be due in 2026 for the 2024 fiscal year.


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The estimated Pillar Two current tax expense relating to 2025 amounts to EUR 1.3 million, resulting in an

increase of ETR by 0.1%. (2024: EUR 1 million; increase in ETR by 0.4%). The estimated Pillar Two current tax

expense relating to the prior year has decreased by EUR 0.6 million, resulting in a decrease of ETR by 0.05%.

Both amounts have been accounted for within the income taxes of the reporting period. This estimate is

based on the current interpretation of Pillar Two legislation and that actual amounts may differ once

legislation and final calculations have been performed.

With reference to the income tax accounting policy, Philips does not recognize deferred taxes arising from tax

laws that implement Pillar Two model rules published by the Organisation for Economic Co-operation and

Development.

Deferred tax assets and liabilities

Deferred tax assets (DTAs) are recognized for temporary differences, unused tax losses, and unused tax credits

to the extent that realization of the related tax benefits is probable. The ultimate realization of deferred tax

assets is dependent upon the generation of future taxable income in the countries where the deferred tax

assets originated and during the periods when the deferred tax assets become deductible. Management

considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning

strategies in making this assessment.

The net deferred tax assets of EUR 1,681 million (2024: EUR 1,835 million) consist of deferred tax assets of EUR

1,773 million (2024: EUR 1,916 million) and deferred tax liabilities of EUR 93 million (2024: EUR 81 million). Of

the total deferred tax assets of EUR 1,773 million as of December 31, 2025 (2024: EUR 1,916 million), EUR

1,070 million (2024: EUR 1,188 million) is recognized with respect to entities in various countries where there

have been tax losses in the current or preceding period, primarily the US. Based on Philips' assessment the net

decrease in deferred tax assets is primarily due to currency depreciation of assets recognized in US. In 2025,

there was no additional de-recognition or recognition of de-recognized DTAs in US.

Philips recognizes deferred tax assets only to the extent future tax profits are considered probable. For the

recoverability assessment of US DTAs, the income projections were used as a basis to determine probable tax

profits at country level, using similar methodology as used for goodwill impairment testing at CGU level (for

more information refer to note Goodwill). The company evaluated multiple risk-adjusted scenarios that

support the assumption that it is probable that the results of future operations will generate sufficient taxable

income to support the recognized tax losses as well the deductible temporary differences. The projections

include forward-looking assumptions whereby the most recent available information was used to determine

the expected period of recovery of the deferred tax assets. Relevant developments potentially impacting the

period and probability of recovery are monitored closely.

A change in enacted tax rates or a revision to risk-adjusted long term income projections by jurisdiction could

have an impact on the measurement of deferred tax assets.

In 2025, there has been no change relating to de-recognized deferred tax assets in the US. As of December 31,

2025, the amount of deductible temporary differences for which no deferred tax asset has been recognized in

the balance sheet was EUR 352 million (2024: EUR 788 million). The reduction in the unrecognized balance of

temporary differences mainly reflects a reclassification to unrecognized tax loss balances in the US, which is

mainly driven by shift of carrying deferred tax assets on temporary differences to tax losses, which is recorded

in ‘Recognized in income statement’.

Net deferred tax assets relating to the years 2025 and 2024, respectively, are presented here.

Philips Group

Deferred tax assets and liabilities in millions of EUR


	Balance as of January 1, 2025	Recognized in income statement	Other ¹	Balance as of December 31, 2025	Assets	Liabilities
Intangible assets	373	(45)	(27)	301	448	(147)
Property, plant and equipment	(64)	9	9	(46)	50	(96)
Inventories	364	(13)	(37)	314	315	(1)
Other assets	151	12	(10)	152	205	(53)
Pensions and other long-term employee benefits	152	29	(9)	172	180	(7)
Other liabilities	319	(29)	(16)	274	312	(38)
Deferred tax assets on tax loss carryforwards	541	61	(88)	513	513	-
Set-off deferred tax positions	-	-	-	-	(250)	250
Net deferred tax assets	1,835	24	(178)	1,681	1,773	(93)

1Other includes the movements of assets and liabilities recognized in equity and OCI, which includes foreign currency translation

differences, acquisitions, reclassifications and divestments.

As of December 31, 2025, the temporary differences associated with investments, including potential income

tax consequences on dividends, for which no deferred tax liabilities are recognized, aggregate to EUR 284

million (2024: EUR 340 million).


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Philips Group

Deferred tax assets and liabilities in millions of EUR


	Balance as of January 1, 2024	Recognized in income statement	Other ¹	Balance as of December 31, 2024	Assets	Liabilities
Intangible assets	679	(333)	26	373	533	(160)
Property, plant and equipment	(88)	25	(1)	(64)	39	(103)
Inventories	360	(9)	13	364	369	(5)
Other assets	184	(25)	(9)	151	207	(56)
Pensions and other employee benefits	193	(61)	20	152	179	(27)
Other liabilities	496	(198)	20	319	365	(47)
Deferred tax assets on tax loss carryforwards	730	(222)	33	541	541	-
Set-off deferred tax positions	-	-	-	-	(317)	317
Net deferred tax assets	2,556	(823)	102	1,835	1,916	(81)

1Other includes the movements of assets and liabilities recognized in equity and OCI, which includes foreign currency translation

differences, acquisitions, reclassifications and divestments.

The company has available tax loss and credit carryforwards, which expire as expressed in the accompanying

table.

Philips Group

Expiry years of net operating loss and credit carryforwards in millions of EUR


	Total balance as of December 31, 2025	Unrecognized balance as of December 31, 2025	Total balance as of December 31, 2024	Unrecognized balance as of December 31, 2024
Within 1 year	4	4	21	21
1 to 2 years	5	3	5	4
2 to 3 years	11	5	6	3
3 to 4 years	97	60	15	6
4 to 5 years	122	74	146	64
Later	680	670	807	771
Unlimited	4,711	2,978	3,342	1,695
Total	5,628	3,794	4,342	2,564

The increase in the unrecognized balance on tax losses as of December 31, 2025, mainly relates to the

reclassification from unrecognized balance of temporary differences, as noted above.

Philips Group

Income tax liabilities in millions of EUR


	2025	2024
Uncertain Tax Positions ¹	(70)	-
Income tax payable	(104)	(71)
Income tax liabilities	(174)	(71)

¹ Uncertain tax positions were shown as non-current tax liabilities in 2024.

The expected liabilities reported as uncertain tax positions are included in current income tax liabilities (2025:

EUR 70 million) and reclassified from other non-current liabilities (2024: EUR 116 million).

The decrease in uncertain tax positions mainly relates to release of positions on expiry of the statute of

limitations for tax audits, in combination with netting of the uncertain tax positions with recognized tax

assets, such as carryforward tax losses or tax receivables.

Tax risks

Philips is exposed to tax risks and uncertainty over tax treatments. For particular tax treatments that are not

expected to be accepted by tax authorities, Philips either recognizes a liability or reflects the uncertainty in the

recognition and measurement of its current and deferred tax assets and tax attributes. For the measurement

of the uncertainty, Philips uses the most likely amount or the expected value of the tax treatment. The

positions include, among others:

Transfer pricing risks

Philips has issued transfer pricing directives, which are in accordance with international guidelines such as

those of the Organisation of Economic Co-operation and Development. In order to reduce the transfer pricing

uncertainties, monitoring procedures are carried out by Group Tax to safeguard the correct implementation

of the transfer pricing directives. However, tax disputes can arise due to non-harmonized transfer pricing

regimes and different views on 'at arm's length' pricing.

Tax risks on general and specific service agreements and licensing agreements

Due to the centralization of certain activities (such as Research & Development, IT and group Functions), costs

are also centralized. As a consequence, these costs and/or revenues must be allocated to the beneficiaries, i.e.,

the various Philips entities. For that purpose, service contracts such as intra-group service agreements and

licensing agreements are signed with a large number of group entities. Tax authorities review these intra-

group service and licensing agreements, and may reject the implemented intra-group charges. Furthermore,

buy-in or -out situations in the case of (de)mergers could affect the cost allocation resulting from the intra-

group service agreements between countries. The same applies to the specific service agreements.


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Tax risks due to disentanglements and acquisitions

When a subsidiary of Philips is disentangled, or a new company is acquired, tax risks may arise. Philips creates

merger and acquisition (M&A) teams for these disentanglements or acquisitions. In addition to representatives

from the involved business, these teams consist of specialists from various group Functions and are formed,

among other things, to identify tax risks and to reduce potential tax claims.

Tax risks due to permanent establishments

A permanent establishment may arise when a Philips entity has activities in another country; tax claims could

arise in both countries on the same income.

9Earnings per share

Accounting policies

The company presents basic and diluted earnings per share (EPS) data for its common shares. Basic EPS is

calculated by dividing the Net income (loss) attributable to shareholders by the weighted average number of

common shares outstanding (after deduction of treasury shares) during the period. Diluted EPS is determined

by adjusting the Net income (loss) attributable to shareholders and the weighted average number of common

shares outstanding (after deduction of treasury shares) during the period, for the effects of all dilutive

potential common shares, which comprise performance shares, restricted shares and share options granted

under share-based compensation plans as well as forward contracts to repurchase shares, to the extent that

these contracts are dilutive.

Philips Group

Earnings per share in millions of EUR unless otherwise stated 1


	2025	2024	2023
Income from continuing operations	901	(840)	(454)
Income from continuing operations attributable to shareholders	899	(843)	(456)
Income from continuing operations attributable to non-controlling interests	1	3	2
Income from discontinued operations	(4)	142	(10)
Income from discontinued operations attributable to shareholders	(4)	142	(10)
Net income	897	(698)	(463)
Net income attributable to shareholders	895	(702)	(466)
Net income attributable to non-controlling interests	1	3	2

Weighted average number of common shares outstanding (after deduction of treasury shares) during the period	948,239,009	933,370,814	948,300,672


	2025	2024	2023
Plus incremental shares from assumed conversions of:
Share options	238,577	232,965	-
Performance shares	9,322,536	4,958,144	2,623,097
Restricted shares	4,179,423	3,898,844	2,574,738
Forward contracts to repurchase shares	523,617	1,835,048	15,511,844
Dilutive potential common shares ²	14,264,153	10,925,002	20,709,680
Diluted weighted average number of shares outstanding (after deduction of treasury shares) during the period	962,503,162	933,370,814	948,300,672
Basic earnings per common share attributable to shareholders (in EUR)
Income from continuing operations	0.95	(0.90)	(0.48)
Income from discontinued operations	-	0.15	(0.01)
Net income	0.94	(0.75)	(0.49)
Diluted earnings per common share attributable to shareholders (in EUR) ²
Income from continuing operations	0.93	(0.90)	(0.48)
Income from discontinued operations	-	0.15	(0.01)
Net income	0.93	(0.75)	(0.49)

Dividend distributed per common share in EUR	0.85	0.85	0.85

1Shareholders refers to shareholders of Koninklijke Philips N.V.

2The dilutive potential common shares are not taken into account in the periods for which there is a loss, as the effect would be

antidilutive.

On May 8, 2025, the General Meeting of Shareholders approved a dividend of EUR 0.85 per common share, in

shares or (subject to certain conditions) in cash. The dividend was settled in June through cash and the

issuance of 22,980,748 new common shares. The impact of the issuance of shares for the share dividend with

respect to 2024 on per-share calculations for prior periods was not material.

10Property, plant and equipment

Accounting policies

Owned assets

The cost of property, plant and equipment comprise all directly attributable costs (including the cost of

material and direct labor).

Depreciation is generally calculated using the straight-line method over the useful life of the asset. Land and

assets under construction are not depreciated. When assets under construction are ready for their intended


	121

use, they are transferred to the relevant asset category and depreciation starts. All other property, plant and

equipment items are depreciated over their estimated useful lives to their estimated residual values.

The estimated useful lives of property, plant and equipment are:

Philips Group

Useful lives of property, plant and equipment


Buildings	from 5 to 50 years
Machinery and installations	from 3 to 20 years
Other equipment	from 1 to 10 years

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances

indicate that the book value of the assets concerned may not be recoverable. An impairment loss is

recognized for the amount by which the asset's book value exceeds their recoverable amount. Impairments

are reversed if and to the extent that the impairment no longer exists. The recoverable amount is defined as

the higher of the asset’s fair value less costs of disposal and its value in use.

Gains and losses on the sale of property, plant and equipment are included in other business income. Costs

related to repair and maintenance activities are expensed in the period in which they are incurred unless they

extend the asset's original lifetime or capacity.

Right-of-use assets

The company leases various items of real estate, vehicles and other equipment. The company determines

whether an arrangement constitutes or contains a lease based on the substance of the arrangement at the

lease inception. The arrangement constitutes or contains a lease if fulfillment is dependent on the use of a

specific asset and the arrangement conveys a right to use the asset, even if that asset is not explicitly specified

in the arrangement.

Company as a lessee

The company recognizes right-of-use assets and lease liabilities for leases with a term of more than 12 months

if the underlying asset is not of low value. Payments for short-term and low-value leases are expensed over

the lease term. Extension options are included in the lease term if their exercise is reasonably certain. Right-of-

use assets are measured at cost less accumulated depreciation and impairment losses, adjusted for any

remeasurements. Right-of-use assets are depreciated using the straight-line method over the shorter of the

lease term and the useful life of the underlying assets.

Company as a lessor

When the company acts as a lessor, it determines at lease inception whether a lease is a finance lease or an

operating lease. Leases in which the company does not transfer substantially all the risks and rewards

incidental to ownership of an asset are classified as operating leases. The company recognizes lease payments

received under operating leases as income on a straight-line basis over the lease term in the Consolidated

statement of income.

Accounting estimates and judgments

Impairment of owned and right-of-use assets

Judgments are required, not only to determine whether there is an indication that an asset may be impaired,

but also whether indications exist that impairment losses previously recognized may no longer exist or may

have decreased (impairment reversal). After indications of impairment have been identified, estimates and

assumptions are used in the determination of the recoverable amount of a fixed asset. These involve estimates

of expected future cash flows (based on future growth rates and remaining useful life) and residual value

assumptions, as well as discount rates to calculate the present value of the future cash flows.

Owned assets

Estimates are required to determine the (remaining) useful lives of fixed assets. Useful lives are determined

based on an asset's age, the frequency of its use, repair and maintenance policy, technology changes in

production and expected restructuring. The company estimates the expected residual value per asset item.

The residual value is the higher of the asset's expected sales price (based on recent market transactions of

similar sold items) and its material scrap value.

Right-of-use assets

Judgment is required to determine the lease term. The assessment of whether the company is reasonably

certain to exercise extension options impacts the lease term, which could affect the amount of lease liabilities

and right-of-use assets recognized.

Property, plant and equipment are fixed assets that are owned or right-of-use assets under a lease agreement.

Owned and right-of-use assets are held for use in Philips' operating activities.

Philips Group

Property, plant and equipment in millions of EUR


	2025	2024
Owned assets	1,465	1,565
Right-of-use assets	752	886
Total	2,217	2,452

Leasing activities

The company leases equipment to customers under operating lease arrangements. These leases primarily

relate to the Diagnosis & Treatment and Connected Care segments. At December 31, 2025, the net book value


	122

of assets subject to operating leases amounted to EUR 143 million (2024: EUR 135 million), which includes

additions of EUR 135 million recognized during 2025 (2024: EUR 131 million) and depreciation of EUR 96

million recognized during 2025 (2024: EUR 103 million).

The company leases various items of real estate, vehicles and other equipment where it acts as a lessee. The

company has multiple extension and termination options in a number of lease contracts. These are used to

maximize operational flexibility in terms of managing the assets used in the company's operations. The

options considered reasonably certain are part of lease liabilities. The company has no commitments to any

leases not yet commenced in 2025 (2024: EUR 0 million). The company's lease contracts do not contain

financial covenants.

The company enters into sale-and-leaseback transactions primarily for its Sleep & Respiratory Care Business.

These transactions are accounted for at market value. The payments for these leases are considered in

determining lease liabilities. Principal repayments are part of cash flows used for financing activities and

interest payments are part of cash flows used for operating activities. The cash inflows arising from the sales

transactions are part of cash flows provided by financing activities. Lease payments under sale-and-leaseback

arrangements for 2025 were EUR 29 million (2024: EUR 43 million). The remaining minimum payment under

sale-and-leaseback arrangements included in lease obligations above are:

Philips Group

Remaining minimum payments under sale-and-leaseback arrangements in millions of EUR


2026	30
2027	24
2028	17
2029	13
2030	5
Thereafter	-

Further lease disclosures as lessee can be found in Income from operations, Financial income and expenses,

Cash flow statement supplementary information and Debt. For disclosures for lease receivables refer to

Receivables.


	123

Philips Group

Property, plant and equipment in millions of EUR


	Owned assets					Right-of-use assets			Property, plant and equipment
	Land and buildings	Machinery and installations	Other equipment	Assets under construction	Total	Land and buildings	Other equipment	Total	Total
Balance as of January 1, 2024
Cost	1,114	1,731	1,404	274	4,521	1,425	216	1,641	6,162
Accumulated depreciation	(638)	(1,278)	(1,041)	-	(2,957)	(619)	(104)	(722)	(3,679)
Book value	476	453	363	274	1,565	806	113	919	2,483
Additions	2	134	76	236	448	101	87	189	637
Assets available for use	12	70	140	(248)	(26)	26	-	26	-
Depreciation	(49)	(191)	(166)	-	(406)	(146)	(56)	(202)	(608)
Impairments	(14)	(23)	(28)	-	(65)	(23)	-	(23)	(89)
Reclassifications	7	(6)	8	(1)	8	(9)	(3)	(12)	(4)
Translation differences and other	20	2	9	10	41	(6)	(4)	(10)	31
Total change	(22)	(13)	38	(3)	1	(57)	24	(33)	(32)
Balance as of December 31, 2024
Cost	1,151	1,790	1,527	271	4,738	1,462	241	1,702	6,441
Accumulated depreciation	(697)	(1,350)	(1,126)	-	(3,173)	(712)	(104)	(816)	(3,989)
Book value	454	440	401	271	1,565	749	137	886	2,452
Additions	1	148	41	271	461	25	78	103	564
Assets available for use	42	69	127	(239)	(1)	1	-	1	-
Depreciation	(44)	(174)	(155)	-	(373)	(132)	(58)	(190)	(563)
Impairments	(1)	(17)	(14)	-	(33)	(7)	-	(7)	(39)
Divestments and transfers to assets classified as held for sale	(1)	-	(2)	(2)	(5)	(1)	-	(1)	(6)
Reclassifications	5	(5)	(15)	(3)	(18)	-	-	-	(18)
Translation differences and other	(28)	(52)	(28)	(23)	(132)	(28)	(13)	(41)	(173)
Total change	(26)	(31)	(46)	3	(100)	(142)	8	(134)	(235)
Balance as of December 31, 2025
Cost	1,105	1,550	1,411	274	4,340	1,328	255	1,583	5,923
Accumulated depreciation	(677)	(1,142)	(1,055)	-	(2,875)	(721)	(110)	(831)	(3,706)
Book value	428	408	355	274	1,465	607	145	752	2,217


	124

11Goodwill

Accounting policies

The measurement of goodwill at initial recognition is described in the Acquisitions and divestments note.

Goodwill is subsequently measured at cost, less accumulated impairment losses.

Goodwill is not amortized but is instead tested for impairment annually in the fourth quarter, or more

frequently if indicators of potential impairment exist. Internal and external sources of information are

considered to assess if there are indicators that an asset or groups of cash-generating units (CGUs) may be

impaired. Goodwill is allocated to groups of CGUs and tested for impairment at the Business level (one level

below segment), which represents the lowest level at which goodwill is monitored internally for management

purposes. An impairment loss is recognized in the Consolidated statements of income whenever and to the

extent that the carrying amount of a group of CGUs exceeds the recoverable amount for the group of CGUs,

whichever is the greater, its value in use or its fair value less cost of disposal. Value in use is measured as the

present value of future cash flows expected to be generated by the asset. Fair value less cost of disposal is

measured as the amount obtained from the sale of an asset in an arm’s length transaction, less costs of

disposal.

Accounting estimates and judgments

The cash flow projections used in the value in use calculations for goodwill impairment testing contain various

judgments and estimations as described in the ‘key assumptions’ section.

The changes in 2024 and 2025 were:

Philips Group

Goodwill in millions of EUR


	2025	2024
Balance as of January 1
Cost	12,777	12,133
Impairments	(2,394)	(2,256)
Book value	10,383	9,876

Divestments and transfers to assets classified as held for sale	(53)	(22)
Translation differences and other	(1,058)	528
Total change	(1,112)	507
Balance as of December 31
Cost	11,367	12,777
Impairments	(2,096)	(2,394)
Book value	9,271	10,383

In 2025, goodwill decreased by EUR 1,112 million, primarily as a result of translation differences.

Goodwill impairment testing

During 2025, there were no goodwill impairments recorded.

Goodwill allocated to the Businesses (groups of cash-generating units) as of December 31, 2025, is presented

in the accompanying table:

Philips Group

Goodwill by business in millions of EUR


	2025	2024
Monitoring	3,752	4,194
Image-Guided Therapy	2,888	3,216
Precision Diagnosis	1,289	1,440
Sleep & Respiratory Care	625	694
Personal Health	469	509
Enterprise Informatics	248	331
Book value	9,271	10,383


	125

The carrying amount of each group of CGUs is compared to the recoverable amount of the group of CGUs.

Unless otherwise noted, the recoverable amount for each group of CGUs is based on value-in-use calculations.

Cash flow projections were determined using Philips management's internal forecasts that cover an initial

forecast period from 2026 to 2028. Projections were extrapolated using the growth rates disclosed in the

accompanying table for an extrapolation period of 4 years (2029-2032), after which a terminal value was

calculated per 2033. However, when appropriate, management may apply a longer explicit forecast period for

certain CGUs. For the terminal value calculation, growth rates were capped at a historical long-term average

growth rate. The company uses scenarios in the business forecasting process and the most reasonable and

supportable assumptions that represent management’s best estimate are used as the basis for the value-in-use

calculations.

Key assumptions

Key assumptions used in the value-in-use calculations were compound sales growth rates, EBITA* in the

terminal value and the rates used for discounting the projected cash flows.

The compound sales growth rate is the annualized steady nominal growth rate over the forecast period

calculated with reference to the latest full year of actual sales as the base for the growth. The compound sales

growth rate used to calculate the terminal value is only applied to the first year after the extrapolation

period, after which no further growth is assumed for the terminal value calculation.

The compound sales growth rates and EBITA* used to estimate cash flows are based on past performance,

external market growth assumptions and industry long-term growth averages. EBITA* for each group of CGUs

is expected to increase over the projection period as a result of volume growth and cost efficiencies. By their

nature, these assumptions 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 the

plans, goals and expectations set forth in these assumptions.

The rates used for discounting the projected cash flows in goodwill impairment testing is based on a weighted

cost of capital (WACC), which in turn is based on business-specific inputs along with other inputs as mentioned

below. The WACC is based on post-tax cost of equity and cost of debt, and is further calculated based on

market data and inputs to accurately capture changes to the time value of money, such as the risk-free

interest rate, the beta factor and country risk premium. In order to properly reflect the different risk profiles

of different businesses, a WACC is determined for each business. As such, the beta factor is determined based

on a selection of peer companies, which can differ per business. Different businesses have different

geographical footprints, resulting in business-specific inputs for variables like country risk. Philips performs the

value-in-use calculations using post-tax cash flows and discount rate, the implicit pre-tax rate discount rate is

derived from an iterative calculation for disclosure purposes.

The values assigned to the key assumptions used for the value-in-use calculations for 2025 and 2024 were:

Philips Group

Key assumptions 2025


	Compound sales growth rate
	Initial forecast period	Extrapolation period	Used to calculate terminal value	Pre-tax discount rates
Monitoring	5.6%	4.3%	2.5%	9.0%
Image-Guided Therapy	6.7%	4.6%	2.5%	9.8%
Precision Diagnosis	3.1%	3.8%	2.5%	10.4%
Sleep & Respiratory Care	10.8%	7.3%	2.5%	11.8%
Personal Health	5.5%	4.2%	2.5%	9.9%
Enterprise Informatics	3.9%	3.1%	2.5%	9.6%

Philips Group

Key assumptions 2024


	compound sales growth rate
	initial forecast period	extrapolation period	used to calculate terminal value	pre-tax discount rates
Monitoring	5.3%	4.7%	2.5%	9.1%
Image-Guided Therapy	6.3%	5.0%	2.5%	9.7%
Precision Diagnosis	2.4%	3.6%	2.5%	9.9%
Sleep & Respiratory Care	10.1%	7.3%	2.5%	10.3%
Personal Health	5.1%	4.2%	2.5%	9.9%
Enterprise Informatics	4.4%	5.4%	2.5%	8.9%

Sensitivity to changes in assumptions

Based on the annual impairment test, the estimated recoverable amount of the Enterprise Informatics CGU

exceeds the carrying amount by EUR 148 million. It was noted that an increase of 150 basis points in the pre-

tax discount rate, a 250 basis point decline in the compound sales growth rate or a 24% decrease in EBITA* in

the final year would, individually, cause its recoverable amount to fall to the level of its carrying value.

The results of the annual impairment tests of Monitoring, Image-Guided Therapy, Precision Diagnosis, Sleep &

Respiratory Care and Personal Health 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.

*The definition of this non-IFRS measure and a reconciliation to the IFRS measure is included in Information by segment and

main country


	126

12Intangible assets excluding goodwill

Accounting policies

Acquired finite-lived intangible assets are amortized using the straight-line method over their estimated

useful life. The useful lives are evaluated annually. Intangible assets are initially capitalized at cost, with the

exception of intangible assets acquired as part of a business combination, which are capitalized at their

acquisition date fair value.

The company expenses all research costs as incurred. Expenditure on development activities, whereby research

findings are applied to a plan or design for the production of new or substantially improved products and

processes, is capitalized as an intangible asset if the product or process is technically and commercially

feasible, the company has sufficient resources and the intention to complete development and can measure

the attributable expenditure reliably.

The capitalized development expenditure comprises of all directly attributable costs (including the cost of

materials and direct labor). Other development expenditures and expenditures on research activities are

recognized in the Consolidated statements of income. Capitalized development expenditure is stated at cost

less accumulated amortization and impairment losses. Amortization of capitalized development expenditure

is charged to the Consolidated statements of income on a straight-line basis over the estimated useful lives of

the intangible assets.

Philips Group

Expected useful lives of intangible assets excluding goodwill in years


Brand names	2-20
Customer relationships	2-25
Technology	3-20
Other	1-10
Software	1-10
Product development	3-10

The weighted average expected remaining life of brand names, customer relationships, technology and other

intangible assets is 8.2 years as of December 31, 2025 (2024: 8.5 years).

Impairment of intangible assets not yet ready for use

Intangible assets not yet ready for use are not amortized but are tested for impairment annually and whenever

impairment indicators require. In the case of intangible assets not yet ready for use, either internal or external

sources of information are considered to assess if there are indicators that an asset or a CGU may be impaired.

Impairment of non-financial assets other than goodwill, intangible assets not yet ready for use, inventories

and deferred tax assets

Non-financial assets other than goodwill, intangible assets not yet ready for use, inventories and deferred tax

assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying

amount of an asset may not be recoverable. Recoverability of assets to be held and used is assessed by a

comparison of the carrying amount of an asset with the greater of its value in use and fair value less cost of

disposal. Value in use is measured as the present value of future cash flows expected to be generated by the

asset. Fair value less cost of disposal is measured as the amount obtained from a sale of an asset in an arm’s

length transaction, less costs of disposal. If the carrying amount of an asset is deemed not recoverable, an

impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the

recoverable amount. The review for impairment is carried out at the level where cash flows occur that are

independent of other cash flows.

Impairment losses recognized in prior periods for intangible assets other than goodwill are assessed at each

reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is

reversed if and to the extent that there has been a change in the estimates used to determine the recoverable

amount. The loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying

amount that would have been determined, net of depreciation or amortization, if no impairment loss had

been recognized. Reversals of impairment are recognized in the Consolidated statements of income.

Accounting estimates and judgments

The cash flow projections used in the value in use calculations for intangible assets excluding goodwill contain

various judgments and estimations. For intangible assets excluding goodwill, estimates are required to

determine the (remaining) useful lives.

Philips did not make any acquisitions in 2025 (2024: no acquisitions).

Impairments in 2025 amounted to EUR 58 million (2024: EUR 188 million) and mainly relate to divested

businesses.

The company uses scenarios in the business forecasting process, and the most reasonable and supportable

assumptions that represent management’s best estimate are used as the basis for the value-in-use calculations.

The amortization and impairment of intangible assets is further specified in Income from operations.


	127

The most notable intangible assets as of December 31, 2025, relate to the BioTelemetry customer relationships

and technology with a carrying value of EUR 253 million and EUR 76 million and a remaining amortization

period of 11 years and 7 years, respectively, and Spectranetics customer relationships and technology with a

carrying value of EUR 210 million and EUR 126 million and a remaining amortization period of 12 years and 7

years, respectively. The most notable intangible assets as of December 31, 2024, relate to the BioTelemetry

customer relationships and technology with value of EUR 316 million and EUR 108 million and a remaining

amortization period of 12 years and 8 years, respectively, and Spectranetics customer relationships and

technology with a carrying value of EUR 256 million and EUR 164 million and a remaining amortization period

of 13 years and 8 years, respectively.

Philips Group

Intangible assets excluding goodwill in millions of EUR


	Brand names	Customer relationships	Technology	Product development	Product development in progress	Software	Other	Total
Balance as of January 1, 2024
Cost	629	2,593	2,908	2,432	635	929	139	10,265
Amortization / impairments	(511)	(1,718)	(1,895)	(2,096)	(91)	(662)	(101)	(7,075)
Book value	118	875	1,013	336	544	267	38	3,190
Additions	-	-	36	-	240	85	-	361
Assets available for use	-	-	-	266	(266)	-	-	-
Amortization	(19)	(92)	(138)	(162)	-	(95)	(1)	(506)
Impairments	(7)	-	(135)	(13)	(24)	(7)	(1)	(188)
Divestments and transfers to assets classified as held for sale	-	(11)	-	-	-	-	1	(10)
Translation differences and other	6	51	79	(9)	29	15	(37)	134
Total change	(20)	(52)	(158)	82	(21)	(3)	(38)	(209)
Balance as of December 31, 2024
Cost	671	2,722	2,900	2,659	624	984	-	10,559
Amortization / impairments	(573)	(1,899)	(2,044)	(2,241)	(101)	(719)	-	(7,578)
Book value	98	823	855	418	523	265	-	2,982
Additions	-	-	37	-	261	93	-	393
Assets available for use	-	-	-	321	(321)	-	-	-
Amortization	(17)	(77)	(118)	(162)	-	(90)	-	(464)
Impairments	-	-	(27)	-	(16)	(14)	-	(58)
Divestments and transfers to assets classified as held for sale	-	(1)	-	(58)	(5)	-	-	(63)
Translation differences and other	(8)	(86)	(64)	(19)	(40)	(4)	-	(220)
Total change	(25)	(164)	(171)	83	(120)	(14)	-	(413)
Balance as of December 31, 2025
Cost	530	2,423	2,590	2,705	510	995	-	9,752
Amortization / impairments	(457)	(1,764)	(1,906)	(2,204)	(108)	(745)	-	(7,183)
Book Value	73	659	684	500	403	250	-	2,569


	128

13Other financial assets

Accounting policies

Classification and measurement of financial assets

The company applies IFRS 9 in classifying and measuring financial assets. Classification and measurement

depend on the characteristics of the financial asset’s contractual cash flows and the company’s business model

for managing the assets.

The company initially measures a financial asset at its fair value plus, in the case of financial assets other than

those designated at fair value through profit or loss, transaction costs.

For the purposes of subsequent measurement, financial assets are classified into four categories:

•Financial assets at amortized cost: debt instruments held with the objective to collect contractual cash flows,

provided that the cash flows represent solely payments of principal and interest.

•Financial assets at fair value through other comprehensive income (FVTOCI): debt instruments held with the

objective to collect contractual cash flows and sell the financial asset, provided that the cash flows represent

solely payments of principal and interest. Changes in fair value are recognized in OCI and recycled to profit

or loss upon derecognition.

•Financial assets at FVTOCI: equity instruments for which the company made an irrevocable election to

present subsequent changes in their fair value in OCI given that the short-term fair value fluctuations of

these long-term, equity investments are not considered representative of the company’s performance.

Gains and losses are not recycled to profit or loss upon derecognition; however, dividends are recognized in

profit or loss.

•Financial assets at fair value through profit or loss (FVTPL): debt instruments that do not meet the criteria

for amortized cost or FVTOCI, and equity instruments not designated at FVTOCI, are measured at FVTPL.

Changes in fair value are recognized in profit or loss.

Impairment of financial assets

The company recognizes a loss allowance for expected credit losses (ECL) for trade receivables, contract assets,

lease receivables, and debt instruments measured at amortized cost or at FVTOCI.

At each reporting date, the company assesses the credit risk of its financial assets. If, at the reporting date, the

credit risk on a debt instrument has not increased significantly since initial recognition, the company measures

the loss allowance for the financial asset at an amount equal to 12 months of expected credit losses. If, at the

reporting date, the credit risk on a debt instrument has increased significantly since initial recognition, the

company measures the loss allowance for the financial asset at an amount equal to the lifetime-expected

credit losses. For all trade receivables, contract assets and lease receivables the company measures the loss

allowance at an amount equal to lifetime-expected credit losses.

Accounting estimates and judgments

The determination of fair value is subject to estimates for investments that are not publicly traded. Refer to

Fair value of financial assets and liabilities.

Financial assets classified at amortized cost and at fair value through OCI are subject to impairment

assessment. The calculation of expected credit losses requires the company to apply significant judgment and

make estimates and assumptions that involve significant uncertainty at the time they are made. Changes to

these estimates and assumptions can result in significant changes to the timing and amount of expected credit

losses to be recognized.

Other current financial assets

In 2025, Other current financial assets decreased from EUR 2 million to EUR 0 million (2024: decreased from

EUR 3 million to EUR 2 million).

Other non-current financial assets

The company’s investments in Other non-current financial assets mainly consist of investments in common

shares of companies in various industries and investments in limited life funds. The changes during 2025 and

2024 are presented in the accompanying table:

Philips Group

Other non-current financial assets in millions of EUR


	Non-current financial assets at FVTPL	Non-current financial assets at FVTOCI	Non-current financial assets at Amortized cost	Total
Balance as of January 1, 2025	288	242	102	631
Changes:
Acquisitions/additions	118	3	11	132
Sales/redemptions/reductions	(14)	(32)	(9)	(55)
Value adjustment through OCI	-	(14)	-	(14)
Value adjustment through P&L	(26)	-	-	(26)
Translation differences and other	(22)	(19)	(2)	(42)
Reclassifications	36	40	1	78
Balance as of December 31, 2025	380	221	103	704


	129

Philips Group

Other non-current financial assets in millions of EUR


	Non-current financial assets at FVTPL	Non-current financial assets at FVTOCI	Non-current financial assets at Amortized cost	Total
Balance as of January 1, 2024	284	258	77	619
Changes:
Acquisitions/additions	76	6	65	147
Sales/redemptions/reductions	(31)	(14)	(11)	(56)
Value adjustment through OCI	-	(23)	-	(23)
Value adjustment through P&L	(25)	-	1	(23)
Translation differences and other	8	12	(4)	16
Reclassifications	(25)	4	(27)	(47)
Balance as of December 31, 2024	288	242	102	631

As of December 31, 2025, equity investments of EUR 213 million (2024: EUR 222 million) are accounted under

the FVTOCI category based on the company's election at initial recognition mainly because such investments

are neither held for trading purposes nor primarily for their increase in value and the elected presentation is

considered to reflect the nature and purpose of the investment.

14Other assets

Accounting policies

The company recognizes contract assets for revenue earned from installation services because the receipt of

consideration is conditional on successful completion of the installation. Upon completion of the installation

and acceptance by the customer, the amount recognized as contract assets is reclassified to trade receivables.

Other assets are measured at amortized cost minus any impairment losses.

Other non-current assets

Other non-current assets as of December 31, 2025, were EUR 119 million (2024: EUR 127 million), mainly

include prepaid expenses.

Other current assets

Other current assets as of December 31, 2025, totaled EUR 529 million (2024: EUR 588 million), primarily

contract assets of EUR 354 million (2024: EUR 349 million) and prepaid expenses of EUR 180 million (2024: EUR

238 million) mainly related to Other, Diagnosis & Treatment and Connected Care segments.

15Inventories

Accounting policies

Inventories are stated at the lower of cost or net realizable value. The cost of inventories comprises all costs of

purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and

condition. The costs of conversion of inventories include direct labor and fixed and variable production

overheads, considering the stage of completion and the normal capacity of production facilities. Costs of idle

facility and abnormal waste are expensed. The cost of inventories is determined using the first-in, first-out

(FIFO) method. The write-down of inventories to net realizable value is included in cost of sales.

Accounting estimates and judgments

Inventory is reduced for the estimated losses due to obsolescence. This reduction is determined for groups of

products based on sales in the recent past and/or expected future demand.

Inventories are summarized in the accompanying table.

Philips Group

Inventories in millions of EUR


	2025	2024
Raw materials and supplies	1,175	1,344
Work in process	408	414
Finished goods	1,287	1,439
Inventories	2,870	3,198

In 2025, total inventories decreased by EUR 328 million, mainly in raw materials and supplies and finished

goods. The write-down of inventories to net realizable value was EUR 154 million in 2025 and EUR 230 million

in 2024.


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16Receivables

Accounting policies

Receivables are initially measured at fair value and are subsequently measured at amortized cost if held

within a business model with the objective to collect the contractual cash flows, or at fair value through OCI if

held within a business model with the objective of both holding to collect contractual cash flows and selling.

Receivables are measured less any impairment losses.

Receivables are de-recognized when the company has transferred substantially all risks and rewards, which

includes transactions in which the company enters into factoring transactions, or if the company does not

retain control over the receivables.

Accounting estimates

Receivables are subject to impairment assessment, which involves estimating expected credit losses. Refer to

Other financial assets for accounting policies on impairment of financial assets.

Non-current receivables

Non-current receivables are associated mainly with customer financing in the Diagnosis & Treatment segment

amounting (net of allowance) to EUR 84 million (2024: EUR 81 million), insurance receivables in the US

amounting to EUR 28 million (2024: EUR 33 million) and income tax receivables amounting to EUR 19 million

(2024: EUR 36 million).

Philips has leasing activities where it acts as lessor. In such arrangements, Philips provides the customer with a

right to use of medical equipment in exchange for a series of payments. Residual values of assets under lease

form an insignificant part of the carrying amount of those assets. Residual values are influenced by asset

market prices and are therefore subject to management estimation. Residual values are at least reassessed on

an annual basis, or more often when necessary. Reassessments are based on a combination of realization of

assets sold, expert knowledge and judgment of local markets. In order to reduce residual value risk exposures

there may be residual value guarantees or purchase options embedded in the customer contract. Credit risk

for lease receivables is reviewed regularly and mitigated, for example, by retaining a security interest in the

leased asset.

The accompanying table sets out a maturity analysis of lease receivables, showing the undiscounted lease

payments to be received after the reporting date.

Philips Group

Maturity analysis of lease receivables in millions EUR


	2025	2024
Less than one year	55	33
One to two years	11	20
Two to three years	9	16
Three to four years	8	14
Four to five years	7	12
Over five years	17	19
Total undiscounted lease payments receivable	106	114
Unearned finance income	(10)	(12)
Net investment in lease	96	102

Current receivables

Current receivables of EUR 3,530 million (2024: EUR 3,672 million) as of December 31, 2025, included trade

accounts receivable (net of allowance) of EUR 3,339 million (2024: EUR 3,513 million), accounts receivable

other of EUR 173 million (2024: EUR 134 million), and accounts receivable from investments in associates of

EUR 19 million (2024: EUR 25 million).

The trade accounts receivable, net, per segment are:

Philips Group

Trade accounts receivable, net in millions of EUR


	2025	2024
Diagnosis & Treatment	1,582	1,687
Connected Care	1,043	1,064
Personal Health	562	575
Other	152	187
Trade accounts receivable, net	3,339	3,513


	131

The aging analysis of trade accounts receivable, net, representing current and overdue but not fully impaired

receivables, is presented in the accompanying table.

Philips Group

Aging analysis in millions of EUR


	2025	2024
Current	3,077	3,154
Overdue 1-30 days	54	141
Overdue 31-180 days	171	194
Overdue more than 180 days	37	24
Trade accounts receivable, net	3,339	3,513

The changes in the allowance for doubtful accounts receivable are:

Philips Group

Allowance for accounts receivable in millions of EUR


	2025	2024
Balance as of January 1	245	216
Additions charged to expense	37	112
Deductions from allowance ¹	(45)	(88)
Transfer to assets held for sale	(1)	-
Other movements	(43)	5
Balance as of December 31	193	245

1Write-offs for which an allowance was previously provided.

The allowance for doubtful accounts receivable has been established for expected credit losses and is related

primarily to receivables that are past due. The allowance presented also includes the allowance for Non-

current customer finance receivables of EUR 1 million (2024: EUR 8 million). Other movements in the current

period primarily relate to the reclassification of a provision for contractual allowances for certain Connected

Care receivables, as well as the impact of foreign currency remeasurement.

Included in the above balances as of December 31, 2025, are allowances for individually impaired receivables

of EUR 189 million (2024: EUR 239 million).

17Equity

Accounting policies

Common shares are classified as equity. Incremental costs directly attributable to the issuance of shares are

recognized as a deduction from equity. Where the company repurchases the company’s equity share capital

(treasury shares), the consideration paid, including any directly attributable incremental transaction costs (net

of income taxes), is deducted from shareholders’ equity until such treasury shares are cancelled or reissued.

Where such treasury shares are subsequently reissued, any consideration received, net of any directly

attributable incremental transaction costs and the related income tax effects, is included in shareholders’

equity.

Call options on own shares are treated as equity instruments.

Dividends are recognized as a liability in the period in which they are declared and approved by shareholders.

The income tax consequences of dividends are recognized when a liability to pay the dividend is recognized.

Common shares

As of December 31, 2025, authorized common shares consist of 2 billion shares (December 31, 2024: 2 billion;

December 31, 2023: 2 billion), and the issued and fully paid share capital consists of 962,920,132 common

shares, each share having a par value of EUR 0.20 (December 31, 2024: 939,939,384; December 31, 2023:

913,515,966).


	132

Preference shares

As a means to protect the company against (an attempt at) an unsolicited takeover or other attempt to exert

(de facto) control of the company, the ‘Stichting Preferente Aandelen Philips’ has been granted the right to

acquire preference shares in the company. It may exercise this right for as many preference shares as there are

common shares in the company outstanding at that time. As of December 31, 2025, no such right has been

exercised and no preference shares have been issued. Authorized preference shares consist of 2 billion shares

as of December 31, 2025 (December 31, 2024: 2 billion; December 31, 2023: 2 billion).

Options, restricted and performance shares

Under its share-based compensation plans, the company granted stock options on its common shares and

other conditional rights to receive common shares in the future, such as restricted shares and performance

shares (refer to Share-based compensation).

Treasury shares

In connection with the company’s share repurchase programs, shares that have been repurchased and are

held in Treasury for the purpose of (i) delivery under share-based compensation plans upon exercise of

options, or vesting of restricted or performance shares, and (ii) capital reduction, are accounted for as a

reduction of shareholders’ equity. Treasury shares are recorded at cost, representing the market price on the

acquisition date. When treasury shares are delivered by the company under its share-based compensation

plans, such shares are removed from treasury shares on a first-in, first-out (FIFO) basis.

When treasury shares are delivered by the company upon exercise of options, the difference between the cost

and the cash received is recorded in retained earnings. When treasury shares are delivered by the company

upon vesting of restricted shares or performance shares (granted under the company’s share-based

compensation plans), the difference between the market price of the shares and the cost is recorded in

retained earnings, and the market price is recorded in the share-based compensation reserve.

Philips Group

Treasury share transactions and share-based compensation in millions of EUR


	2025	2024	2023
Treasury shares	113	54	54

Re-issuance of treasury shares	(60)	(36)	(29)
Share-based compensation cost	141	96	88
Income tax	4	5	2
Share-based compensation reserve	85	65	61

Retained earnings	(39)	(18)	(24)

Total shareholders' equity	159	101	91

The accompanying table shows the movements in the outstanding number of shares over the last three years.

Philips Group

Outstanding number of shares


	2025	2024	2023
Balance as of January 1	925,009,074	906,403,156	881,480,527
Dividend distributed	22,980,748	30,860,582	39,334,938
Purchase of treasury shares	-	(13,718,391)	(15,964,445)
Delivery of treasury shares	3,299,111	1,463,727	1,552,136
Balance as of December 31	951,288,934	925,009,074	906,403,156

The accompanying table reflects transactions that took place in relation to former and current share-based

compensation plans:

Philips Group

Transactions related to share-based compensation plans


	2025	2024	2023
Shares acquired	-	9,281,227	3,000,000
Average market price	N/A	EUR 21.88	EUR 41.59
Amount paid	N/A	EUR 203 million	EUR 125 million
Shares delivered	3,299,111	1,463,727	1,552,136
Average price (FIFO)	EUR 34.31	EUR 37.14	EUR 34.59
Cost of delivered shares	EUR 113 million	EUR 54 million	EUR 54 million
Total shares in treasury at year-end	11,631,198	14,930,310	7,112,810
Total cost	EUR 298 million	EUR 411 million	EUR 262 million

Transactions that took place for capital reduction purposes:

Philips Group

Transactions related to capital reduction


	2025	2024	2023
Shares acquired	-	4,437,164	12,964,445
Average market price	N/A	EUR 37.56	EUR 37.25
Amount paid	N/A	EUR 167 million	EUR 483 million
Cancellation of treasury shares (shares)	-	4,437,164	15,134,054
Cancellation of treasury shares (EUR)	N/A	EUR 167 million	EUR 566 million
Total shares in treasury at year-end	-	-	-
Total cost	-	-	-


	133

Share purchase transactions related to employee options involved a cash inflow of EUR 13 million in 2025. In

2025, we settled withholding tax liability for an amount of EUR 33 million relating to the dividend distribution

in 2024.

Share repurchase methods for share-based remuneration plans and capital reduction purposes

Philips uses different methods to repurchase shares in its own capital: (i) share buyback repurchases in the

open market via an intermediary; and (ii) repurchase of shares via forward contracts for future delivery of

shares. During 2025, Philips did not repurchase any shares.

Forward contracts to repurchase shares and open market repurchases of shares

For share-based compensation plans

On June 3, 2025, Philips announced that it would repurchase up to 6 million shares to cover certain of its

obligations arising from its Long-Term Incentive plans. To this end, Philips entered into a number of forward

transactions for an amount of EUR 127 million to acquire 6 million shares with settlement dates in February

2027, November 2027 and December 2027 and a weighted forward price of EUR 21.17. This resulted in a EUR

121 million increase in retained earnings against treasury shares.

On September 15, 2025, Philips extended the settlement of two forward contracts for 2 million Long-Term

Incentive plans shares, each as part of the share repurchase program earlier announced on June 14, 2023. The

forward contract amounted to EUR 86 million with settlement date of October 2026 and November 2026 and

a weighted forward price of EUR 21.59. This resulted in a EUR 3 million increase in retained earnings against

treasury shares.

On August 5, 2024, Philips announced that it would repurchase shares for an amount of up to EUR 125 million

to cover certain of its obligations arising from its Long-Term Incentive plans. The repurchases were executed

through a combination of open market purchases by an intermediary (in August 2024 acquiring 2.2 million

shares which resulted in a EUR 60 million increase in retained earnings against treasury shares) and one

forward contract for an amount of EUR 65 million to acquire 2.5 million shares with a settlement date in

November 2026 and a weighted average forward price of EUR 26.40.

In March, April, November and December 2024, Philips settled EUR 316 million of forward contracts. This resulted

in a EUR 316 million decrease in retained earnings.

As of December 31, 2025, the remaining forward contracts to cover obligations under share-based

compensation plans related to 12.5 million shares (December 31, 2024: 6.5 million shares) and amounted to

EUR 283 million (December 31, 2024: EUR 142 million).

Share cancellations

There were no share cancellations in 2025.

Dividend distribution

2025

In May 2025, Philips distributed a dividend of EUR 0.85 per common share, representing a total value of EUR

789 million (including costs). Of the total dividend distribution to all shareholders, a maximum of 50% will be

available for payment in cash. If shareholders in total elect to receive an aggregate amount of cash dividend

that exceeds 50% of the total dividend amount, those shareholders who elected to receive their dividend in

cash will receive their cash dividend on a pro-rata basis, the remainder being distributed in shares. The

aggregate cash election result was 41.4%, which is below the 50% maximum as adopted in the General

Meeting of Shareholders and therefore shareholders will receive the dividend in accordance with their

election. Approximately 59% of the shareholders elected for a share dividend, resulting in the issuance of

22,980,748 new common shares.

A proposal will be submitted to the 2026 Annual General Meeting of Shareholders to pay a dividend of EUR

0.85 per common share, in shares or cash at the option of the shareholder, against retained earnings for 2025.

2024

In May 2024, Philips distributed a dividend of EUR 0.85 per common share, representing a total value of EUR

768 million (including costs). The dividend was distributed in the form of shares only, resulting in the issuance

of 30,860,582 new common shares.

2023

In May 2023, Philips distributed a dividend of EUR 0.85 per common share, representing a total value of EUR

749 million (including costs). The dividend was distributed in the form of shares only, resulting in the issuance

of 39,334,938 new common shares.

Limitations in the distribution of shareholders’ equity

As of December 31, 2025, pursuant to Dutch law, certain limitations exist relating to the distribution of

shareholders’ equity of EUR 1,545 million. Such limitations relate to common shares of EUR 193 million, as well

as to legal reserves required by Dutch law included under retained earnings of EUR 1,005 million and

unrealized currency translation differences of EUR 347 million. The unrealized gain related to cash flow

hedges of EUR 33 million and unrealized loss related to fair value through OCI financial assets of EUR 89

million qualify as revaluation reserves and reduce the distributable amount due to the fact that these reserves

are negative.

The legal reserves required by Dutch law of EUR 1,005 million included under retained earnings relates to any

legal or economic restrictions on the ability of affiliated companies to transfer funds to the parent company in

the form of dividends.

As of December 31, 2024, these limitations in distributable amounts were EUR 3,254 million and related to

common shares of EUR 188 million, as well as to legal reserves required by Dutch law included under retained


	134

earnings of EUR 1,052 million and unrealized currency translation differences of EUR 2,014 million. The

unrealized losses related to fair value through OCI financial assets of EUR 90 million and unrealized gain

related to cash flow hedges of EUR 1 million qualify as a revaluation reserve and reduce the distributable

amount due to the fact that this reserve is negative.

Non-controlling interests

Non-controlling interests relate to minority stakes held by third parties in consolidated group companies.

Capital management

Philips manages capital based upon the IFRS measures, net cash provided by operating activities and net cash

used for investing activities as well as the non-IFRS measure net debt.

Net debt is defined as the sum of long and short-term debt minus cash and cash equivalents. Group equity is

defined as the sum of shareholders’ equity and non-controlling interests. This measure is used by Philips

Treasury management and investment analysts to evaluate financial strength and funding requirements. The

Philips net debt position is managed with the intention of retaining the current strong investment grade

credit rating. Furthermore, Philips’ dividend policy is aimed at dividend stability and a pay-out ratio of 40% to

50% of Adjusted income from continuing operations attributable to shareholders (reconciliation to the most

directly comparable IFRS measure, Net income, is provided at the end of this note).

Philips Group

Composition of net debt and group equity in millions of EUR unless otherwise stated


	2025	2024	2023
Long-term debt	6,934	7,113	7,035
Short-term debt	1,151	526	654
Total debt	8,084	7,639	7,689
Cash and cash equivalents	2,794	2,401	1,869
Net debt	5,290	5,238	5,820
Shareholders’ equity	10,957	12,006	12,028
Non-controlling interests	32	37	33
Group equity	10,990	12,043	12,061
Net debt : group equity ratio	32:68	30:70	33:67


	135

Adjusted income from continuing operations attributable to shareholders is not a recognized measure of

financial performance under IFRS. The reconciliation of Adjusted income from continuing operations

attributable to shareholders to the most directly comparable IFRS measure, Net income, is included in the

accompanying table.

Philips Group

Adjusted income from continuing operations attributable to shareholders 1 in millions of EUR


	2025	2024	2023
Net income	897	(698)	(463)
Discontinued operations, net of income taxes	4	(142)	10
Income from continuing operations	901	(840)	(454)
Income from continuing operations attributable to non- controlling interests	(1)	(3)	(2)
Income from continuing operations attributable to shareholders ¹	899	(843)	(456)
Adjustments for:
Amortization and impairment of acquired intangible assets	240	392	290
Impairment of goodwill	-	-	8
Restructuring costs and acquisition-related charges	260	326	381
Other items:	270	830	1,358
Respironics litigation provision	-	984	575
Respironics insurance income	-	(538)	-
Respironics consent decree charges	97	113	363
Respironics field-action running costs	112	133	224
Contract settlement gain	(27)	-	-
Quality actions	89	123	175
Provision for a legal matter	-	-	31
Investment re-measurement loss	-	-	23
Loss (gain) on divestment of business	-	-	(35)
Remaining items	(1)	16	2
Net finance income/expenses	28	23	18
Tax impact on adjusting items ²	(192)	(370)	(450)
Tax effect of derecognition of US deferred tax asset	-	941	-
Adjusted Income from continuing operations attributable to shareholders 1	1,506	1,300	1,148

1Shareholders in this table refers to shareholders of Koninklijke Philips N.V.

2Includes deferred tax assets derecognized in the line below

18Debt

Accounting policies

Debt

Debt is initially measured at fair value net of directly attributable transaction costs. Subsequently, debt is

measured at amortized cost using the effective interest rate method. Amortized cost is calculated by taking

into account any discount or premium on acquisition and fees or costs that are an integral part of the

effective interest rate. Debt is derecognized when the obligation under the liability is discharged, cancelled or

has expired.

Lease liabilities

Lease liabilities are measured at the present value of the lease payments due over the lease term, generally

discounted using the incremental borrowing rate. Lease liabilities are subsequently measured at amortized

cost using the effective interest rate method. Lease liabilities are remeasured in case of modifications or

reassessments of the lease.

Philips has a USD 2.5 billion Commercial Paper Program and a EUR 1 billion committed standby revolving

credit facility that can be used for general group purposes. As of December 31, 2025, Philips did not have any

loans outstanding under either facility. These facilities do not have a material adverse change clause, have no

financial covenants and no credit-rating-related acceleration possibilities.

Philips established a Euro Medium-Term Note (EMTN) program, a framework that facilitates the issuance of

notes for a total amount up to EUR 10 billion. In 2025, Philips issued two new tranches under the program for

a total of EUR 1 billion fixed rate notes due 2030 and 2035 for general corporate purposes, including the

refinancing of the 2026 EUR and USD Bonds, and tendered on outstanding 2026, 2027, 2028 and 2029 EUR

Bonds. As of December 31, 2025, Philips has EUR 4.6 billion (2024: EUR 3.7 billion) fixed rate notes outstanding

under the EMTN program.

The conditions applicable to all USD-denominated corporate bonds issued by the company in March 2008 and

March 2012 (due 2038 and 2042) contain a ‘Change of Control Triggering Event’. If the company would

experience such an event with respect to a series of corporate bonds the company might be required to offer

to purchase the bonds that are still outstanding at a purchase price equal to 101% of their principal amount,

plus accrued and unpaid interest, if any. Furthermore, the conditions applicable to the EUR-denominated

corporate bonds issued since 2018 contain a similar provision (‘Change of Control Put Event’). Upon the

occurrence of such an event, the company might be required to redeem or purchase any of such bonds at


	136

their principal amount together with interest accrued. Philips’ outstanding long-term debt does not contain

financial covenants.

As of December 31, 2025, debt includes forward contracts of EUR 260 million (nominal value) relating to the

repurchase of shares to cover long-term incentive and employee stock purchase plans (2024: EUR 142 million),

with maturity dates in the fourth quarter of 2026 (EUR 141 million) and in 2027 (EUR 119 million).

Long-term debt

The accompanying tables present information about the long-term debt outstanding, its maturity and

average interest rates in 2025 and 2024.

Philips Group

Long-term debt in millions of EUR unless otherwise stated


	2025
	Amount outstanding	Current portion	Non-current portion	Between 1 and 5 years	Amount due after 5 years	Average remaining term (in years)	Average rate of interest
USD bonds	1,135	108	1,027	-	1,027	12.6	6.2%
EUR bonds	5,659	632	5,027	2,747	2,280	4.5	2.5%
Forward contracts	274	152	123	123	-	1.2	0.5%
Lease liabilities	963	207	757	479	277	3.5	4.0%
Bank borrowings	1	1	-	-	-	1.0	1.0%
Other long-term debt	-	-	-	-	-	3.6	1.3%
Long-term debt	8,032	1,098	6,934	3,349	3,584	5.4	3.2%

Philips Group

Long-term debt in millions of EUR unless otherwise stated


	2024
	Amount outstanding	Current portion	Non-current portion	Between 1 and 5 years	Amount due after 5 years	Average remaining term (in years)	Average rate of interest
USD bonds	1,408	131	1,276	122	1,154	12.3	6.3%
EUR bonds	4,917		4,917	2,639	2,278	4.7	2.3%
Forward contracts	148	82	66	66	-	1.3	1.2%
Lease liabilities	1,073	219	854	506	347	3.8	3.7%
Bank borrowings	1	1	1	1	-	1.5	1.0%
Other long-term debt	-	-	-	-	-	3.2	1.2%
Long-term debt	7,546	434	7,113	3,333	3,779	5.9	3.2%


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Bonds

The accompanying table presents the amount outstanding and effective rate of bonds.

Philips Group

Unsecured Bonds in millions of EUR unless otherwise stated


	Effective rate	2025	2024
Unsecured EUR Bonds
Due 22/05/2026; 1/2%	0.608%	632	750
Due 05/05/2027; 1 7/8%	2.049%	687	750
Due 02/05/2028; 1 3/8%	1.523%	480	500
Due 05/11/2029; 2 1/8%	2.441%	595	650
Due 30/03/2030; 2%	2.128%	500	500
Due 31/05/2030; 3 2/8%	3.324%	500
Due 08/09/2031; 4 2/8%	4.33%	500	500
Due 31/05/2032; 3 3/4%	4.043%	700	700
Due 05/05/2033; 2 5/8%	2.71%	600	600
Due 31/05/2035; 4%	4.092%	500
Unsecured USD Bonds
Due 15/05/2025; 7 3/4%	7.429%		52
Due 15/05/2025; 7 1/8%	6.794%		79
Due 01/06/2026; 7 1/5%	6.885%	108	121
Due 03/11/2038; 6 7/8%	7.21%	620	697
Due 15/03/2042; 5%	5.273%	426	480
Adjustments ¹		(54)	(55)
Unsecured Bonds		6,794	6,324

1Adjustments related to both EUR and USD bonds and concern bond discounts, premium and transaction costs

Leases

The accompanying table presents a reconciliation between the total of future minimum lease payments and

their present value.

Philips Group

Lease liabilities in millions of EUR


	2025			2024
	Future minimum lease payments	Interest	Present value of minimum lease payments	Future minimum lease payments	Interest	Present value of minimum lease payments
Less than one year	241	34	207	255	35	219
Between one and five years	556	76	479	592	85	506
More than five years	304	27	277	385	38	347
Lease liabilities	1,101	137	963	1,232	159	1,073

Short-term debt

Philips Group

Short-term debt in millions of EUR


	2025	2024
Short-term bank borrowings	52	92
Current portion of long-term debt	1,098	434
Short-term debt	1,151	526

During 2025, the weighted average interest rate on the bank borrowings was 6.3% (2024: 9.3%). This

decrease was mainly driven by lower interest rate environments across various countries globally.


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19Provisions

Accounting policies

A provision is a liability of uncertain timing or amount. Provisions are recognized if, as a result of a past event,

the company has a present legal or constructive obligation, it is probable that an outflow of economic

benefits will be required to settle the obligation, and the amount can be estimated reliably. Provisions are

measured at the present value of the expenditures expected to be required to settle the obligation using a

pre-tax discount rate that reflects current market assessments of the time value of money. The increase in the

provision due to passage of time (accretion) is recognized as interest expense. Provisions include contingent

consideration and defined benefit obligations (DBO), which represent financial liabilities characterized by

uncertainty regarding their timing or amount.

Restructuring-related provisions

Provisions for severance and termination benefits are recognized for those costs only when the company has a

detailed formal plan for the restructuring and has raised a valid expectation with those affected that it will

carry out the restructuring by starting to implement that plan or announcing its main features to those

affected by it. Before a provision is established, the company recognizes any impairment loss on the assets

associated with the restructuring.

Accounting estimates and judgments

By their nature, the recognition of provisions requires estimates and assumptions regarding the timing and

the amount of outflow of resources. The main estimates include:

•Product warranty provisions: the provisions for assurance-type product warranty reflect the estimated costs

of replacement and free-of-charge services that will be incurred by the company with respect to products

sold and include costs to execute quality remediation and related field actions (including the Respironics

field action). These require management to make estimates and assumptions about items such as quantities

and the portion of products to be remediated through replacement, repair or (partial) refund.

•Environmental provisions: 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 as well as changes in judgments and

discount rates. The impact of climate change is also considered when assessing whether Philips has a

present legal or constructive obligation, particularly in relation to fines, penalties and commitments to

reduce greenhouse gas emissions.

•Legal provisions: provisions for legal claims and investigations reflect the best estimate of the outflow of

resources, supported by internal and external legal counsel, when it is probable that such outflow of

resources will be required to settle an obligation.

Philips Group

Provisions in millions of EUR


	Product warranty	Environmental	Restructuring- related	Legal	Other	Post-employment benefits	Contingent consideration	Total
Current	624	22	102	477	181	-	57	1,463
Non-current	67	80	14	10	248	558	58	1,035
Balance as of December 31, 2023	692	102	116	487	429	558	115	2,498

Additions	439	9	131	1,015	185	81	5	1,865
Utilizations	(507)	(15)	(127)	(477)	(124)	(76)	(9)	(1,336)
Releases	(15)	-	(26)	(28)	(35)	(5)	(3)	(113)
Accretion	-	5	-	38	(1)	-	3	45
Changes in discount rate	-	(7)	-	-	-	-	-	(8)
Translation differences and other	(24)	4	(1)	44	(8)	2	3	21
Total change	(107)	(5)	(23)	592	16	3	(2)	474


	139


	Product warranty	Environmental	Restructuring- related	Legal	Other	Post-employment benefits	Contingent consideration	Total
Current	522	20	77	1,066	229	-	61	1,977
Non-current	63	76	16	13	216	560	52	996
Balance as of December 31, 2024	585	96	94	1,079	446	560	113	2,972

Additions	328	7	169	15	116	66	4	706
Utilizations	(385)	(14)	(124)	(1,047)	(166)	(85)	(1)	(1,821)
Releases	(32)	-	(46)	(8)	(26)	-	(2)	(114)
Accretion	-	4	-	1	-	-	1	7
Translation differences and other	(39)	(11)	(4)	(9)	(33)	(22)	(5)	(123)
Total change	(129)	(13)	(4)	(1,048)	(109)	(40)	(3)	(1,345)

Current	373	19	84	18	140	-	77	712
Non-current	83	64	5	12	196	520	34	915
Balance as of December 31, 2025	456	83	90	31	337	520	111	1,627

Post-employment benefits

For details of post-employment benefits refer to Post-employment benefits.

Product warranty provisions

Product warranty provisions include costs of replacements and repair services that will be incurred by the

company in relation to products sold, to execute quality remediation and related field actions, as well as the

field action provision in connection with the Respironics voluntary recall notification, which is explained

separately in the next section. The company expects the provisions to be utilized mainly within 2026.

Additions in 2025 include EUR 149 million for replacement and repair services related to products sold under

warranty, as well as EUR 138 million and EUR 40 million for quality remediation and related field actions in

the Diagnosis & Treatment and Connected Care segments, respectively.

Respironics field-action provision

On June 14, 2021, Philips subsidiary Philips Respironics initiated a voluntary recall notification in the US and

field safety notice outside the US for certain sleep and respiratory care products related to the polyester-based

polyurethane (PE-PUR) sound abatement foam in these devices. The remediation continues to progress

globally. As of December 31, 2025, the total number of units remaining that are expected to be remediated is

approximately 65,000 devices worldwide.

Philips has recognized a provision based on Philips’ best estimate of the costs to repair, replace or refund

devices, subject to the Respironics field action. The provision is related to the cost to repair, replace or provide

financial compensation for affected devices and includes, among others, the costs for the remaining

production, the cost of intensified communication with physicians and patients, material costs, labor cost and

logistics, as well as costs relating to financial compensation provided to customers under the field action. The

provision does not include any product liability costs or other claims.

Philips Group

Respironics field-action provision in millions of EUR


	2025	2024
Balance as of January 1	130	334
Additions	15	30
Utilizations	(92)	(220)
Translation differences and other	(17)	(14)
Balance as of December 31	36	130

Utilizations for the year reflect the costs incurred in executing the remediation during the year.

The completion of the field action continues to be subject to uncertainty, which requires management to

make estimates and assumptions about items such as quantities and the portion to be replaced, repaired and

subject to financial compensation.

Further to the above, field-action running remediation costs during the year of EUR 112 million (2024: EUR

133 million, 2023: EUR 224 million), such as testing, external advisory and regulatory response and additional

right-of-return and warranty provisions, have been incurred.


	140

Philips and its affiliates are defendants in a number of consumer class action lawsuits from users of the

affected devices and a number of individual personal injury and other compensation claims. For legal matters

including claims refer to the legal provisions section of this note as well as Contingencies.

Environmental provisions

The environmental provisions include accrued costs recorded with respect to environmental remediation in

various countries. In the US, subsidiaries of the company have been named as potentially responsible parties in

state and federal proceedings for the clean-up of certain sites.

The additions and the releases of the provisions originate from additional insights in relation to factors like

the estimated cost of remediation, changes in regulatory requirements and efficiencies in completion of

various site work phases.

Approximately EUR 60 million of the long-term provision is expected to be utilized after one to five years,

with the remainder after five years. For more details on the environmental remediation refer to

Contingencies.

Restructuring-related provisions

Philips Group

Restructuring-related provisions in millions of EUR


	December 31, 2025	December 31, 2024
Diagnosis & Treatment	27	34
Connected Care	22	19
Personal Health	7	15
Other	34	26
Philips Group	90	94

In 2025, Philips continued general productivity actions aimed at simplifying the organization as part of its

multi-year plan designed to create value with sustainable impact. As of December 31, 2025, the most

significant restructuring projects impacted segments Other and Diagnosis & Treatment and mainly took place

in the Netherlands, the US and Germany. The restructuring comprised mainly product portfolio rationalization

and the reorganization of global support functions. The company expects the provisions to be utilized mainly

within the next year.

Legal provisions

Philips is a defendant in a number of consumer class-action lawsuits from users of the affected devices and a

number of individual personal injury and other compensation claims related to the Respironics recall.

On May 9, 2024, Philips Respironics reached agreement on a class action settlement in relation to the pending

US medical monitoring class action complaint and a private settlement in relation to US personal injury claims

for an aggregate amount of USD 1.1 billion. Both agreements became final in January 2025 following a

successful registration process for the personal injury settlement and subsequently the settlement amounts

have been fully paid in the first half of 2025.

Utilizations of EUR 1,047 million mainly relate to the medical monitoring and personal injury claims class

action settlement in the US that was paid in 2025.

For details of other legal matters, including regulatory and other governmental proceedings, refer to

Contingencies.

The company expects the provisions to be utilized mainly within the next three years.

Contingent consideration

There is no material movement in 2025 and approximately EUR 32 million of the non-current amount is

expected to be utilized after three years. These amounts relate to previous acquisitions in 2018 and 2022.

Other provisions

The main elements of other provisions are:

Philips Group

Other provisions in millions of EUR


	2025	2024
Other long-term employee benefits	70	80
Self-insurance	74	60
Non-income taxes / social security	32	48
Rights of return	34	44
Decommissioning costs	34	37
Onerous contracts	36	66
Remaining	57	111
Balance as of December 31	337	446

Onerous contracts reflect non-cancellable commitments on supplies for which no future demand or

alternative usage has been identified. Remaining provisions relate to a variety of positions, for example

provision for disability of employees and provision for royalty obligations. The releases in 2024 and 2025

reflect updated assessments of these provisions throughout the year. The company expects the other

provisions to be utilized mainly within the next five years.


	141

20Post-employment benefits

Accounting policies

Defined contribution plans

A defined contribution plan is a post-employment benefit plan for which the company pays fixed

contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit

expense in the Consolidated statements of income in the periods during which services are rendered by

employees.

Defined benefit plans

A defined benefit plan is a post-employment benefit plan that is not a defined contribution plan. Defined

benefit plans define an amount of pension benefit that an employee will receive after retirement. That

pension benefit typically depends on several factors such as years of service, age and salary.

The net pension asset or liability recognized in the Consolidated balance sheets in respect of defined benefit

plans is the fair value of plan assets less the present value of the projected defined benefit obligation at the

balance sheet date. The defined benefit obligation is calculated annually by qualified actuaries using the

projected unit credit method. Recognized assets are limited to the present value of any reductions in future

contributions or any future refunds. The net pension liability is presented as a long-term provision; no

distinction is made for the short-term portion.

For the company’s major plans, a full discount rate curve of high-quality corporate bonds is used to determine

the defined benefit obligation, where available. The curves are based on the Mercer Yield Curve

methodology, which uses data of corporate bonds rated AA or equivalent. For the other plans, a single point

on the Mercer Yield Curve is used corresponding to the average maturity of the defined benefit obligation. In

countries without a deep corporate bond market, the discount rate is based on government bonds.

Pension costs with respect to defined benefit plans primarily represent the increase of the actuarial present

value of the obligation for post-employment benefits based on employee service during the year and the

interest on the net recognized asset or liability with respect to employee service in previous years.

Remeasurements of the net defined benefit asset or liability comprise actuarial gains and losses, the return on

plan assets (excluding interest) and the effect of the asset ceiling (excluding interest). The company recognizes

all remeasurements in Other comprehensive income.

Past service costs arising from the introduction of a change to the benefit payable under a plan or a

significant reduction of the number of employees covered by a plan (curtailment) are recognized in full in the

Consolidated statements of income.

The company’s net obligation with respect to other long-term employee benefits is the amount of future

benefit that employees have earned in return for their service in the current and prior periods, such as jubilee

entitlements. That benefit is discounted to determine its present value. Remeasurements are recognized in

the Consolidated statements of income in the period in which they arise.

Further information on other long-term employee benefits can be found in Provisions in the Other provisions

section.

Accounting estimates and judgments

To make the actuarial calculations for the valuation of defined benefit obligations, assumptions are needed

for discount rates, healthcare cost increases, future salary increases, future pension increases, life expectancy

and employee turnover rates. The actuarial calculations are made by external actuaries based on inputs from

observable market data, such as corporate bond yield curves to determine the discount rates, mortality tables

to determine life expectancy and inflation rates to determine future salary increases and future pension

increases.

Post-employment benefit plans have been established in many countries in accordance with the legal

requirements, customs and the local practice in the countries involved. The larger part of post-employment

benefits are company pension plans, of which some are funded and some are unfunded. All funded post-

employment benefit plans are considered to be related parties.

Most employees who take part in a company pension plan are covered by defined contribution (DC) pension

plans. The main DC plans are in the Netherlands and the US. The company also sponsors a number of defined

benefit (DB) pension plans. The benefits provided by these plans are based on employees’ years of service and

compensation levels.

The company also sponsors a limited number of retiree medical plans. The benefits provided by these plans

typically cover a part of the healthcare costs after retirement. None of these plans are individually significant

to the company and are therefore not further separately disclosed.

The larger funded DB and DC plans are governed by independent trustees who have a legal obligation to

protect the interests of all plan members and operate under the local regulatory framework.


	142

The DB plans in Germany make up most of the defined benefit obligation (DBO) and the net position. In 2025,

the US qualified DB pension plan was fully terminated. The company also has DB plans in the rest of the

world; however, these are individually not significant to the company and do not have a significantly different

risk profile that would warrant separate disclosure.

Plan assets are managed in legally separate pension trusts, primarily overseen by independent trustees, who

bear full responsibility for and have complete discretion over the investment strategy for these plan assets.

The plan assets of the Philips pension plans are invested in well-diversified portfolios.

The adjacent table provides a breakdown of the present value of the funded and unfunded DBO, the fair

value of plan assets and the net position in Germany, the US and in other countries. The table also provides

the value of reimbursement rights.

Philips Group

Post-employment benefits in millions of EUR


	Germany		United States		Other countries		Total
	2025	2024	2025	2024	2025	2024	2025	2024
Present value of funded DBO	(499)	(531)		(416)	(209)	(205)	(708)	(1,152)
Present value of unfunded DBO	(224)	(242)	(117)	(131)	(131)	(134)	(472)	(507)
Total present value of DBO	(723)	(773)	(117)	(547)	(340)	(339)	(1,180)	(1,659)
Fair value of plan assets	472	496		465	190	189	662	1,150
Asset ceiling					(1)	(1)	(1)	(1)
Net position	(251)	(277)	(117)	(82)	(151)	(151)	(519)	(510)
Value of reimbursement rights					7	7	7	7

The classification of the net position is:

Philips Group

Classification net position in millions of EUR


	Germany		United States		Other countries		Total
	2025	2024	2025	2024	2025	2024	2025	2024
Total asset for plans in a surplus	-	-	-	49	-	1	-	50
Total liability for plans in a deficit	(251)	(277)	(117)	(131)	(152)	(152)	(520)	(560)
Net position	(251)	(277)	(117)	(82)	(151)	(151)	(519)	(510)

Germany

The company has several DB plans in Germany, some of which are unfunded. The plan assets of the funded DB

plans in Germany are held in a legally separate pension trust.

Due to the relatively high level of social security in Germany, the company’s pension plans mainly provide

benefits for the higher earners. The plans are open for future pension accrual. Indexation is mandatory due to

legal requirements. Some of the German plans have a DC design, but are accounted for as DB plans due to a

legal minimum return requirement.

Company pension commitments in Germany are largely protected against employer bankruptcy via the

Pensions-Sicherungs-Verein, which charges a fee to all German companies providing pension promises.

Philips participates in the Philips Pensionskasse (VVaG), a legally independent pension institution established

under German law and subject to supervision by the German Federal Financial Supervisory Authority (BaFin).

In accordance with the terms of the arrangement, the obligation of Philips is limited to the payment of fixed

contributions to the Philips Pensionskasse. The Philips Pensionskasse itself bears the actuarial and investment

risks associated with the pension benefits and is responsible for meeting benefit payments to members.

Although German statutory labor law provides for a subsidiary employer liability in the event that a pension

institution is unable to fulfil its obligations, this liability is contingent in nature. Based on the funding

position, regulatory framework, historical experience and ongoing supervision by BaFin, Philips does not have

a present or probable obligation to make additional payments beyond the contractually agreed contributions.

Accordingly, Philips classifies the Philips Pensionskasse as a defined contribution plan.

United States

In 2025, the US qualified DB pension plan was fully terminated. The remaining US non-qualified DB pension

plans are closed plans without future pension accrual. Some of the non-qualified DB pension plans are funded

through a trust, which assets do not qualify as plan assets.

The assets of the US qualified DC pension plan are held in a trust governed by fiduciaries.

The settlement of the terminated US qualified DB pension plan, which is recorded as a past service cost, did

not have a material impact on the company’s results or cash flows in 2025.

Risks related to DB plans

DB plans expose the company to various demographic and economic risks such as longevity risk, investment

risks, currency and interest rate risk and in some cases inflation risk. The latter plays a role in the assumed

salary increase but more importantly in some countries where indexation of pension accruals is mandatory.

The company has an active de-risking strategy in which it constantly looks for opportunities to reduce the risks

associated with its DB plans. Lump sum cash-out options, buy-ins, buy-outs and a change to DC are examples

of this strategy.


	143

Summary of pre-tax costs for post-employment benefits and reconciliations

The adjacent table contains the total of current and past service costs, administration costs and settlement

results as included in Income from operations and the interest cost as included in Financial expenses.

Philips Group

Pre-tax costs for post-employment benefits in millions of EUR


	2025	2024	2023
Defined benefit plans	71	43	47
- included in income from operations	54	23	25
- included in financial expense	17	20	21
- included in Discontinued operations	-	-	-
Defined contribution plans	317	365	376
- included in income from operations	317	365	376
- included in Discontinued operations	-	-	-
Post-employment benefits costs	388	408	423

Summary of the reconciliations for the DBO and plan assets

The adjacent tables contain the reconciliations for the DBO and plan assets.

Philips Group

Defined benefit obligations in millions of EUR


	2025	2024
Balance as of January 1	1,659	1,605
Service cost	31	29
Interest cost	52	65
Employee contributions	4	4
Actuarial (gains) / losses
- demographic assumptions	(1)	-
- financial assumptions	(49)	20
- experience adjustment	1	9
(Negative) past service cost	13	(7)
Settlements	(331)	1
Benefits paid from plan	(103)	(63)
Benefits paid directly by employer	(36)	(36)
Translation differences and other	(60)	32
Balance as of December 31	1,180	1,659

Philips Group

Plan assets in millions of EUR


	2025	Asset ceiling 2025	2024	Asset ceiling 2024
Balance as of January 1	1,150	(1)	1,089	-
Interest income on plan assets	35	-	45	-
Admin expenses paid	(1)	-	(1)	-
Return on plan assets excluding interest income	(34)	-	13	-
Employee contributions	4	-	4	-
Employer contributions	(5)	-	30	-
Settlements	(340)	-	-	-
Benefits paid from plan	(103)	-	(63)	-
Translation differences and other	(44)	-	33	(1)
Balance as of December 31	662	(1)	1,150	(1)

The past service costs in 2025 mainly relate to the termination of the US qualified DB pension plan and the

impact of new labor codes in India. The past service costs in 2024 mainly relate to the retiree medical plans in

Brazil and the pension plan in Switzerland.

Plan assets allocation

The asset allocation in the company’s DB plans as of December 31, 2025 and 2024, were:

Philips Group

Plan assets allocation in millions of EUR


	2025	2024
Assets quoted in active markets
- Debt securities	216	460
- Equity securities	12	12
- Other 1	180	431

Assets not quoted in active markets
- Debt securities	1	-
- Equity securities	-	-
- Other ¹	253	247
Total assets	662	1,150

1Other assets are primarily composed of cash and cash equivalents, real estate, investment funds, and assets managed by

insurance companies.

The plan assets in 2025 contain 38% (2024: 22%) unquoted plan assets. Plan assets in 2025 do not include

property occupied by or financial instruments issued by the company.


	144

Assumptions

The mortality tables used for the company’s largest DB plans are:

•Germany: Heubeck-Richttafeln 2018 Generational, assuming 93% of mortality rates for male retirees

between ages 60 and 85

•US: PRI-2012 Generational with MP2021 improvement scale + white collar adjustment

The weighted averages of the assumptions used to calculate the DBO were:

Philips Group

Assumptions used for defined benefit obligations in %

as of December 31,


	Germany		United States		Other countries		Total
	2025	2024	2025	2024	2025	2024	2025	2024
Discount rate	3.9%	3.3%	5.0%	5.1%	4.4%	4.2%	4.1%	4.0%
Inflation rate	2.0%	2.0%	2.3%	2.3%	2.1%	2.2%	2.0%	2.1%
Salary increase	2.8%	2.8%	0.0%	0.0%	4.5%	4.4%	3.1%	3.1%

Sensitivity analysis

The following table illustrates the approximate impact on the DBO from movements in key assumptions. The

DBO was recalculated using a change in the assumptions of 1% which overall is considered a reasonably

possible change. The impact on the DBO because of changes in discount rate is normally accompanied by

partly offsetting movements in plan assets.

The average duration in years of the DBO of the DB plans is 9 (Germany: 10, US: 7, and other countries: 9) as

of December 31, 2025 (2024: 10).

Philips Group

Sensitivity of key assumptions in millions of EUR


	2025	2024
Increase
Discount rate (1% movement)	(80)	(123)
Pension increase (1% movement)	54	60
Salary increase (1% movement)	12	14
Longevity ¹	26	34
Decrease
Discount rate (1% movement)	98	150
Pension increase (1% movement)	(47)	(52)
Salary increase (1% movement)	(11)	(12)
Longevity ¹	(21)	(24)

1The mortality table (i.e., longevity) also impacts the DBO. The above sensitivity table illustrates the impact on the DBO of a

further 10% decrease / increase in the assumed rates of mortality for the company’s major plans. A 10% decrease / increase in

assumed mortality rates equals a change of life expectancy by 0.5 - 1 year.

Cash flows and costs in 2026

Cash outflows in relation to post-employment benefits are estimated to amount to EUR 382 million in 2026,

consisting of:

•EUR 24 million employer contributions to DB plans (Germany: EUR 10 million, US: EUR 0 million, other

countries: EUR 14 million)

•EUR 42 million cash outflows in relation to DB plans (Germany: EUR 20 million, US: EUR 9 million, other

countries: EUR 13 million)

•EUR 316 million employer contributions to DC plans (Netherlands: EUR 142 million, US: EUR 111 million,

other countries: EUR 63 million)

The service and administration cost for 2026 is expected to amount to EUR 30 million for DB plans. The net

interest cost for 2026 for the DB plans is expected to amount to EUR 21 million. The cost for DC pension plans

in 2026 is equal to the expected DC cash flow.


	145

21Accrued liabilities

Accounting policies

Accrued liabilities are initially measured at fair value and subsequently at amortized cost and are de-

recognized when the obligation under the liability is discharged, cancelled or has expired.

Accrued liabilities are summarized in the accompanying table.

Philips Group

Accrued liabilities in millions of EUR


	2025	2024
Personnel-related costs:
- Salaries and wages	631	601
- Accrued holiday entitlements	100	95
- Other personnel-related costs	98	101
Fixed-asset-related costs:
- Gas, water, electricity, rent and other	32	41
Communication and IT costs	52	55
Distribution costs	92	95
Sales-related costs:
- Commission payable	17	16
- Advertising and marketing-related costs	120	120
- Other sales-related costs	18	15
Material-related costs	116	124
Interest-related accruals	95	83
Other accrued liabilities	246	283
Accrued liabilities	1,616	1,630

22Other liabilities

Accounting policies

Other liabilities are initially measured at fair value and subsequently at amortized cost and are derecognized

when the obligation under the liability is discharged, cancelled or has expired.

The company recognizes contract liabilities if a payment is received or a payment is due (whichever is earlier)

from a customer before the company transfers the related goods or services. Contract liabilities are

recognized as revenue when the company performs under the contract (i.e., transfers control of the related

goods or services to the customer).

Other non-current liabilities

Non-current liabilities were EUR 47 million as of December 31, 2025 (December 31, 2024: EUR 167 million),

associated mainly with indemnification and non-current accruals.

Other current liabilities

Other current liabilities are summarized in the accompanying table.

Philips Group

Other current liabilities in millions of EUR


	2025	2024
Accrued customer rebates	137	169
Other taxes including social security premiums	133	115
Other liabilities	126	70
Other current liabilities	395	354

Other liabilities within Other current liabilities are mainly linked to divestment-related obligations in 2025.

Contract liabilities

Non-current contract liabilities were EUR 458 million as of December 31, 2025 (December 31, 2024: EUR 431

million) and current contract liabilities were EUR 1,490 million as of December 31, 2025 (December 31, 2024:

EUR 1,699 million).

The current contract liabilities decreased by EUR 209 million, which is mainly driven by a decrease in deferred

balances for customer service contracts. The current contract liabilities as of December 31, 2024, resulted in

revenue recognized of EUR 1,699 million in 2025.


	146

23Cash flow statement supplementary information

Accounting policies

Cash and cash equivalents

Cash and cash equivalents include all cash balances, certain money market funds and short-term highly liquid

investments with an original maturity of three months or less that are readily convertible into known amounts

of cash. Bank overdrafts are included in borrowings in current liabilities.

Cash flow statements

The cash flow statement is prepared using the indirect method. Cash flows related to interest and tax are

included in operating activities. Assets and liabilities acquired as part of a business combination are included

in investing activities (net of cash acquired). Dividends paid to shareholders are included in financing activities.

Dividends received are included in operating activities.

Cash flows arising from transactions in a foreign currency are translated into the company’s functional

currency using the exchange rate at the date of the cash flow. Cash flows from derivative instruments that are

accounted for as cash flow hedges are classified in the same category as the cash flows from the hedged

items. Cash flows from other derivative instruments are classified as investing cash flows.

Cash paid for leases

In 2025, gross lease payments of EUR 268 million (2024: EUR 252 million; 2023: EUR 271 million) included

interest of EUR 38 million (2024: EUR 37 million; 2023: EUR 27 million).

Net cash used for derivatives and current financial assets

In 2025, a total of EUR 67 million cash was paid with respect to foreign exchange derivative contracts related

to activities for liquidity management and with respect to the purchase and proceeds from current financial

assets (2024: EUR 38 million inflow; 2023: EUR 46 million outflow).

Purchase and proceeds from non-current financial assets

In 2025, the net cash inflow was EUR 15 million. In 2024, the net cash outflow was EUR 66 million. In 2023, the

net cash outflow was EUR 44 million.

Reconciliation of liabilities arising from financing activities

Certain items in the statements of cash flows do not correspond to the differences between the balance sheet

amounts for the respective items, principally because of the effects of translation differences and

consolidation changes.

Philips Group

Reconciliation of liabilities arising from financing activities in millions of EUR


	Balance as of December 31, 2024	Cash flow	Currency effects and consolidation changes	Other ¹	Balance as of December 31, 2025
Long term debt ²	7,546	448	(230)	267	8,032
EUR bonds	4,917	738	-	4	5,659
USD bonds	1,408	(120)	(154)	1	1,135
Leases	1,073	(169)	(76)	135	963
Forward contracts ³	148			127	274
Bank borrowings	1	(1)			1
Other long-term debt	-				-
Short term debt ²	92	(24)	(16)		53
Short-term bank borrowings	92	(24)	(16)	-	52
Other short-term loans	1	-			1
Equity	(554)	(317)		306	(565)
Dividend payable	-	(330)		330	-
Forward contracts ³	(143)	-		(125)	(267)
Treasury shares	(411)	13		101	(298)
Total		107

1Besides non-cash, other includes interest paid on leases, which is part of cash flows from operating activities.

2In this table, current portion of long-term debt is included in long-term debt (and excluded from short-term debt).

3The forward contracts are related to the share buyback program and LTI plans.


	147

Philips Group

Reconciliation of liabilities arising from financing activities in millions of EUR


	Balance as of December 31, 2023	Cash flow	Currency effects and consolidation changes	Other ¹	Balance as of December 31, 2024
Long term debt ²	7,567	(53)	107	(74)	7,546
EUR bonds	4,569	340		8	4,917
USD bonds	1,325		83	-	1,408
Leases	1,074	(192)	24	167	1,073
Forward contracts ³	396			(248)	148
Bank borrowings	203	(201)		(1)	1
Other long-term debt	-	-	-	-	-
Short term debt ²	122	(30)	1	-	92
Short-term bank borrowings	122	(31)	1		92
Other short-term loans	-	1	-	-	1
Equity	(656)	(413)		516	(554)
Dividend payable	-	(3)		3	-
Forward contracts ³	(394)	-		251	(143)
Treasury shares ⁴	(262)	(410)		262	(411)
Total		(496)

1Besides non-cash, other includes interest paid on finance leases, which is part of cash flows from operating activities.

2In this table, current portion of long-term debt is included in long-term debt (and excluded from short-term debt).

3The forward contracts are related to the share buyback program and LTI plans.

4Cash flow in 2024 includes withholding tax for share buyback amounting to EUR 41 million.

24Contingencies

Accounting policies

Contingent liabilities

A contingent liability is a liability of uncertain timing and amount. Contingencies are not recognized in the

balance sheet because they are dependent on the occurrence or non-occurrence of one or more uncertain

future events not wholly within the control of the company or because the risk of loss is estimated to be

possible but not probable or because the amount cannot be measured reliably.

Contingent assets

Contingent assets are disclosed if the inflow of economic benefits is probable, but not virtually certain. If the

inflow of economic benefits becomes virtually certain, the asset would no longer be contingent and its

recognition appropriate.

Financial guarantees

Philips’ policy is to provide guarantees and other letters of support only in writing. Philips does not stand by

other forms of support. The company recognizes a liability at the fair value of the obligation at the inception

of a financial guarantee contract. The guarantee is subsequently measured at the higher of the best estimate

of the obligation or the amount initially recognized less, when appropriate, cumulative amortization.

Accounting estimates and judgments

Significant judgment is required to determine the likelihood of a potential outflow of resources. In addition,

judgment is involved in determining whether the amount of an obligation can be measured with sufficient

reliability. Contingencies involve inherent uncertainties including, but not limited to, court rulings,

negotiations between affected parties, governmental actions, tax and environmental remediation.

Contingent assets require management to apply judgment, especially to estimate the likelihood of the inflow

of economic benefits and timing of recognition.

Guarantees

The total fair value of guarantees recognized on the balance sheet amounts to EUR 2 million (December 31,

2024: nil). Remaining off-balance-sheet business related guarantees on behalf of third parties and associates

amounted to EUR 4 million as of December 31, 2025, (December 31, 2024: EUR 343 million). The decrease

compared to the prior year primarily reflects that the insurance‑related product‑liability exposure associated

with the Respironics recall was settled and, accordingly, was no longer outstanding as of December 31, 2025.

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 certain manufacturing activities

on the environment.

Legal proceedings

The company and certain of its group companies and former group companies are involved as a party in legal

proceedings, 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.


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While it is not feasible to predict or determine the outcome of all pending or threatened legal proceedings,

regulatory and governmental proceedings, the company is of the opinion that the cases described below may

have, or have had in the recent past, a significant impact on the company’s consolidated financial position,

results of operations and cash flows.

Respironics recall

On June 14, 2021, Philips subsidiary Philips RS North America LLC (Philips Respironics) issued a voluntary recall

notification in the US and field safety notice outside the US for specific Philips Respironics CPAP, Bi-Level PAP,

and mechanical ventilator devices (the “Recalled Devices”).

Consent decree

On August 26, 2021, the US Food and Drug Administration (FDA) commenced an inspection of the Philips

Respironics manufacturing facility in Murrysville, Pennsylvania, and provided Philips Respironics with its

preliminary inspectional observations on November 9, 2021. In 2024, Philips Respironics reached an agreement

with the US Department of Justice (DoJ), acting on behalf of the FDA, regarding the terms of a consent decree

to resolve the identified issues in relation to the inspection.

DOJ investigation; state Attorneys General investigation

Philips Respironics and certain of Philips' subsidiaries in the US continue to cooperate with a criminal and civil

investigation triggered by a subpoena received from the DOJ in 2022 to provide information related to events

leading to the Respironics recall. In addition, the same entities are cooperating with an investigation initiated

in 2024 by certain US state Attorneys General into trade practices related to the products subject of the

Respironics recall. While the outflow of economic resources in connection with these investigations is assessed

as probable, given the current stage of the investigations, the company is not able to reliably estimate the

financial impact.

Product liability claims

Following the voluntary recall notification, a number of civil complaints have been filed in several jurisdictions

against Philips Respironics and certain of its affiliates (including the company) generally alleging economic

loss, personal injury and/or the potential for personal injury allegedly caused by the recalled devices.

In the US, consumer and commercial class action lawsuits have been filed alleging economic loss and medical

monitoring claims. Individual personal injury lawsuits have also been filed. On October 8, 2021, a Multi-District

Litigation (MDL) in the US District Court for the Western District of Pennsylvania was formed, and most of

these class action and personal injury lawsuits have been consolidated in the MDL for pre-trial proceedings.

On September 7, 2023, Philips Respironics reached agreement on a class action settlement in relation to the

economic loss class action complaint, for which the company recorded a EUR 575 million provision in the first

quarter of 2023. The claims period concluded on August 9, 2024, and since then, the Claims Administrator has

been processing claims, calculating relevant payment amounts, and making payments to eligible class

members.

On May 9, 2024, Philips Respironics reached agreement on a class action settlement in relation to the medical

monitoring class action complaint. Under the agreement, which became final in January 2025, the Philips

defendants agreed to pay a capped amount of USD 25 million into a Qualified Settlement Fund for the

benefit of eligible class members.

Also on May 9, 2024, Philips Respironics reached agreement on a private settlement in relation to US personal

injury claims. Under the agreement, the Philips defendants have agreed to pay USD 1.075 billion to consist of

USD 25 million in notice and administrative costs and USD 1.050 billion into a Personal Injury Settlement Fund.

The settlement became final as at the registration deadline on January 31, 2025, registrations exceeded the

required 95% of eligible claimants, and payment occurred in the first half of 2025. For those individuals who

declined to participate in, or are ineligible for, the settlement, and who wish to litigate their personal injury

claims, they will need to identify themselves after the registration deadline and then comply with court orders

imposing certain discovery obligations on them, including with respect to early disclosure of their evidence on

causation.

Philips Respironics and certain of its affiliates (including the company) continue to be defendants in consumer

class action lawsuits in Australia and Canada and collective or group actions in Chile, France, Germany, Italy

and the Netherlands, alleging economic loss and/or personal injury. In 2025, a class action in Israel was

resolved while a class action filed in Italy was dismissed by the court and is pending appeal.

While the company believes it is probable that ongoing lawsuits will in the aggregate lead to an outflow of

economic resources for Philips Respironics or other Philips entities, given the significant uncertainty regarding

the nature of the relevant events and potential obligations, the company is not currently able to reliably

estimate the amount of the obligation associated with these various lawsuits. The final outcome of the

lawsuits and the remaining cost to resolve them cannot currently be determined due to a number of variables,

including the early stages of some of these proceedings and uncertainty regarding the number of remaining

claimants, their allegations, and their alleged injuries. The courts have not yet been asked to decide the

question of whether any of the claimed injuries could have been caused by use of the recalled devices.

In 2024, the company and its insurance carriers reached an agreement on the basis of which the insurance

carriers agreed to contribute EUR 540 million to cover product liability-related cash flows related to the

Respironics recall. This amount was paid in full to the company in 2024.

Securities claims

On August 16, 2021, a securities class action complaint was filed against the company, its former CEO and its

former CFO in the US District Court for the Eastern District of New York alleging violations of the Securities

Exchange Act of 1934 causing damage to investors. On September 23, 2024, following amendments to the

complaint, the court issued a decision dismissing all claims against the company’s former CFO and the former

head of Philips Respironics but denying in part the motion to dismiss with respect to the company and its

former CEO. The Court narrowed the class period and dismissed all claims based on statements made before

2018. The Court also dismissed all claims relating to certain categories of alleged misstatements. On October


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28, 2024, the company and its former CEO moved for reconsideration of that portion of the decision denying

their motion, and that motion was denied in November 2025. On February 28, 2025, plaintiffs moved for class

certification, and that motion remains pending. On December 15, 2025, plaintiffs moved for leave to file a

further amended complaint that would add certain additional allegations and the company’s current CEO as a

defendant; the proposed amendment would not change the proposed class period. The Court granted

plaintiffs’ motion for leave to amend and plaintiffs filed their amended complaint on December 29, 2025. On

January 30, 2026, defendants filed a motion to dismiss the further amended complaint.

In the Netherlands, six different parties (primarily commercially motivated litigation funders and investor

advocacy organizations) representing both retail and institutional investors have approached the company,

holding the company and its directors liable for alleged misstatements and failures to make timely disclosures

in relation to the Respironics recall. As of December 31, 2025, two parties have filed a civil complaint with the

Amsterdam District Court. In addition, on December 31, 2025, the VEB, also on behalf of certain retail and

institutional investors, filed a request for inquiry proceedings with the Enterprise Chamber of the Amsterdam

Court of Appeal. On January 9, 2026 and January 14, 2026, similar requests were filed by Vanguard on behalf

of certain funds they manage and by Grant & Eisenhofer P.A. and Old Haven Funding LLC on behalf of certain

investors.

It is the company’s assessment that it is possible but not probable that these cases could lead to a certain

outflow of economic resources. The company is not able to reliably estimate the financial impact, if any. An

adverse outcome of these cases could have a material impact on the company’s consolidated financial

position, results of operations and cash flows.

SEC investigation

Following earlier requests for information from the US Securities and Exchange Commission (SEC), in March

2024, the company received a subpoena from the SEC relating to the Respironics recall and compliance with

relevant securities laws. The investigation is not an indication that the SEC or its staff have determined that

any violations of law have occurred. The company is fully cooperating with the investigation. It is the

company's assessment that it is possible but not probable that this investigation could lead to certain outflow

of resources. The company is not able to reliably estimate the financial impact, if any.

Other claims

On October 12, 2021, SoClean, a company offering ozone-based cleaning products for sleep devices, filed a

lawsuit in the US against the company and certain of its affiliates alleging that the defendants’ statements

about the potential adverse effect ozone cleaning may have on the recalled devices has significantly damaged

its business. Philips believes that the claim is without merit. In November 2023, the court ruled on one of the

motions to dismiss filed by defendants and partially dismissed some of SoClean’s claims. On January 4, 2024,

Philips and its affiliates filed their answer and counterclaims against SoClean and one of its affiliates. In

October 2024, the court partially dismissed some of the counterclaims. Philips and its affiliates are also

pursuing claims against SoClean and one of its affiliates for contribution for personal injury settlement costs

and/or personal injury liability incurred by the company or its affiliates. As of December 31, 2025, Philips and

SoClean have reached an agreement in principle, subject to documentation, to mutually resolve all pending

litigation between them.

Other

In the second half of 2023, Electro Medical Systems S.A., a manufacturer of, among others, medical devices for

dental prophylaxis, filed a lawsuit against the company alleging that the company materially breached its

duties under a cooperation agreement entered into between the parties in 2016, claiming damages in excess

of EUR 300 million, alleging loss of profit and lost increase in brand value. Philips disagrees with the

allegations and has submitted its statement of defense in June 2024. A first Court hearing took take place in

the first half of 2025. The case is now pending further instructions from the court.

Miscellaneous

For details on other contractual obligations, please refer to liquidity risk in Details of treasury and other

financial risks.

25Related-party transactions

In the normal course of business, Philips purchases and sells goods and services from/to various related parties in

which Philips typically holds between 20% and 50% equity interest and has significant influence. These

transactions are generally conducted with terms comparable to transactions with third parties.

Philips Group

Related-party transactions in millions of EUR


	2025	2024	2023
Sales of goods and services	146	89	106
Purchases of goods and services	50	50	42
Receivables from related parties	19	25	18
Payables to related parties	-	2	2

Philips founded three Philips Medical Capital (PMC) entities, in the US, France and Germany, in which Philips

holds a minority interest. Philips Medical Capital, LLC in the US is the most significant entity. The above table

includes sales transactions between Philips and PMC of EUR 146 million in 2025 (2024: EUR 88 million; 2023:

EUR 87 million), under which PMC has leased the equipment to the ultimate customer. In addition, as part of

its S&RC operations in the US, PMC funded durable medical equipment (DMEs) providers, through loans and

leases. PMC-funded transactions these DMEs entered into with Philips amount to EUR 70 million in 2025 (2024:

EUR 75 million; 2023: EUR 117 million). The associated costs of these funding transactions are borne by the

ultimate customer and settled directly with PMC.

On August 14, 2023, it was announced that Exor N.V. acquired a 15% minority stake in Philips shares and

entered into a relationship agreement with the company. Pursuant to the relationship agreement with the

company, Exor N.V. proposed one member to the Supervisory Board, who was confirmed at the Annual


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General Meeting of Shareholders on May 7, 2024. From this date, Exor is considered a related party for

reporting purposes. For remuneration details of Benoît Ribadeau-Dumas as the Exor nominee see Information

on remuneration. Exor has agreed to maintain its shareholding of at least 15% up to 20% for three years

from August 13, 2023. Philips did not have other reportable transactions with Exor during the period ended

December 31, 2025.

In light of the composition of the Executive Committee, the company considers the members of the Executive

Committee and the Supervisory Board to be the key management personnel as defined in IAS 24 Related

party disclosures.

For remuneration details of the Executive Committee, the Board of Management and the Supervisory Board

see Information on remuneration.

For post-employment benefit plans see Post-employment benefits.

26Share-based compensation

Accounting policies

Philips’ share-based compensation is an equity-settled plan made of restricted and performance shares. The

restricted shares are subject to a three-year service condition and the performance shares include both market

and non-market-based performance conditions, in addition to a three-year service condition. These shares are

awarded to the Executive Committee and senior management.

The grant date fair value of market-based performance shares is determined through a Monte Carlo valuation

model. The grant date fair value of non-market-based performance shares and restricted shares is determined

as the share price at the grant date as participants receive notional dividends throughout the vesting period.

The costs of share-based compensation plans are revised for expected performance (non-market-based

performance shares) and forfeiture and are spread evenly over the service period.

Share-based compensation is recognized over the service period as personnel expense in the consolidated

statement of income, with a corresponding increase to equity.

Accounting estimates and judgments

The use of a valuation model to determine market-based performance share fair value requires estimates for

the expected volatility of the Philips share price and correlation among input variables.

At each reporting date, Philips calculates the expected realization of the non-market-based performance

targets and revises the expected share-based compensation expense. The cumulative effect is recorded in the

consolidated statement of income with a corresponding adjustment in equity.

No expense is recognized for awards that do not ultimately vest because non-market performance and/or

service conditions have not been met.

The purpose of the share-based compensation plans is to align the interests of management with those of

shareholders by providing incentives to improve the company’s performance on a long-term basis, thereby

increasing shareholder value.

The company has the following plans:

•performance shares: rights to receive common shares in the future based on performance and service

conditions

•restricted shares: rights to receive common shares in the future based on a service condition

•options on its common shares

Since 2013 the Board of Management and other members of the Executive Committee are only granted

performance shares*. Performance shares as well as restricted shares can be granted to executives, certain

selected employees and new employees.

Under the terms of employee stock purchase plans established by the company in various countries,

employees are eligible to purchase a limited number of Philips shares at discounted prices through payroll

withholdings.

Share-based compensation costs were EUR 148 million (2024: EUR 104 million; 2023: EUR 97 million). This

includes the employee stock purchase plan of EUR 6 million, which is not a share-based compensation that

affects equity. In the Consolidated statements of changes in equity EUR 141 million is recognized in 2025 and

represents the costs of the share-based compensation plans. The amount recognized as an expense is adjusted

for forfeitures. USD-denominated performance shares, restricted shares and options are being granted only to

employees whose home country is the US.

Performance shares

The performance is measured over a three-year performance period. The performance shares have three

performance conditions: relative Total Shareholders’ Return (TSR) compared to a peer group of 20 companies

including Philips (2024: 20 companies; 2023: 20 companies); adjusted Earnings Per Share growth** (EPS); and a

sustainability criterion. The criterion is based on three Sustainable Development Goals (SDG) as defined by the

United Nations that are included in Philips’ strategy on sustainability. The performance conditions are


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weighted as follows: TSR 50%, EPS 40% and SDG 10% (applicable for 2021, 2022 and 2023 plans). As of 2024

the performance conditions are weighted as follows: TSR 40%, EPS 40% and SDG 20%.

The performance shares vest three years after the grant date. The number of performance shares that will

vest is dependent on achieving the performance conditions provided that the grantee is still employed with

the company.

The amount recognized as an expense is adjusted for actual performance of adjusted EPS growth** and the

actual realization of the SDGs, since these are non-market performance conditions. It is not adjusted for non-

vesting or extra vesting of performance shares due to a relative TSR performance that differs from the

performance anticipated at the grant date, since this is a market-based performance condition.

The fair value of the performance shares is measured based on Monte Carlo simulation, which takes into

account dividend payments between the grant date and the vesting date by including reinvested dividends as

well as the market conditions expected to impact relative total shareholders’ return performance in relation

to selected peers. The following weighted-average assumptions were used for the 2025 grants:

•risk-free rate: 1.82%

•expected share price volatility: 38%

The assumptions were used for these calculations only and do not necessarily represent an indication of

management’s expectation of future developments for other purposes. The company has based its volatility

assumptions on historical experience measured over a 10-year period.

A summary of the status of the company’s performance share plans as of December 31, 2025, and changes

during the year are presented in the accompanying table:

Philips Group

Performance shares


	2025		2024
	Number of shares	Weighted average grant- date fair value	Number of shares	Weighted average grant- date fair value
EUR-denominated
Outstanding as of January 1	6,466,838	24.41	5,392,035	27.22
Granted	1,994,246	21.94	2,265,462	28.94
Notional dividends ¹	269,210	24.63	218,782	24.35
Vested/Issued	(333,321)	20.73	(169,524)	50.30
Forfeited	(336,681)	24.93	(451,052)	25.07
Adjusted quantity ²	(1,801,626)	20.52	(788,865)	50.65
Outstanding as of December 31	6,258,667	24.92	6,466,838	24.41

USD-denominated
Outstanding as of January 1	4,190,628	26.89	3,261,048	29.73
Granted	1,522,255	24.81	1,733,891	31.07
Notional dividends ¹	187,657	27.25	142,892	26.85
Vested/Issued	(166,326)	21.98	(80,151)	61.37
Forfeited	(525,643)	27.08	(489,195)	28.35
Adjusted quantity ²	(942,807)	21.98	(377,857)	61.37
Outstanding as of December 31	4,265,764	27.42	4,190,628	26.89

1Dividend declared in 2025 on outstanding shares.

2Adjusted quantity includes the adjustments made to Performance shares outstanding due to updates on the actual TSR, EPS,

and SDG.

As of December 31, 2025, a total of EUR 116 million of unrecognized compensation costs relate to non-vested

performance shares (as of December 31, 2024, EUR 128 million; as of December 31, 2023, EUR 102 million).

These costs are expected to be recognized over a weighted-average period of 1.8 years.


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Restricted shares

The fair value of restricted shares is equal to the share price at grant date. The company issues restricted

shares that, in general, have a three-year cliff-vesting period provided that the grantee is still employed with

the company.

A summary of the status of the company’s restricted shares as of December 31, 2025, and changes during the

year are presented in the accompanying table.

Philips Group

Restricted shares


	2025		2024
	Number of shares	Weighted average grant- date fair value	Number of shares	Weighted average grant- date fair value
EUR-denominated
Outstanding as of January 1	3,523,906	21.17	2,995,252	23.39
Granted	1,146,201	19.38	1,367,380	22.64
Notional dividends ¹	145,617	21.43	52,481	22.57
Vested/Issued	(1,147,752)	21.70	(627,855)	35.10
Forfeited	(244,654)	20.65	(263,352)	21.06
Outstanding as of December 31	3,423,318	20.44	3,523,906	21.17

USD-denominated
Outstanding as of January 1	3,327,230	23.04	2,654,193	26.04
Granted	1,118,263	22.18	1,460,620	24.59
Notional dividends ¹	136,697	22.66	48,774	24.33
Vested/Issued	(1,070,835)	23.24	(582,404)	40.51
Forfeited	(341,996)	22.97	(253,953)	23.43
Outstanding as of December 31	3,169,359	22.66	3,327,230	23.04

1Dividend declared in 2025 on outstanding shares.

As of December 31, 2025, a total of EUR 67 million of unrecognized compensation costs relate to non-vested

restricted shares (as of December 31, 2024, EUR 73 million; as of December 31, 2023, EUR 63 million). These

costs are expected to be recognized over a weighted-average period of 1.8 years.

Option plans

Retention option plan

In April 2023, the company granted non-recurring retention options that expire after 10 years. These options

vest after two years, provided that the grantee is still employed with the company.

The fair value of the options under this plan is measured based on Black-Scholes-Merton option pricing

model. The expected life of the options is calculated as the average between vesting period (two years) and

the total contractual life (10 years).

The accompanying tables summarize information about the company’s options as of December 31, 2025, and

changes during the year.

Philips Group

Options on EUR-denominated listed share


	2025		2024
	Number of options	Weighted average exercise price	Number of options	Weighted average exercise price
Outstanding as of January 1	3,396,539	22.16	3,660,000	22.16
Exercised	(378,515)	22.16	(3,793)	22.16
Forfeited	(11,548)	22.16	(259,668)	22.16
Expired	(39,983)	22.16	-	-
Outstanding as of December 31	2,966,493	22.16	3,396,539	22.16

The total intrinsic value of EUR-denominated options exercised during 2025 was EUR 0.8 million (2024: EUR 15

thousand). Cash received during 2025 from exercises under the company’s options plans amounted to EUR 8.4

million (2024: EUR 84 thousand). As of December 31, 2025, there were 2,966,493 options outstanding and

exercisable (as of December 31, 2024, 3,396,539 options outstanding and 39,983 exercisable) with a weighted

average remaining contractual term of 6.7 years (as of December 31, 2024, 8.1 years for outstanding options

and 0.4 years for exercisable options) and total intrinsic value of EUR 3.2 million (as of December 31, 2024 EUR

7.6 million for outstanding options and EUR 90 thousand for exercisable options).


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Philips Group

Options on USD-denominated listed share


	2025		2024
	Number of options	Weighted average exercise price	Number of options	Weighted average exercise price
Outstanding as of January 1	1,637,764	24.42	1,929,000	24.42
Exercised	(201,873)	24.42	-	-
Forfeited	(54,248)	24.42	(291,236)	24.42
Outstanding as of December 31	1,381,643	24.42	1,637,764	24.42

The total intrinsic value of USD-denominated options exercised during 2025 was USD 0.5 million (2024: USD

nil). Cash received during 2025 from exercises under the company’s options plans amounted to EUR 4.4 million

(2024: EUR nil). The actual tax deductions realized as a result of USD option exercises totaled approximately

EUR 1.0 million in 2025 (2024: nil). As of December 31, 2025, there were 1,381,643 options outstanding and

exercisable (as of December 31, 2024, 1,637,764 options outstanding and nil exercisable) with a weighted

average remaining contractual term of 5.8 years (as of December 31, 2024, 8.0 years for outstanding options

and 0 years for exercisable options) and total intrinsic value of USD 3.7 million (as of December 31, 2024, USD

1.5 million for outstanding options and USD nil for exercisable options).

Philips Group

Outstanding options in millions of EUR unless otherwise stated


	2025			2024
	Number of options	Intrinsic value	Weighted average remaining contractual term in years	Number of options	Intrinsic value	Weighted average remaining contractual term in years
EUR-denominated
20-25	2,966,493	3	6.7	3,396,539	8	8.1
Outstanding options	2,966,493	3	6.7	3,396,539	8	8.1

USD-denominated
20-25	1,381,643	4	5.8	1,637,764	1	8.0
Outstanding options	1,381,643	4	5.8	1,637,764	1	8.0

*Executive Committee members can receive restricted share rights as a sign-on LTI awards upon hiring.

**The definition of this non-IFRS measure and a reconciliation to the IFRS measure is included in Equity.

27Information on remuneration

Remuneration of the Executive Committee

In 2025, the total remuneration costs relating to the Executive Committee (consisting of 14 members

throughout the year, including the members of the Board of Management) amounted to EUR 42 million

(2024: EUR 32 million; 2023: EUR 33 million) and consisted of the elements in the following table.

Philips Group

Remuneration costs of the Executive Committee 1 in EUR


	2025	2024	2023
Base salary/Base compensation	9,734,874	9,362,765	8,729,458
Annual incentive ²	8,639,381	5,292,388	11,405,130
Performance shares ³	21,180,588	12,673,614	7,272,815
Stock options	42,805	90,503	13,358
Restricted share rights ³	266,414	999,374	1,907,511
Pension allowances ⁴	1,246,863	1,197,695	1,346,937
Pension scheme costs	226,177	269,092	260,554
Other compensation ⁵	1,050,399	2,136,668	1,900,224
Total	42,387,499	32,022,099	32,835,987

1The Executive Committee consisted of 14 members as per December 31, 2025 (2024: 13 members; 2023: 13 members)

2The annual incentives are related to the performance in the year reported which are paid out in the subsequent year.

3Costs of performance shares and restricted share rights are based on accounting standards (IFRS) and do not reflect the value of

performance shares at the vesting/release date

4Pension allowances are gross taxable allowances paid to the Executive Committee members in the Netherlands. These

allowances are part of the pension arrangement

5The stated amounts mainly concern (share of) allowances to members of the Executive Committee that can be considered as

remuneration. In a situation where such a share of an allowance can be considered as (indirect) remuneration (for example,

private use of the company car), then the share is both valued and accounted for here. The method employed by the fiscal

authorities is the starting point for the value stated.

Remuneration of the Board of Management

In 2025, the total remuneration costs relating to the members of the Board of Management amounted to EUR

13 million (2024: EUR 10 million; 2023: EUR 10 million).

Remuneration of the Supervisory Board

The remuneration of the members of the Supervisory Board amounted to EUR 1.8 million (2024: EUR 1.7

million; 2023: EUR 1.5 million). Former members received no remuneration. The members of the Supervisory


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Board do not receive any share-based remuneration. Therefore, as of December 31, 2025, the members of the

Supervisory Board held no stock options, performance shares or restricted shares.

Supervisory Board members’ and Board of Management members’ interests in Philips shares

Members of the Supervisory Board and of the Board of Management are prohibited from writing call and put

options or similar derivatives of Philips securities.

Philips Group

Shares held by Board members 1 2 in number of shares


	December 31, 2025	December 31, 2024
R.W.O. Jakobs	147,397	134,298
M.J. van Ginneken	147,126	137,753
P.A. Stoffels	19,143	18,366
S.J. Poonen	11,899	3,240
I.K. Nooyi	3,489	3,348
D. Pyott	Retired	20,526
S.K. Chua	2,251	2,160
F. Sijbesma	25,854	25,854
A.M. Harrison	1,688	1,620
P. Löscher	23,345	22,398

1Reference date for board membership is December 31, 2025

2The total shares held by the members of the Board of Management is less than 1% of the company's issued share capital.

28Fair value of financial assets and liabilities

Accounting policies

Fair value hierarchy

For financial reporting purposes, financial instruments are categorized into Level 1, 2 or 3, based on the

degree to which the inputs to the fair value measurements are observable and the significance of the inputs

to the fair value measurement in its entirety, which are as follows:

•Level 1: inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets that the

company can access at the measurement date

•Level 2: all significant inputs (other than quoted prices included within Level 1) are observable for the asset

or liability, either directly (as prices) or indirectly (derived from prices)

•Level 3: one or more of the significant inputs are not based on observable market data, such as third-party

pricing information without adjustments, for the asset or liability

Transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy are recognized at the end of the

reporting period in which the change occurred. Transfers are made when there is a change in the

observability of inputs, such as:

•Into Level 1: When quoted prices in active markets become available.

•Out of Level 1: When quoted prices are no longer available or markets become inactive.

•Into or out of Level 3: When significant inputs become observable or unobservable.

There were no transfers between levels during the years ended December 31, 2025, and December 31, 2024.

Offsetting and master netting agreements

Financial assets and liabilities are offset and the net amount is reported in the balance sheet when, and only

when, the company currently has a legally enforceable right to set-off the amounts and the group intends

either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

Accounting estimates and judgments

Determining the fair value of financial instruments requires the use of estimates according to the method

applied for each type of financial asset of liability. 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.


	155

Specific valuation techniques used to value financial instruments include:

Level 1

Instruments included in level 1 are composed primarily of listed equity investments classified as financial assets

carried at fair value through profit or loss or carried at fair value through other comprehensive income (OCI).

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.

Level 2

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter

derivatives or convertible bond instruments) is 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, basis spread and foreign

exchange rates. The valuation of convertible bond instruments uses observable market quoted data for the

options and present value calculations using observable yield curves for the fair value of the bonds.

The fair value of debt is estimated on the basis of the quoted market prices for certain issuances, or on the

basis of discounted cash flow analysis using market rates plus Philips’ spread for the particular tenors of the

borrowing arrangement. Accrued interest is not included within the carrying amount or estimated fair value

of debt.

Level 3

If one or more of the significant inputs are not based on observable market data, such as third-party pricing

information without adjustments, the instrument is included in level 3.

For financial instruments measured at Level 3, where quoted market prices are not available, Philips applies

valuation techniques such as discounted cash flow (DCF) models and market multiple approaches. These

valuation techniques reflect current market conditions at the reporting date and incorporate the best

available data. Significant unobservable inputs used in these valuations may include assumptions regarding

revenue growth, discount rates, credit risk adjustments, capture rates, forward prices, earnings multiples, and

liquidity discounts.

Contingent consideration represents the fair value of expected payments to former shareholders of an

acquired company, conditional upon the occurrence of specified future events or the fulfillment of certain

conditions – such as achieving regulatory or commercial milestones. The terms of each acquisition agreement

define these milestones, which may trigger additional payments if met. The fair value of contingent

consideration is generally determined using a probability-weighted and risk-adjusted approach to estimate

the likelihood of achieving future milestones. For commercial milestones, the discount rates applied in the

risk-adjusted approach reflect the inherent risks associated with their achievement, while both regulatory and

commercial milestones are discounted for the time value of money at risk-free rates. Contingent consideration

can fluctuate significantly, driven by changes in the estimated probability of milestone achievement and

adjustments to discount rates. Changes in the fair value of the contingent consideration liability are

recognized in other business income (expenses). The measurement of fair value is based on management’s

estimates and assumptions, and accordingly classified as Level 3 in the fair value hierarchy.

The accompanying table shows the carrying amounts and fair values of financial assets and financial liabilities,

including their levels in the fair value hierarchy. Fair value information for financial assets and financial

liabilities not carried at fair value is not included if the carrying amount is a reasonable approximation of fair

value. For cash and cash equivalents, loans and receivables, accounts payable, interest accrual and debt

(excluding bonds and leases), the carrying amounts approximate fair value because of the nature of these

instruments (including maturity and interest conditions) and therefore estimated fair value information is not

included.


	156

Philips Group

Fair value of financial assets and liabilities in millions of EUR


as of December 31,	2025					2024
	Carrying amount	Estimated fair value	Level 1	Level 2	Level 3	Carrying amount	Estimated fair value
Financial assets
Carried at fair value:
Debt instruments	302	302			302	231	231
Equity instruments	2	2			2	3	3
Other financial assets	76	76		53	23	54	54
Financial assets carried at FVTP&L	380	380		53	328	288	288
Debt instruments	8	8		8		21	21
Equity instruments	213	213	2		212	222	222
Current financial assets	-	-			-	2	2
Receivables - current	13	13		13		-	-
Receivables - non-current	17	17		17
Financial assets carried at FVTOCI	252	252	2	38	212	244	244
Derivative financial instruments	99	99		82	17	77	77
Financial assets carried at fair value	731	731	2	173	556	609	609
Carried at (amortized) cost:
Cash and cash equivalents	2,794					2,401
Loans and receivables:
Other non-current loans and receivables	103					102
Receivables - current	3,517					3,672
Receivables - non-current	193					208
Financial assets carried at (amortized) cost	6,607					6,382
Total financial assets	7,338					6,992

Financial liabilities
Carried at fair value:
Contingent consideration	(111)	(111)			(111)	(113)	(113)
Financial liabilities carried at FVTP&L	(111)	(111)			(111)	(113)	(113)
Derivative financial instruments	(39)	(39)		(39)		(63)	(63)
Financial liabilities carried at fair value	(149)	(149)		(39)	(111)	(176)	(176)
Carried at (amortized) cost:
Accounts payable	(1,927)					(1,830)
Interest accrual	(95)					(83)
Debt (Corporate bonds and leases)	(7,757)	(7,818)	(6,854)	(963)		(7,397)	(7,363)
Debt (excluding corporate bonds and leases)	(327)					(241)
Financial liabilities carried at (amortized) cost	(10,107)					(9,551)
Total financial liabilities	(10,257)					(9,728)


	157

The accompanying table shows the reconciliation from the beginning balance to the end balance for Level 3

fair value measurements.

Philips Group

Reconciliation of Level 3 fair value measurements in millions of EUR


	2025		2024
	Financial assets	Financial liabilities	Financial assets	Financial liabilities
Balance as of January 1	460	113	503	115
Acquisitions
Purchase	127		86
Sales	(44)		(48)
Utilizations		(1)		(9)
Recognized in profit and loss:
other business income		3		2
financial income and expenses ¹	(17)	1	(23)	3
Recognized in other comprehensive income ²	(43)	(5)	(8)	3
Receivables held to collect and sell			(32)
Reclassification	74		(18)	-
Balance as of December 31	556	111	460	113

1Refer to Financial income and expenses for details.

2Includes translation differences

Offsetting and master netting agreements

Transactions in derivatives are subject to master netting and set-off agreements. In the case of certain

termination events, under the terms of the master agreement, Philips can terminate the outstanding

transactions and aggregate their positive and negative values to arrive at a single net termination sum (or

close-out amount). This contractual right is subject to the following:

•The right may be limited by local law if the counterparty is subject to bankruptcy proceedings.

•The right applies on a bilateral basis.

Philips Group

Financial assets subject to offsetting, enforceable master netting arrangements or similar agreements in millions of EUR


	2025	2024
Derivatives
Gross amounts of recognized financial assets	82	72
Gross amounts of recognized financial liabilities offset in the balance sheet
Net amounts of financial assets presented in the balance sheet	82	72

Related amounts not offset in the balance sheet
Financial instruments	(32)	(45)
Net amount	51	27

Philips Group

Financial liabilities subject to offsetting, enforceable master netting arrangements or similar agreements in millions of EUR


	2025	2024
Derivatives
Gross amounts of recognized financial liabilities	(39)	(63)
Gross amounts of recognized financial assets offset in the balance sheet
Net amounts of financial liabilities presented in the balance sheet	(39)	(63)

Related amounts not offset in the balance sheet
Financial instruments	32	45
Net amount	(7)	(18)


	158

29Details of treasury and other financial risks

Accounting policies

Derivative financial instruments, including hedge accounting

The company uses derivative financial instruments principally to manage its foreign currency risks and, to a

more limited extent, interest rate and commodity price risks. All derivative financial instruments are

accounted for at the trade date and classified as current or non-current assets or liabilities based on the

maturity date or the early termination date. The company measures all derivative financial instruments at fair

value that is derived from the market prices of the instruments, calculated on the basis of the present value of

the estimated future cash flows based on observable interest yield curves, basis spread, credit spreads and

foreign exchange rates, or derived from option pricing models, as appropriate. Gains or losses arising from

changes in fair value of derivatives are recognized in the Consolidated statements of income, except for

derivatives that are highly effective and qualify for cash flow or net investment hedge accounting.

Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash

flow hedge are recorded in other comprehensive income (OCI) until the Consolidated statements of income

are affected by the variability in cash flows of the designated hedged item. To the extent that the hedge is

ineffective, changes in the fair value are recognized in the Consolidated statements of income.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in

the Consolidated statements of income, together with any changes in the fair value of the hedged asset or

liability that are attributable to the hedged risk. The gain or loss relating to the effective portion of interest

rate swaps hedging fixed-rate borrowings is recognized in the Consolidated statements of income, together

with changes in the fair value of the hedged fixed-rate borrowings attributable to interest rate risk. If the

hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged

item for which the effective interest rate method is used is amortized to profit or loss over the period to

maturity using a recalculated effective interest rate.

The company formally assesses, both at the hedge’s inception and on an ongoing basis, whether the

derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or

cash flows of hedged items. When it is established that a derivative is not highly effective as a hedge or that it

has ceased to be a highly effective hedge, the company discontinues hedge accounting prospectively. When

hedge accounting is discontinued because a forecasted transaction is expected not to occur, the company

continues to carry the derivative on the Consolidated balance sheets at its fair value, and gains and losses that

were accumulated in OCI are recognized immediately in the same line item as they relate to in the

Consolidated statements of income.

Foreign currency differences arising upon retranslation of financial instruments designated as a hedge of a

net investment in a foreign operation are recognized directly in the currency translation differences reserve

through OCI, to the extent that the hedge is effective. To the extent that the hedge is ineffective, such

differences are recognized in the Consolidated statements of income.

Accounting estimates and judgments

Financial assets are subject to impairment assessment, which involves estimating expected credit losses. Refer

to Other financial assets for accounting policies on impairment of financial assets.

Philips is exposed to several types of financial risks which are further analyzed below. Philips does not

purchase or hold derivative financial instruments for speculative purposes. Information regarding financial

instruments is included in Fair value of financial assets and liabilities.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial

liabilities.

Liquidity risk for the group is monitored through the Treasury liquidity committee, which tracks the

development of the actual cash flow position for the group and uses input from a number of sources in order

to forecast the overall liquidity position on both short and longer term basis. Philips invests surplus cash in

short-term deposits with appropriate maturities and money market funds to ensure sufficient liquidity is

available to meet liabilities when due.

The rating of the company’s debt by major rating agencies may improve or deteriorate. As a result, Philips’

future borrowing capacity may be influenced and its financing costs may fluctuate. Philips has various sources

to mitigate the liquidity risk for the group. As of December 31, 2025, Philips had EUR 2,794 million in cash and

cash equivalents (2024: EUR 2,401 million), which includes short-term deposits of EUR 2,086 million (2024: EUR

1,946 million). Cash and cash equivalents include all cash balances, money market funds and short-term highly

liquid investments with an original maturity of three months or less that are readily convertible into known

amounts of cash. Philips pools cash from subsidiaries to the extent legally and economically feasible; cash not

pooled remains available for the company’s operational or investment needs.

Philips faces cross-border foreign exchange controls and/or other legal restrictions in a few countries that

could limit its ability to make these balances available on short notice for general use by the group.


	159

Philips has a USD 2.5 billion Commercial Paper Program and a EUR 1 billion committed standby revolving

credit facility that can be used for general group purposes. As of December 31, 2025, Philips did not have any

loans outstanding under either facility. These facilities do not have a material adverse change clause, have no

financial covenants and have no credit-rating-related acceleration possibilities.

Philips established a Euro Medium-Term Note (EMTN) program, a framework that facilitates the issuance of

notes for a total amount up to EUR 10 billion. In 2025, Philips issued two new tranches under the program for

a total of EUR 1 billion fixed rate notes due 2030 and 2035 for general corporate purposes, including the

refinancing of the 2026 EUR and USD bonds, and tendered on outstanding 2026, 2027, 2028 and 2029 EUR

bonds. As of December 31, 2025, Philips has EUR 4.6 billion (2024: EUR 3.7 billion) fixed rates notes

outstanding under the EMTN program. For a description of Philips’ credit facilities, refer to Debt.

In addition to cash and cash equivalents, as of December 31, 2025, Philips also held EUR 2 million (2024: EUR 4

million) of listed (level 1) equity investments at fair value (classified as other non-current financial assets).

The accompanying table presents a summary of the Group’s fixed contractual cash obligations and

commitments as of December 31, 2025. These amounts are an estimate of future payments which could

change as a result of various factors such as a change in interest rates, foreign exchange, and contractual

provisions, as well as changes in business strategy and needs. Therefore, the actual payments made in future

periods may vary from those presented.

Philips Group

Contractual cash obligations 1 2 in millions of EUR


	2025
		Payments due by period
	Total	Less than 1 year	1-3 years	3-5 years	After 5 years
Long-term debt	7,086		1,630	1,806	3,650
Short-term debt	1,174	1,174
Interest on debt	1,765	216	402	361	786
Derivative liabilities	36	35	1	-	-
Purchase obligations ³	1,189	293	390	306	200
Trade and other payables	1,927	1,927
Contractual cash obligations	13,177	3,645	2,423	2,473	4,636

Philips Group

Contractual cash obligations 1 2 in millions of EUR


	2024
		Payments due by period
	Total	Less than 1 year	1-3 years	3-5 years	After 5 years
Long-term debt	7,168		2,006	1,338	3,824
Short-term debt	525	525
Interest on debt	1,792	197	368	325	902
Derivative liabilities	72	64	8	-	-
Purchase obligations ³	1,161	300	307	210	344
Trade and other payables	1,830	1,830
Contractual cash obligations	12,548	2,916	2,689	1,873	5,070

1Amounts in this table are undiscounted

2This table excludes post-employment benefit plan contribution commitments, contingent consideration and income tax

liabilities in respect of tax risks because it is not possible to make a reasonably reliable estimate of the actual period of cash

settlement.

3Purchase obligations are agreements to purchase goods or services that are enforceable and legally binding for the Group. They

specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions

and the approximate timing of the transaction. They do not include open purchase orders or other commitments which do not

specify all significant terms.

Philips has contracts with investment funds where it committed itself to make, under certain conditions,

capital contributions to these funds of an aggregated remaining amount of EUR 112 million (2024: EUR 130

million). As of December 31, 2025, capital contributions already made to these investment funds are recorded

as non-current financial assets.

Philips offers voluntary supply chain finance programs for certain US dollar, euro, Swedish krona and Brazilian

real third parties which provide participating suppliers the opportunity to factor their trade receivables at the

sole discretion of both the suppliers and the third parties. Philips continues to recognize these liabilities as

trade payables and settles them accordingly on the invoice maturity date based on the terms and conditions

of those arrangements. As of December 31, 2025, approximately EUR 117 million (2024: EUR 97 million) of the

Philips account payable were transferred under these arrangements.

Philips Group

Carrying amount of financial liabilities 1 in millions of EUR


	2025	2024
Presented in accounts payables:	117	97
- of which suppliers have received payment from finance provider	99	85


	160

Philips Group

Range of payment due dates


	2025	2024
Liabilities that are part of the arrangements	60-135 days	30-135 days
Comparable trade payables that are not part of the arrangements	0-140 days	0-135 days

1There were no material business combinations or foreign exchange differences during the year.

With respect to the Respironics field action, please refer to Contingencies. The management continues to

monitor the risks associated with such potential claims and its impact on liquidity position, if any.

Currency risk

Currency risk is the risk that reported financial performance or the fair value or future cash flows of a financial

instrument will fluctuate because of changes in foreign exchange rates. Philips operates in many countries

and currencies and therefore currency fluctuations may impact Philips’ financial results. Philips is exposed to

currency risk in the following areas:

•transaction exposures, related to anticipated sales and purchases and on-balance-sheet receivables/payables

resulting from such transactions

•translation exposure of foreign-currency intercompany and external debt and deposits

•translation exposure of net income in foreign entities

•translation exposure of foreign-currency-denominated equity invested in consolidated companies

•translation exposure to equity interests in non-functional-currency investments in associates and other non-

current financial assets

It is Philips’ policy to reduce the potential year-on-year volatility caused by foreign-currency movements on its

net earnings by hedging the anticipated net exposure of foreign currencies resulting from foreign-currency

sales and purchases. In general, net anticipated exposures for the Group are hedged during a period of 15

months in layers of 8% up to a maximum hedge ratio based on an FX VaR Efficient Frontier. The FX VaR

Efficient Frontier model determines the target hedge ratios per currency quantifying the VaR reduction in

relation to the cost associated with hedging. Philips’ policy requires significant committed foreign currency

exposures to be fully hedged, generally using forwards. However, not every foreign currency can or shall be

hedged as there may be regulatory barriers or prohibitive hedging cost preventing Philips from effectively

and/or efficiently hedging its currency exposures. As a result, hedging activities cannot and will not eliminate

all currency risks for anticipated and committed transaction exposures.

The accompanying table outlines the estimated nominal value in millions of EUR for committed and

anticipated transaction exposure and related hedges for Philips’ most significant currency exposures

consolidated as of December 31, 2025.

Philips Group

Estimated transaction exposure and related hedges in millions of EUR


	Sales/Receivables		Purchases/Payable
	Exposure	Hedges	Exposure	Hedges
Balance as of December 31, 2025
Exposure currency
USD	1,814	(1,526)	(1,127)	1,023
JPY	600	(354)	(6)	6
GBP	259	(173)	(10)	10
CNY	304	(267)	(177)	177
PLN	53	(32)	(2)	2
CAD	260	(159)
AUD	160	(98)
CHF	154	(105)	(1)	1
KRW	143	(85)
ILS	5	(3)	(206)	128
EUR	187	(186)	(178)	178
Others	165	(112)	(70)	37
Total 2025	4,104	(3,100)	(1,777)	1,562
Total 2024	4,420	(3,188)	(1,743)	1,543

Philips uses foreign exchange spot and forward contracts, as well as zero cost collars in hedging the exposure.

The derivatives related to transactions are, for hedge accounting purposes, split into hedges of on-balance-

sheet accounts receivable/payable and forecasted sales and purchases. Changes in the value of on-balance-

sheet foreign-currency accounts receivable/payable, as well as the changes in the fair value of the hedges

related to these exposures, are reported in the income statement under costs of sales. Hedges related to

forecasted transactions, where hedge accounting is applied, are accounted for as cash flow hedges. The

results from such hedges are deferred in other comprehensive income within equity to the extent that the

hedge is effective.


	161

As of December 31, 2025, a gain of EUR 33 million was deferred in equity as a result of these hedges (2024:

EUR 1 million gain). The result deferred in equity will be released to earnings mostly during 2026 at the time

when the related hedged transactions affect the income statement. During 2025, EUR 0.5 million (2024: nil)

was recorded in the consolidated statement of income as a result of ineffectiveness on certain anticipated

cash flow hedges. Ineffectiveness arises when anticipated exposures are no longer expected to be highly

probable. During 2025, a gain of EUR 29 million (2024: EUR 29 million gain) included in the cash flow hedges

reserve in equity pertaining to changes in fair value of foreign exchange forward and option contracts was

released to the income statement.

The total net fair value of hedges related to transaction exposure as of December 31, 2025, was an unrealized

gain of EUR 47 million. The estimated impact of a 10% increase of value of the EUR is estimated to be EUR

104 million. The accompanying table contains an overview of the instantaneous 10% increase in the value of

EUR against major currencies.

Philips Group

Estimated impact of 10% increase of value of the EUR on the fair value of hedges in millions of EUR


	2025	2024
USD	59	63
JPY	19	13
GBP	10	13
CHF	10	7

The EUR 104 million increase includes a gain of EUR 48 million that would impact the income statement,

which would largely offset the opposite revaluation effect on the underlying accounts receivable and payable,

and the remaining gain of EUR 55 million would be recognized in equity to the extent that the cash flow

hedges were effective.

Foreign exchange exposure also arises as a result of inter-company loans and deposits. Where the company

enters into such arrangements, the financing is generally provided in the functional currency of the subsidiary

entity. The currency of the company’s external funding and liquid assets is matched with the required

financing of subsidiaries, either directly through external foreign currency loans and deposits, or synthetically

by using foreign exchange derivatives, including cross currency interest rate swaps and foreign exchange

forward contracts. In certain cases where group companies may also have external foreign currency debt or

liquid assets, these exposures are also hedged through the use of foreign exchange derivatives. Changes in

the fair value of hedges related to this exposure are recognized within financial income and expenses in the

statements of income. When such loans would be considered part of the net investment in the subsidiary, net

investment hedging would be applied.

Translation exposure of foreign-currency equity invested in consolidated entities is generally not hedged. If a

hedge is entered into, it is accounted for as a net investment hedge. Net current-period change, before tax, of

the currency translation reserve of negative EUR 1,641 million mainly relates to the development of the USD

versus the EUR. As of December 31, 2025, a weakening of USD by 10% versus the EUR would result in a

decrease in the currency translation reserve in equity of approximately EUR 1,012 million, while a

strengthening of USD by 10% versus the EUR would result in an increase in the currency translation reserve in

equity of approximately EUR 1,236 million. Refer to the country risk section for countries with significant

foreign currency denominated equity invested.

As of December 31, 2025, external bond funding for a book value of USD 1,331 million (EUR 1,135 million)

was designated as a net investment hedge of financing investments in foreign operations for an equal

amount (2024: USD 1,466 million (EUR 1,408 million)). During 2025, a gain of EUR 151 million was recognized

in currency translation differences within the consolidated statements of comprehensive income (2024: loss of

EUR 82 million). During 2025, no ineffectiveness was recognized in the income statement on net investment

hedges arising from counterparty and own credit risk (2024: no ineffectiveness).

As of December 31, 2025, an instantaneous 10% increase in the value of the EUR against all currencies would

lead to an decrease of EUR 26 million in the value of the derivatives, including a EUR 1 million increase related

to the US dollar (2024: EUR 106 million, including a EUR 50 million decrease related to the US dollar).

Generally Philips does not hedge the foreign exchange exposure arising from equity interests in non-

functional-currency investments in associates and other non-current financial assets.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in market interest rates. As of December 31, 2025, Philips had outstanding debt of EUR

8,084 million (2024: EUR 7,639 million), which constitutes an inherent interest rate risk with potential negative

impact on financial results. As of December 31, 2025, Philips held EUR 2,794 million in cash and cash

equivalents (2024: EUR 2,401 million), and had total long-term debt of EUR 6,934 million (2024: EUR 7,113

million) and total short-term debt of EUR 1,151 million (2024: EUR 526 million). As of December 31, 2025,

Philips had a ratio of fixed-rate long-term debt to total outstanding debt of approximately 86% compared to

93% one year earlier. Philips debt has a long maturity profile with an average tenor of long-term debt of 5.4

years with maturities up to 2042.

Philips targets an efficient balance between cost and debt and volatility in interest expenses through the

fixed/floating ratio. In optimizing the fixed/floating ratio, interest-rate swaps may be used to hedge (part of)

Philips’ fixed-rate debt.


	162

As of December 31, 2025, Philips had interest rate swaps for a total notional amount of EUR 250 million

(2024: EUR 0 million) whereby Philips receives a fixed rate of 3.25% and pays EURIBOR 6M plus a weighted-

average spread of 1.04%. The swaps are maturing on May 23, 2030 and are used to hedge the exposure to

changes in the fair value of part of Philips’ fixed-rate debt. The fixed-rate debt and swaps have been

designated in fair value hedge relationships. There is an economic relationship between the hedged item and

the hedging instruments as the terms of the swaps match the terms of the debt. Philips has established a

hedge ratio of 1:1 for the hedging relationships as the underlying risk of the interest rate swaps is identical to

the hedged risk component. Hedge effectiveness is tested qualitatively and ineffectiveness is measured and

booked every reporting period.

The impact of the hedged item (included in long-term debt) and the hedging instruments (included in other

non-current liabilities) on the consolidated balance sheet is:

Philips Group

Carrying amount and fair value adjustments of fair value hedge relationships in millions of EUR


	2025
	Carrying amount/ Notional amount	Accumulated fair value adjustments/Carrying amount	Change in fair value used for measuring ineffectiveness for the period
Fixed-rate long-term debt	(245)	4	4
Interest rate swaps	250	(4)	(4)

Hedge ineffectiveness primarily arises from differences in curve discounting and timing of swap resets

between the hedged item and hedging instrument as well as changes in credit valuation adjustment (CVA)

and debit valuation adjustment (DVA) on the hedging instrument. The ineffectiveness recognized in financial

income and expenses in the consolidated statement of income was immaterial for 2025.

The following table provides the impact of a 1% increase/decrease of interest rates on the fair value of the

debt and the annualized net interest expenses.

Philips Group

Interest rate sensitivity in millions of EUR


	2025	2024
Impact 1% interest rate increase on annualized net interest expense ¹	27	23

1The impact is based on the outstanding net floating-rate position as of December 31, 2025.

Equity price risk

Equity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in equity prices.

Philips is a shareholder in some publicly listed companies and as a result is exposed to potential financial loss

through movements in their share prices. The aggregate equity price exposure in such financial assets

amounted to approximately EUR 2 million as of December 31, 2025 (2024: EUR 4 million). Philips does not hold

derivatives in the above-mentioned listed companies. Philips also has shareholdings in several privately-owned

companies amounting to EUR 214 million (2024: EUR 220 million) mainly consisting of minority stakes in

companies in various industries. As a result, Philips is exposed to potential value adjustments.

Commodity price risk

Commodity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in commodity prices.

Philips is a purchaser of certain base metals, precious metals and energy. Philips may hedge certain commodity

price risks using derivative instruments to minimize significant, unanticipated earnings fluctuations caused by

commodity price volatility. As of December 31, 2025, Philips had financial commodity derivatives outstanding

to the value of EUR 17 million (2024: 6 million).

Credit risk

Credit risk represents the loss that would be recognized at the reporting date, if counterparties failed

completely to perform their payment obligations as contracted. Credit risk is present within Philips trade

receivables, contract assets and customer financing. To have better insights into the credit exposures, Philips

performs ongoing evaluations of the financial and non-financial condition of its customers and adjusts credit

limits when appropriate. In instances where the creditworthiness of a customer is determined not to be

sufficient to grant the credit limit required, there are a number of mitigation tools that can be utilized to

close the gap, including reducing payment terms, cash on delivery, pre-payments and pledges on assets.

Philips invests available cash and cash equivalents with various financial institutions and is exposed to credit

risk with these counterparties. Philips is also exposed to credit risks in the event of non-performance by

financial institutions with respect to financial derivative instruments. Philips actively manages concentration

risk and on a daily basis measures the potential loss under certain stress scenarios, should a financial

institution default. These worst-case scenario losses are monitored and limited by the company.

The company does not enter into any financial derivative instruments to protect against default by financial

institutions. However, where possible the company requires all financial institutions with which it deals in

derivative transactions to complete legally enforceable netting agreements under an International Swap

Dealers Association master agreement or otherwise prior to trading, and whenever possible, to have a strong

credit rating. Philips also regularly monitors the development of the credit risk of its financial counterparties.

Wherever possible, cash is invested and financial transactions are concluded with financial institutions with

strong credit ratings or with governments or government-backed institutions.


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The accompanying table shows the number of financial institutions with credit rating A- and above with

which Philips has cash at hand and short-term deposits above EUR 10 million as of December 31, 2025.

Philips Group

Credit risk with number of counterparties for deposits above EUR 10 million


	10-100 million	100-500 million	500 million and above
AAA rated bank counterparties		2
AA- rated bank counterparties	1	1
A+ rated bank counterparties	2	3
A rated bank counterparties	2	2
A- rated bank counterparties		2
Total	5	10

For an overview of the overall maximum credit exposure related to debt instruments, derivatives and loans

and receivables, refer to Fair value of financial assets and liabilities.

Country risk

Country risk is the risk that political, legal, or economic developments in a single country could adversely

impact performance. The country risk per country is defined as the sum of the equity of all subsidiaries and

associated companies in country cross-border transactions, such as intercompany loans, accounts receivable

from third parties and intercompany accounts receivable. The country risk is monitored on a regular basis.

As of December 31, 2025, the company had country risk exposure of EUR 12 billion in the US, EUR 1.6 billion in

the Netherlands, EUR 769 million in China (including Hong Kong). Other countries higher than EUR 500

million are the United Kingdom at EUR 732 million, Germany at EUR 627 million, France at EUR 537 million

and Japan at EUR 532 million. Other countries with significant exposure are: Singapore at EUR 204 million and

India at EUR 238 million. The degree of risk of a country is taken into account when new investments are

considered. The company does not, however, use financial derivative instruments to hedge country risk.

The impact of hyperinflation is also routinely assessed and was not material for the periods presented.

Other insurable risks

Philips is insured for a broad range of losses by global insurance policies in the areas of property damage/

business interruption, general and product liability, transport, directors’ and officers’ liability, employment

practice liability, crime and cybersecurity. The counterparty risk related to the insurance companies

participating in the above-mentioned global insurance policies is actively managed. As a rule, Philips only

selects insurance companies with a financial strength of at least A-. Throughout the year the counterparty risk

is monitored on a regular basis.

To lower exposures and to avoid potential losses, Philips has a global Risk Engineering program in place. The

main focus of this program is on property damage and business interruption risks including company

interdependencies. Regular on-site assessments take place at Philips locations and business-critical suppliers by

risk engineers of the insurer in order to provide an accurate assessment of the potential loss and its impact.

The results of these assessments are shared across the company’s stakeholders. On-site assessments are carried

out against the predefined Risk Engineering standards, which are agreed between Philips and the insurers.

Recommendations are made in a Risk Improvement report and are monitored centrally. This is the basis for

decision-making by the local management of the business as to which recommendations will be implemented.

For all policies, deductibles are in place, which vary from EUR 0.01 million to EUR 10 million per occurrence,

and this variance is designed to differentiate between the existing risk categories within Philips. Above a first

layer of working deductibles, Philips utilizes a re-insurance captive as part of its overall risk financing

structure, through which a portion of selected risks is retained, with excess coverage obtained from external

insurers.

New insurance contracts were signed effective December 31, 2025, for the coming year.

30Subsequent events

On January 15, 2026, Philips completed the acquisition of SpectraWAVE, Inc., a US-based innovator in

Enhanced Vascular Imaging (EVI) of coronary arteries, angiography-based physiology assessments, and the use

of AI in medical imaging. The acquisition forms part of Philips’ Diagnosis & Treatment segment and

complements its intravascular imaging and physiology portfolio. The purchase price involved an upfront

amount of USD 265 million, which was paid from available cash on hand, and contingent consideration. Due

to the recent closing date, additional IFRS disclosures cannot be made until the initial accounting for the

business combination has been completed.


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Other Corporate governance

Stichting Preferente Aandelen Philips

Stichting Preferente Aandelen Philips, a foundation (stichting)

organized under Dutch law, has been granted the right to acquire

preference shares in the capital of Royal Philips, as stated in the

company’s Articles of Association. In addition, the Foundation has the

right to file a petition with the Enterprise Chamber of the Amsterdam

Court of Appeal to commence an inquiry procedure within the

meaning of article 2:344 of the Dutch Civil Code.

The object of the Foundation is to represent the interests of Royal

Philips, the enterprises maintained by the company and its affiliated

companies within the company’s group, in such a way that the interests

of the company, these enterprises and all parties involved with them

are safeguarded as effectively as possible, and that they are afforded

maximum protection against influences which, in conflict with those

interests, may undermine the autonomy and identity of Philips and

those enterprises, and also to do anything related to the above ends or

conducive to them. The Foundation's objectives include the protection

of Philips against (an attempt at) an unsolicited takeover or other

attempt to exert (de facto) control of the company. The arrangement

will allow Philips to determine its position in relation to the relevant

third party (or parties) and its (their) plans, to seek alternatives and to

defend the company’s interests and those of its stakeholders.

The mere notification that the Foundation exercises its right to acquire

preference shares will result in such shares being effectively issued. The

Foundation may exercise this right for as many preference shares as

there are common shares in the company outstanding at that time. No

preference shares have been issued as of December 31, 2025.

The members of the self-electing Board of the Foundation are Messrs

J.P. de Kreij, J.V. Timmermans, J. van der Veer and P.N. Wakkie. No

Philips Supervisory Board or Board of Management members or Philips

officers are represented on the board of the Foundation.

Other protective measures

Other than the arrangements made with the Foundation referred to

above, the company does not have any measures that exclusively or

almost exclusively have the purpose of defending against unsolicited

public offers for shares in the capital of the company. It should be

noted that the Board of Management and the Supervisory Board

remain under all circumstances authorized to exercise all powers vested

in them to promote the interests of Philips.

The company has issued certain corporate bonds, the provisions of

which contain a Change of Control Triggering Event or a Change of

Control Put Event. Upon the occurrence of such events, the company

might be required to offer to redeem or purchase any outstanding

bonds at certain pre-determined prices. Please also refer to Debt.

Furthermore, the Relationship Agreement entered into between the

company and its long-term minority investor Exor N.V. (published on

the company’s website) includes certain temporary lock-up obligations

for Exor that fall away when any third party has ‘Acquired’ an ‘Interest’

of 50% or more in the company.

Major shareholders

The Dutch Act on Financial Supervision imposes an obligation on

persons holding certain interests to disclose (inter alia) percentage

holdings in the capital and/or voting rights in the company when such

holdings reach, exceed or fall below 3, 5, 10, 15, 20, 25, 30, 40, 50, 60,

75 and 95 percent (as a result of an acquisition or disposal by a person,

or as a result of a change in the company’s total number of voting

rights or capital issued). Certain derivatives (settled in kind or in cash)

are also taken into account when calculating the capital interest. The

statutory obligation to disclose capital interest relates not only to gross

long positions, but also to gross short positions. Required disclosures

must be made to the Dutch Authority for the Financial Markets (AFM)

without delay. The AFM then notifies the company of such disclosures

and includes them in a register, which is published on the AFM’s

website. Furthermore, an obligation to disclose (net) short positions is

set out in the EU Regulation on Short Selling.

The AFM register shows the following notifications of substantial

holdings and/or voting rights at or above the 3% threshold: Exor N.V.:

substantial holding of 15.00% and 15.00% of the voting rights (August

13, 2023); Artisan Investments GP LLC: substantial holding of 10.01%

and 10.01% of the voting rights (June 28, 2024); BlackRock, Inc.:

substantial holding of 4.00% and 5.00% of the voting rights (December

16, 2025); T. Rowe Price Group, Inc.: substantial holding of 3.05% and

3.04% of the voting rights (October 29, 2024).

Philips common shares are also listed on the New York Stock Exchange

and registered under the Exchange Act. Pursuant to Sections 13(d) and

13(g) of the Exchange Act, any person or group of persons who,

directly or indirectly, acquire or hold beneficial ownership of more than

5% of a covered class of equity securities of a listed issuer is required to

publicly report their beneficial ownership by filing a Schedule 13D or

13G with the SEC. For the purposes of US reporting obligations,

'beneficial ownership' of an equity security means that a person has or

shares the power, directly or indirectly, to vote or direct the voting of a

security or dispose of or direct the disposition of a security.

On January 25, 2023, BlackRock, Inc. filed a Schedule 13G with the SEC

indicating that, as of December 31, 2022, it beneficially owned 8.8%

(78,533,730 shares) of the company’s common shares.

On August 23, 2023, Exor N.V. and Giovanni Agnelli B.V. (which has a

controlling equity interest in Exor) jointly filed a Schedule 13D with the

SEC indicating that, as of August 14, 2023, they jointly beneficially

owned 15.0% (139,297,503 shares) of the company’s common shares.

On February 6, 2024, BlackRock, Inc. filed a Schedule 13G/A with the

SEC indicating that, as of December 31, 2023, it beneficially owned

7.0% (64,219,051 shares) of the company’s common shares. On May 16,

2024, Exor N.V. and Giovanni Agnelli B.V. jointly filed a Schedule 13D/A

with the SEC indicating that, as of May 14, 2024, they jointly

beneficially owned 16.1% (145,567,520 shares) of the company’s

common shares. On June 25, 2024, Exor N.V. and Giovanni Agnelli B.V.

jointly filed a Schedule 13D/A with the SEC indicating that, as of June


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21, 2024, they jointly beneficially owned 17.51% (163,717,857 shares)

of the company’s common shares.

On March 18, 2025, Exor N.V. and Giovanni Agnelli B.V. jointly filed a

Schedule 13D/A with the SEC indicating that, as of March 15, 2025, they

jointly beneficially owned 18.7% (172,779,520 shares) of the company’s

common shares. On April 29, 2025, BlackRock, Inc. filed a Schedule

13G/A with the SEC indicating that, as of March 31, 2025, it beneficially

owned 4.4% (41,234,628 shares) of the company’s common shares.

Corporate information

The company began as a limited partnership with the name Philips &

Co in Eindhoven, the Netherlands, in 1891, and was converted into the

company with limited liability N.V. Philips Gloeilampenfabrieken on

September 11, 1912. The company’s name was changed to Philips

Electronics N.V. on May 6, 1994, to Koninklijke Philips Electronics N.V.

on April 1, 1998, and to Koninklijke Philips N.V. on May 15, 2013.

The majority of the shares in Royal Philips are held through the system

maintained by the Dutch Central Securities Depository (Euroclear

Nederland). In the past, Philips has also issued (physical) bearer share

certificates ('Share Certificates'). A limited number of Share Certificates

have never been surrendered. As a result of Dutch legislation that

became effective in July 2019, the relevant shares were registered in

the name of Royal Philips by operation of law per January 1, 2021. As

per January 2, 2026, the remaining entitlements attached to the Share

Certificates not surrendered, expired by operation of law. Philips

intends to use the relevant 1,017 shares to cover certain of its

obligations arising from its Long-Term Incentive plans. For more

information, please contact the Investor Relations department by

email, investor.relations@philips.com, or telephone, +31-20-59 77222.

The statutory seat of the company is Eindhoven, the Netherlands, and

the statutory list of all subsidiaries and affiliated companies, prepared

in accordance with the relevant legal requirements (Dutch Civil Code,

Book 2, articles 379 and 414), forms part of the notes to the financial

statements and is deposited at the office of the Commercial Register in

Eindhoven, the Netherlands (file no. 17001910). The executive offices of

the company are located at the Philips Center, Prinses Irenestraat 59,

1077 WV Amsterdam, the Netherlands, telephone +31-20-59 77777.

Articles of association

Set forth below is a summary of certain provisions of the Articles of

Association of the company, applicable Dutch law and related company

policies. This summary does not constitute legal advice regarding those

matters and should not be regarded as such.

Object and purpose

The objects of the company are to establish, participate in, administer

and finance legal entities, companies and other legal forms for the

purpose of the manufacture and trading of electrical, electronic,

mechanical or chemical products, the development and exploitation of

technical and other expertise, including software, or for the purpose of

other activities, and to do everything pertaining thereto or connected

therewith, including the provision of security in particular for

commitments of business undertakings which belong to its group, all

this in the widest sense, as may also be conducive to the proper

continuity of the collectivity of business undertakings, in the

Netherlands and abroad, which are carried on by the company and the

companies in which it directly or indirectly participates. These objects

can be found in Article 2 of the Articles of Association.

Share capital

On December 31, 2025, the issued share capital amounted to EUR

192,584,026.40 divided into 962,920,132 common shares and no

preference shares.

Voting rights

All issued and outstanding shares carry voting rights and each share

confers the right to cast one vote in a shareholders’ meeting. Pursuant

to Dutch law, no votes may be cast at a General Meeting of

Shareholders in respect of shares which are held by the company. There

are no special statutory rights attached to the shares of the company

and no restrictions on the voting rights of the company’s shares exist.

Major shareholders do not have different voting rights than other

shareholders.

Dividends

A dividend will first be declared on preference shares out of net

income. The Board of Management has the power to determine what

portion of the net income shall be retained by way of reserve, subject

to the approval of the Supervisory Board. The remainder of the net

income, after reservations made, shall be available for distribution to

holders of common shares subject to shareholder approval after year-

end.

Liquidation rights

In the event of the dissolution and liquidation of the company, the

assets remaining after payment of all debts and liquidation expenses

are to be distributed in the following order of priority: to the holders

of preference shares, the amount paid thereon, and the remainder to

the holders of the common shares.

Preemptive rights

Shareholders have a pro rata preferential right of subscription to any

common share issuance unless the right is restricted or excluded. If

designated by the General Meeting of Shareholders, the Board of

Management has the power to restrict or exclude the preferential

subscription rights. A designation of the Board of Management will be

effective for a specified period of up to five years and may be renewed.

As per the date of the Annual General Meeting of Shareholders, the

Board of Management has been granted the power to restrict or

exclude the preferential right of subscription, for a period of 18

months. If the Board of Management has not been designated, the

General Meeting of Shareholders has the power to restrict or exclude

such rights, upon the proposal of the Board of Management, which

proposal must be approved by the Supervisory Board. Resolutions by

the General Meeting of Shareholders referred to in this paragraph

require approval of at least two-thirds of the votes cast if less than half

of the issued share capital is represented at the meeting.

The foregoing provisions also apply to the issuance of rights to

subscribe for shares.

General Meeting of Shareholders

The Annual General Meeting of Shareholders shall be held each year

not later than June 30 and, at the Board of Management’s option, in

Eindhoven, Amsterdam, The Hague, Rotterdam, Utrecht or

Haarlemmermeer (including Schiphol airport); the notice convening the

meeting shall inform the shareholders accordingly. Without prejudice

to applicable laws and regulations, the Board of Management may


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resolve to give notice to holders of its shares, listed and traded on a

stock exchange, via the company’s website and/or by other electronic

means representing a public announcement, which announcement

remains directly and permanently accessible until the General Meeting

of Shareholders. Holders of registered shares shall be notified by letter,

unless the Board of Management resolves to give notice to holders of

registered shares by electronic means of communication by sending a

legible and reproducible message to the address indicated by the

shareholder to the company for such purpose provided the relevant

shareholder has agreed hereto.

In principle, all shareholders are entitled to attend a General Meeting

of Shareholders, to address the meeting and to vote, except for shares

held in treasury by the company. They may exercise the

aforementioned rights at a meeting only for the common shares which

on the record date are registered in their name. The record date is

published in the above announcement and is, pursuant to Dutch law,

set as the 28th day prior to the day of the relevant meeting. Holders of

registered shares must advise the company in writing of their intention

to attend the General Meeting of Shareholders. Holders of shares listed

and traded via a stock exchange who either in person or by proxy wish

to attend the General Meeting of Shareholders should notify ABN

AMRO Bank N.V., which is acting as agent for the company. They must

submit a confirmation by a participating institution, in which

administration they are registered as holders of the shares, that such

shares are registered and will remain registered in its administration up

to and including the record date, whereupon the holder will receive an

admission ticket for the General Meeting of Shareholders. Holders of

shares who wish to attend by proxy have to submit the proxy at the

same time. A participating institution is a bank or broker which,

according to the Dutch Securities Depository Act (Wet giraal

effectenverkeer), is an intermediary (intermediair) of the Dutch Central

Securities Depository (Euroclear Nederland).

In connection with the General Meeting of Shareholders, the company

does not solicit proxies within the United States.

The Articles of Association of the company provide that there are no

quorum requirements to hold a General Meeting of Shareholders.

Subject to certain exceptions provided by Dutch law and/or the Articles

of Association, resolutions of the General Meeting of Shareholders are

passed by an absolute majority of votes cast and do not require a

quorum.

A resolution to amend the articles of association (or to dissolve the

Company) requires the approval of the Supervisory Board and can only

be adopted by a shareholders’ vote of at least three-fourths of the

votes cast at a General Meeting of Shareholders where more than half

of the issued share capital is represented. If at such a meeting the

quorum is not met, a further meeting shall be convened, to be held

within eight weeks of the first meeting, at which no quorum will apply.

If a proposal to amend the articles of association (or to dissolve the

Company) is submitted to the General Meeting of Shareholders by the

Board of Management, only a simple majority vote is required and no

quorum applies.

Limitations on right to hold or vote common shares

There are no limitations imposed by Dutch law or by the Articles of

Association on the right of non-resident owners to hold or vote the

common shares.

Exchange controls

Cash dividends paid in euros on Dutch registered shares and bearer

shares may be officially transferred from the Netherlands and

converted into any other currency without Dutch legal restrictions,

except that for statistical purposes such payments and transactions

must be reported to the Dutch Central Bank. Furthermore, no

payments, including dividend payments, may be made to jurisdictions

subject to sanctions adopted by the government of the Netherlands

and implementing resolutions of the Security Council of the United

Nations.

The Articles of Association of the company provide that cash

distributions on New York Registry Shares shall be paid in US dollars,

converted at the rate of exchange on the stock market of Euronext

Amsterdam at the close of business on the day fixed and announced for

that purpose by the Board of Management.

Significant differences in corporate governance

practices

The corporate governance rules established by the New York Stock

Exchange (NYSE) allow Foreign Private Issuers, such as Royal Philips, to

follow home country practices on most corporate governance matters

instead of those that apply to US domestic issuers, provided that they

disclose any significant ways in which their corporate governance

practices differ from those applying to listed US domestic issuers under

the NYSE listing standards. The following paragraphs summarize what

we believe to be the significant differences between certain Dutch

practices on corporate governance matters and the corporate

governance provisions applicable to US domestic issuers under the

NYSE listing standards.

Dutch corporate governance code

The company is a company organized under Dutch law, with its

common shares listed on Euronext Amsterdam, and is subject to the

Dutch Corporate Governance Code of March 20, 2025 (the Dutch

Corporate Governance Code). Philips’ New York Registry Shares,

representing common shares of the company, are listed on the NYSE.

Board structure

The NYSE listing standards prescribe regularly scheduled executive

sessions of non-executive directors. The company has a two-tier

corporate structure: a Board of Management consisting of executive

directors under the supervision of a Supervisory Board consisting

exclusively of non-executive directors. Members of the Board of

Management and other officers and employees cannot simultaneously

act as member of the Supervisory Board. The Supervisory Board must

approve specified decisions of the Board of Management.

Independence of members of our Supervisory Board

The Dutch Corporate Governance Code sets forth certain best practices

limiting the number of non-independent members of the Supervisory

Board and its committees. The Supervisory Board considers all its

members to be independent under the Dutch Corporate Governance

Code, except for Mr Ribadeau-Dumas, to whom the independence

exception of best practice provision 2.1.7(iii) of the Dutch Corporate

Governance Code is deemed to apply. The definitions of independence

under the Dutch Corporate Governance Code, however, differ in their


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details from the definitions of independence under the NYSE listing

standards. In some cases the Dutch requirements are stricter than the

NYSE listing standards, and in other cases the NYSE listing standards are

the stricter of the two. The members of the Audit Committee of the

Supervisory Board are also independent under the NYSE listing

standards.

Committees of our Supervisory Board

The company has established four committees, consisting of members

of the Supervisory Board only: the Audit Committee, the Remuneration

Committee, the Corporate Governance and Nomination & Selection

Committee and the Quality & Regulatory Committee. The roles,

responsibilities and composition of these committees reflect the

requirements of the Dutch Corporate Governance Code, the company’s

Articles of Association and Dutch law, which differ from the NYSE

listing standards in these respects. The role of each committee is to

advise the Supervisory Board and to prepare the decision-making of the

Supervisory Board. In principle, the entire Supervisory Board remains

responsible for its decisions even if such decisions were prepared by

one of the Supervisory Board’s committees.

The NYSE requires that, when an audit committee member of a listed

US domestic issuer serves on four or more audit committees of public

companies, the listed company should disclose (either on its website or

in its annual report on Form 10-K) that the board of directors has

determined that this simultaneous service would not impair the

director’s service to the listed company. Dutch law does not require the

company to make such a determination.

In accordance with the procedures laid down in the Philips Auditor

Policy and as mandatorily required by Dutch law, the external auditor

of the company is appointed by the General Meeting of Shareholders

on the proposal of the Supervisory Board, after the latter has been

advised by the Audit Committee and the Board of Management.

Equity compensation plans

The company complies with Dutch legal requirements regarding

shareholder approval of equity compensation plans for the members of

the Board of Management. Dutch law does not require shareholder

approval of certain equity compensation plans for which the NYSE

listing standards would require such approval. The company is subject

to a Dutch requirement to seek shareholder approval for equity

compensation plans for its members of the Board of Management.

Related party transactions

The NYSE listing standards require certain transactions with related

parties to be reviewed by a company’s audit committee or another

independent body of the board of directors for potential conflicts of

interest, and for the audit committee or other independent body to

prohibit such a transaction if it determines it to be inconsistent with

the interests of the company and its shareholders. However, Foreign

Private Issuers can rely on home country practice with respect to review

and approval of related party transactions. Philips has internal

procedures in place to confirm that related party transactions are

entered into at arm’s length and, if and to the extent required under

Dutch law, to enable the Supervisory Board to assess the terms of

significant related party transactions.

New York Registry Shares

Certain common shares of the company are registered in the register

maintained by Deutsche Bank Trust Company Americas, as the New

York transfer agent, registrar and dividend disbursing agent (the 'New

York Transfer Agent'), pursuant to a Transfer Agent Agreement, dated

July 16, 2018, between the New York Transfer Agent and the company

(such common shares, 'New York Registry Shares'). As soon as

practicable after receipt from the company, the New York Transfer

Agent will provide holders of New York Registry Shares with a notice of

any meeting or solicitation of consents or proxies with a notice

prepared by the company stating (i) such information as is contained in

such notice of meeting and any solicitation materials (or a summary

thereof in English provided by the company), (ii) that each registered

holder at the close of business on the record date set by the company

therefore will be entitled, subject to any applicable provisions of Dutch

law and the Articles of Association, to exercise the voting rights

pertaining to the New York Registry Shares, and (iii) the manner in

which such voting rights may be exercised. The New York Transfer

Agent may, to the extent not prohibited by applicable law or by the

requirements of the New York Stock Exchange, in lieu of distribution of

the materials provided to it in connection with any meeting of, or

solicitation of consents or proxies from, holders of common shares,

distribute to the registered holders of New York Registry Shares a

notice that provides such holders with, or otherwise publicizes to such

holders, instructions on how to retrieve such materials or receive such

materials upon request (i.e., by reference to a website containing the

materials for retrieval or a contact for requesting copies of the

materials).

Fees and charges payable by a holder of New York Registry Shares

Deutsche Bank Trust Company Americas (‘Deutsche Bank’), as the US

registrar, transfer, dividend disbursement and shareholder servicing

agent (‘Agent’) under Philips’ New York Registry Share program (the

‘Program’), collects fees for the issuance, cancellation and/or transfer of

New York Registry Shares directly from investors depositing ordinary

shares or surrendering New York Registry Shares for the purpose of

withdrawal or from intermediaries acting for them. The Agent collects

fees for making distributions to investors by deducting those fees from

the amounts distributed or by selling a portion of the distributable

property to pay the fees.

The Agent may charge shareholders a fee of up to USD 5.00 per 100

shares for the exchange of New York Registry Shares for shares and vice

versa, for certain free distributions of shares and for shares issued upon

exercise of rights, as well as for certain taxes, fees and expenses

incurred in connection with issuances and cancellations. The Agent is

also permitted to charge a distribution fee of USD 0.05 per share to

holders of New York Registry Shares in connection with a corporate

action or event unless certain fees are otherwise charged to Philips.

Fees and payments made by the Agent to Philips

The Agent has agreed to reimburse certain expenses of Philips related

to the Program and incurred by Philips in connection with the Program.

The Agent has also agreed to waive certain fees for standard costs

associated with the administration of the program.


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Risk factors

Philips believes the risks set out below are the material risks affecting

Philips and its securities. These risk factors may not, however, include all

the risks that ultimately may affect Philips. Some risks not yet known to

Philips, or currently believed not to be material, may ultimately have a

major impact on Philips’ business, revenue, income, assets, liquidity,

capital resources, reputation and/or ability to achieve its business and

ESG objectives. Please note that this section is not intended to describe

risks that have materialized, as these are addressed in other sections

and referenced where relevant. Philips defines risks in four main

categories: Strategic, Operational, Financial and reporting, and

Compliance. Philips presents the risk factors within each category in

order of the current view of their expected significance. Compared to

the previous year, we have further prioritized risk factors relating to

geopolitics and macro-economics, and to AI. We have continued high

prioritization of risk factors related to patient safety and quality, supply

chain, and the simplification of how we work. Although still relevant,

we have de-emphasized risk factors related to global inflation. This

does not mean that a lower-listed risk factor may not have a material

and adverse impact on Philips’ business, revenue, income, assets,

liquidity, capital resources, reputation, and/or ability to achieve its

business and ESG objectives. Furthermore, other risk factors not listed

below may ultimately prove to have more significant adverse

consequences than the listed risk factors.

We aim to manage risk within our risk appetite. Pursuing strategic

opportunities within the dynamics of the health technology industry

typically requires a higher appetite towards the corresponding strategic

risks. We may accept considerable strategic risks in a responsible way

given the necessity to invest in research and development and to

manage the portfolio of businesses to ensure we continually revitalize

our offerings. For selected options with very high strategic impact, we

may occasionally take a risk-seeking approach subject to careful

evaluation. Toward operational risks, we overall take a prudent-to-

balanced approach, aiming to optimize productivity and minimize

downside risks considering the need for efficient execution, reliable

and secure IT systems and continuity of the delivery of our products,

services and sustainability commitments. Where operational risks may

impact the quality of our products and services and the safety of

patients, we take an averse approach. Regarding financial and

reporting risks, we adopt a prudent-to-balanced approach aiming at

the financial sustainability of the company, investor commitment and

stakeholder trust. We manage these risks with the intention of

retaining our current strong investment-grade credit rating. As Philips

is committed to act with integrity always, we take an averse-to-prudent

approach to any risk that would result in breach of compliance with

our General Business Principles and mandatory laws and regulations.

Strategic risks

Philips’ global operations are exposed to

geopolitical and macro-economic changes

Philips’ business and operations may be adversely impacted by

unfavorable macro-economic conditions and geopolitical instability in

global and individual markets. In 2025, Mature geographies accounted

for 72% of Philips’ revenues, while Growth geographies accounted for

the remaining 28%. While Mature geographies are currently the main

source of Philips’ revenues, Growth geographies (excluding China) are

an increasing source of revenues. Philips produces, sources, and designs

its products and services mainly from the US, the EU – primarily the

Netherlands – and China, and most of Philips’ assets are located in

these geographies. Changes in politics and monetary, trade, tax policies

and sanction laws in the US, the EU and China may trigger reactions

and countermeasures and may also have an adverse impact on other

markets in which Philips is active. Philips continues to expect global

market conditions to remain highly uncertain and volatile due to

geopolitical and macro-economic factors.

Philips observes an increasing trend of geopolitical tensions and

deglobalization, which intensifies protectionism. Examples of

protectionism measures are trade policies, tariffs, customs duties,

taxation, import or export controls and sanctions, local value creation

and production requirements, technology and data storage and

movement restrictions, talent mobility restrictions, nationalization of

assets, and restrictions on repatriation of returns from foreign

investments. Tariffs and other trade restrictions introduced or proposed

by the US administration, along with retaliatory measures from

affected trading partners, continue to pose risks to global trade

relations and supply chain stability. These developments may have

significant implications for the EU and economic interests of companies

organized in jurisdictions in the EU. In addition, protectionism may

increase general uncertainty on the development of local regulations

that may result in proliferation of and changes to such regulations,

causing the company to comply with disparate, evolving standards.

Philips observes this trend in the major markets in which it operates

and has a particular concern about the development of the US-China

relationship and China’s drive to expand its global political footprint

and become self-sufficient in critical technologies, including health-

related ones. China's anti-corruption campaign has also negatively

impacted demand and increased uncertainty within the medical

industry. If this trend continues, geopolitical relations deteriorate, and

economies decouple, then it is expected that existing global trade and

investment restrictions will remain or increase. Further regulatory and

compliance challenges for doing business globally may emerge and

deteriorate, resulting in continued pressure on market growth and

investments.

Uncertainty and challenges regarding various global macro-economic

factors continue to persist. Examples of general factors potentially

affecting Philips are an overall weakening of economic growth and the

trend of declining growth of the Chinese economy in particular,

reduced government spending, declining customer and consumer

confidence and spending, high inflation and interest rates, and the

emergence of economic impacts related to the climate crisis. Although

the ability to manage pandemics (for example, resurgences of

COVID-19 or mutations thereof) has improved, pandemics may

continue to affect Philips’ operations in the future. Examples of

healthcare-specific potential factors include rising uncertainty over the

future direction of public healthcare policy and the risk of declining

public investment in healthcare ecosystems. These factors could affect

customer demand and sales as well as our manufacturing costs,

operating expenses (including wages), and other expenses. We may not

be able to compensate for loss of sales through overall sales growth or

manage increased costs by improving productivity and increasing our

prices to offset increased costs in a timely manner, if at all, which could

have a material impact on our revenue, gross margins, profitability and

cash flows.


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The Russia-Ukraine war has continued to contribute to global economic

and political uncertainty. Governments in the US, the UK, the EU,

Canada, and Japan have each imposed a broad range of export controls

on certain products as well as sanctions on certain industry sectors and

institutions in Russia, and may expand such controls and sanctions in

the future. The conflicts in Ukraine and Russia may escalate or expand,

and any current or future sanctions and resulting geopolitical and

macro-economic disruptions could be significant. Similarly, Philips

remains exposed to elevated geopolitical risks across the Middle East.

This situation has intensified regional instability, with potential

implications for energy markets, trade routes, and investor sentiment.

Economic and political uncertainty may affect the company’s results of

operations, financial position and cash flows. Philips is present in Israel

with several subsidiaries, mainly in Diagnosis & Treatment and

Connected Care, that are primarily involved in manufacturing and

research and development activities. Geopolitical conflicts may

heighten the impact of other risk factors described herein, including

but not limited to: volatility in prices for transportation, energy,

commodities and other raw materials; disruptions in the global supply

chain; decreased customer and consumer confidence and spending;

increased cyberattacks; intensified protectionism; political and social

instability; increased exposure to foreign currency fluctuations; rising

inflation and interest rates; and constraints, volatility or disruptions in

the credit and capital markets. It is possible that the conflicts in Ukraine

and Russia and in the Middle East may escalate or expand and current

or future sanctions and resulting geopolitical and macro-economic

disruptions could be significant. We cannot predict the impact that

conflicts may have on the global economy in the future.

Changes in geopolitical and macro-economic conditions are difficult to

predict, and the factors described previously, or other factors, may lead

to adverse impacts on global trade levels and flows, economic growth,

and financial markets and political stability, all of which could adversely

affect the demand for, and supply of, Philips products and services. This

may result in a material adverse impact on Philips’ business, financial

condition, and operating results. These factors could also make it more

difficult to budget and to make reliable financial forecasts, or could

have a negative impact on Philips’ access to funding.

Philips may be unable to keep pace with the

changing health technology environment

With Philips’ focus on health technology, our business model is

transforming from a transactional, product-focused business model to a

customer- and patient-centric, outcome-oriented business model, with

multi-year customer partnerships enabled by a portfolio of innovative

devices, solutions, platforms, insights and value-added services. If this

transformation is not targeted at successful products and services or is

made too slowly, Philips may not meet the expectations of customers,

patients or other stakeholders. We may face a loss of customer

relevance, fail to capture growth, and lose market share. In addition,

because of our health technology focus, Philips may have a reduced

ability to offset potential negative impacts (including, but not limited

to, impacts on sales, operating results, liabilities, compliance, and

financing) on its health technology business by other businesses

through a more diversified portfolio. As a result of its focus on health

technology, Philips is deepening customer engagement and entering

into long-term solutions and services business arrangements, becoming

more dependent on a number of key customers for long-term recurring

revenues, thus increasing the risk that the loss of, or a significant

reduction in, orders from one or more of our key customers could cause

a significant decline in our revenues. As Philips looks to increase its use

of indirect sales channels, Philips will increasingly rely on successfully

leveraging new and existing partners to support customers and

patients. Any of these factors may have a material adverse impact on

Philips’ brand value and reputation, business, financial condition, and

operating results. More specific health technology risks and their

potential impacts are included in the Operational, Financial and

Compliance risk sections that follow, as well as in the note

Contingencies.

Philips may be unable to gain leadership in AI and

health informatics

New digital, AI-driven technologies and ways of conducting business

are fundamentally changing the health technology industry, and with

that, our competitive business environment. Customers are seeking

solutions that convert data from our imaging and monitoring systems

into actionable insights and drive quality and efficiency in clinical and

operational workflows. Philips’ approach to innovation is to look into

the broader productivity and workflow support, expanding the use of

generative AI in the development of its technologies and increasingly

incorporating generative AI capabilities in its products and services to

drive quality and efficiency in clinical and operational workflows.

The development of AI technologies is complex and Philips may fall

behind established and new digital competitors if Philips does not

develop the requisite capabilities to innovate its portfolio of AI-enabled

products and services, adjust its business models and find ways to

globally commercialize new products and services at scale and in a

timely, competitive, ethical, sustainable and compliant manner. This

could result in an inability to satisfy customer and patient needs,

thereby missing out on revenue and margin growth opportunities,

which may have a material adverse impact on Philips’ business, financial

condition and operating results.

Philips is also expanding the use of AI in its internal value chain. If

Philips were to lag in adopting AI in internal processes, Philips could

miss out on important benefits such as higher productivity, lower costs

and faster response to customer needs. Please refer to the operational

risk factor “Philips may face challenges in simplifying the organization

and the ways of working” for more information.

Acquisitions could fail to deliver on Philips’ business

plans and value creation expectations, and we may

not be able to successfully integrate acquired

operations

Philips has a selective strategic mergers and acquisitions (M&A)

approach. This strategy may not be successful and we may not be able

to integrate acquisitions successfully or efficiently with our existing

operations, culture and systems, which may expose Philips to risks in

areas such as sales and service, logistics, quality, regulatory compliance,

legal claims, information technology, and finance. Integration

challenges may adversely impact the realization of value creation

expectations. Transactions may incur significant costs, result in

unforeseen operating difficulties, divert management attention from

other business priorities, and may ultimately be unsuccessful. Cost

savings expected to be implemented, or other assumptions underlying

the business case relating to a particular acquisition, may not be

realized. If we are unable to successfully define or accomplish any of

our objectives with respect to selective strategic M&A, we may not be


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able to realize the anticipated benefits of such acquisitions and we may

experience lower-than-anticipated profits, or even incur losses.

Acquisitions may also lead to a substantial increase in long-lived assets,

including goodwill, which may later be subject to write-down or

impairment if an acquired business does not perform as expected,

which may have a material adverse effect on Philips’ earnings.

Philips may be unable to meet internal or external

aims or expectations with respect to ESG-related

matters

Environmental, Social and Governance (ESG) factors may directly and

indirectly impact Philips businesses or the business environment in

which Philips operates. For instance, customers may choose products or

services based on sustainability or other ESG criteria. At the same time,

ESG adverse sentiments also exist among certain stakeholders, and we

may face scrutiny, reputational risk, product boycotts, lawsuits or

market access restrictions from these parties regarding our ESG-related

initiatives (including those related to human capital and diversity).

Philips may, from time to time, disclose ESG-related initiatives or aims

in connection with the conduct of its business and operations. For

example, Philips has adopted initiatives with respect to reducing

greenhouse gas emissions in its supply chain. However, there is no

guarantee that Philips will be able to implement such initiatives or

meet such aims within anticipated timeframes, considering, for

example, the technological limitations in the research and development

process. Philips is also increasingly focused on products and services

incorporating AI, and the development and use of our products and

services incorporating AI may require more energy than similar

products or services not incorporating AI. In addition, there is an

increasing focus on ESG matters (both ‘pro-ESG’ and ‘anti-ESG’) from

Philips stakeholders – including customers, consumers, employees,

regulators, governments and investors – and those stakeholders may

also have ESG-related expectations with respect to Philips’ business and

operations. For example, customers may focus on ESG-related criteria in

buying our products, e.g., through green procurement standards.

Any inability by Philips to address concerns or meet expectations about

ESG-related matters could negatively impact sentiment toward Philips,

our products, and our brand. Improper or incorrect sustainability

claims and low ESG scores could also potentially impact Philips’

reputation and affect sales. Expectations regarding ESG-related

matters may change as a result of regulatory developments, including

if the EU or its Member States or other regions introduce more

regulatory and legislative initiatives to advance ESG objectives.

Regulatory and legislative initiatives related to ESG matters, in turn,

could also affect how customers or other stakeholders perceive our

products or business operations. If our products or business operations

do not meet the criteria for sustainability according to, for example,

the EU Taxonomy Regulation (including the related delegated

regulations), Regulation (EU) 2023/1115 (the “EU Deforestation

Regulation”) or any other similar regulations, this may negatively

affect how customers or other stakeholders view Philips. Philips may

fail to fulfill internal or external ESG-related initiatives, aims, goals,

targets or expectations, or be perceived to do so, or we may fail to

report performance or developments adequately or accurately with

respect to such initiatives, aims, goals, targets or expectations. In

addition, Philips could be criticized or held responsible if the scope of

its initiatives, aims, goals or targets regarding ESG-related matters is

deemed insufficient by certain stakeholders (or too expansive by

stakeholders with anti-ESG sentiments). Any of these factors may have

an adverse impact on Philips’ reputation and brand value,

competitiveness, or on Philips’ business, financial condition and

operating results.

Philips may be unable to secure and maintain

intellectual property rights for its products and

services or may infringe others’ intellectual property

rights

Philips is dependent on its ability to obtain and maintain licenses and

other intellectual property (IP) rights covering its products and services

and its design and manufacturing processes. The IP portfolio is the

result of an extensive IP generation process that could be influenced by

a number of factors, including innovation and acquisitions. The value

of the IP portfolio is dependent on the successful promotion and

market acceptance of standards (co-)developed by Philips. This is

particularly applicable to the segment ‘Other’, where licenses from

Philips to third parties generate IP royalties and contribute to Philips’

results of operations. The timing of licenses from Philips to third parties

and associated revenues from IP royalties are uncertain and may vary

significantly from period to period. Additionally, royalties are often

based on sales by third parties, creating an exposure to macro-

economic effects and continuity of these third parties. A loss or

impairment in connection with such licenses to third parties could have

a material adverse impact on Philips’ financial condition and operating

results. The use of AI in the development of our products and services

may lead to new risks related to IP. The legal landscape and subsequent

legal protection for the use of AI remain uncertain, and development

of the law in this area could impact our ability to enforce our

proprietary rights or protect against infringing uses. Philips is also

exposed to the risk that a third party may claim to own IP rights to

technology applied in Philips products and services. The use or

adoption of AI technologies into our products and services may

heighten the risk of exposure to claims of copyright infringement or

other IP misappropriation. Philips may inadvertently use publicly

available data sets for testing or training AI algorithms that may

contain certain IP conditions that prescribe that Philips can only use

such open data for R&D and not for the development of products; if

this risk materializes, legal action may be taken against Philips. If any

such claims of infringement of these IP rights are successful, Philips may

be required to pay damages to such third parties or may incur other

costs or losses.

Operational risks

Products and services may fail quality or security

standards, which could adversely affect patient

safety or customer operations

As a health technology company and innovator, our products and

services must comply with the rules and regulations that govern our

operations, processes, and ways of working. Risks associated with non-

compliance with patient safety, quality, regulatory, or security

standards can occur throughout the life cycle of our products or

services, inclusive of pre-market activities (such as product design,

production and supplier quality activities) and post-market activities. As

we increase the adoption of AI to support our customers, we may

become more exposed to the risks associated with the use of such


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technologies, such as lack of transparency, cybersecurity and data

provenance, bias and deficient or inaccurate outputs and other

unintended consequences that are not easily detectable or are

inconsistent with our policies and values. Consequences of identified

risks include patient harm, negatively impacting customers’ operations

and healthcare professionals’ ability to provide care, and unauthorized

access to confidential data, including patient records and medical

devices. In turn, these may result in damage to our brand, reputation,

competitive disadvantage, legal liability and regulatory enforcement,

all of which may have a material adverse impact on Philips’ business,

reputation, financial condition, and operating results.

Philips may be unable to ensure a resilient supply

chain

Most of Philips’ operations are conducted on an international scale,

exposing Philips to various supply chain challenges and uncertainties.

Philips produces and procures products and parts in various countries.

The production and shipping of products and parts, whether from

Philips or from third parties, may be subject to interruptions and/or

increased costs due to various external factors. These factors include,

but are not limited to: regional conflicts, sanctions, tariffs or other

trade measures, natural disasters, extreme weather events (the effects

of which may be exacerbated by climate change), and geopolitical

developments.

Philips may fail to obtain or replace components for its medical systems

in a timely manner from existing supplies, and alternative sources of

components could involve significant costs and regulatory challenges

and may not be available to us on reasonable terms, adversely affecting

our business and financial performance. While macro trends around

materials availability have improved, Philips medical systems stay in

production for longer periods than the life cycle of their semi-

conductors and require continuous rejuvenation of their electronic

components.

In 2025 ongoing geopolitical conflicts, increasing trade tensions, tariff

developments and heightened volatility around country- and material-

specific restrictions have increased the risk of disruptions to our supply

chain.

Our suppliers and our third-party service providers may also be exposed

to potentially worsening macro-economic and geopolitical trends, as

well as both acute and chronic physical climate risks, or potential labor

shortages. These factors may cause business interruptions, property

damage, and inventory loss, increasing lead times and adversely

impacting our production capacity, which may negatively affect the

delivery of products and services to customers, for example the

postponement of equipment installations in hospitals. If Philips is not

able to respond swiftly to those factors, this may result in an inability to

deliver on customer needs, ultimately resulting in loss of revenue and

margin.

Philips purchases raw materials, including rare-earth metals, copper,

steel, aluminum, noble gases and oil-related products. Philips’ business

depends on the availability of raw materials and energy, and there is

no assurance that such raw materials and energy will be available for

purchase in the future or available at current costs. In particular, the

introduction of more stringent regulatory or legislative measures to

internalize negative externalities can be expected in response to the

threats posed by climate change and environmental degradation. In

this context, reference is also made to the EU Corporate Sustainability

Due Diligence Directive (CSDDD) introducing or extending a duty of

care, requiring Philips to identify and act on adverse environmental and

human rights impacts across its supply chain. These initiatives have the

potential to affect market dynamics (e.g., green premiums) and the

availability of sustainable resources, which may, in turn, increase

Philips’ costs associated with purchasing materials and components. The

rise in global climate commitments and new regulations on Energy

Attribute Certificates (EACs) and Power Purchasing Agreements (PPAs)

may also drive fluctuations in energy costs and affect the availability of

EACs and PPAs.

Certain commodities have experienced unstable market conditions, and

this instability is anticipated to persist, leading to rising costs.

Additionally, costs may rise due to more stringent laws and regulations

related to climate change. Such legislation might necessitate

investments in technology aimed at reducing energy consumption and

greenhouse gas emissions, exceeding our current expectations, or could

lead to higher prices for negative externalities (e.g., carbon pricing). If

Philips is not able to compensate for increased costs of energy,

(sub-)components, (raw) materials, and transportation – either by

reducing reliance thereon or passing on increased costs to customers –

then price increases could have a material adverse impact on Philips’

business, financial condition, and operating results.

Philips may increase its dependency on a concentration of external

suppliers, as a result of the continuing process of creating a leaner

supply base and launching initiatives to replace internal capabilities

with outsourced products and services. These initiatives also need to be

balanced with local-market value-creation requirements, including

those relating to local manufacturing and data storage.

Although Philips works closely with its suppliers to avoid supply

discontinuities, there can be no assurance that Philips will not

encounter future supply issues, causing disruptions or unfavorable

conditions. Furthermore, while the materials supply has improved, the

challenges in our capability for the planning and synchronization of

supply with demand continue, which, combined with a drive for

inventory reduction and cash flow improvements, can lead to further

materials running out of stock. That could have a material adverse

impact on Philips’ business, financial condition and operating results.

Philips may face challenges in simplifying the

organization and the ways of working

Having an integrated operating model promoting agility with clear

accountability is a priority to improve the execution of our strategy. If

we do not effectively simplify the organization and our ways of

working – which include, but are not limited to, changes in structure

and governance, policies, processes, IT systems and data – we may be

limited in our ability to fully realize our business ambitions and to

create value with sustainable impact driven by growth, innovation and

execution, while increasing quality, speed and productivity.

Philips is increasingly using AI within its internal value chain to drive

productivity and customer responsiveness by, for example, accelerating

R&D through greater use of generative AI code; enhancing customer

support with AI agents performing remote system health checks and

proactive maintenance; strengthening sales and marketing through AI

content creation; managing digital assets; and tracking real-time buyer


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analytics. Everyone at Philips is expected to use AI safely, ethically and

responsibly. However, there is no guarantee that policies and

procedures with respect to AI will be applied consistently or will ensure

that there are no adverse impacts from the use of AI.

The continuous evolution of our business environment requires Philips

to continuously evaluate the operating model and make improvements

if it proves to be wholly or partly unsuccessful.

Philips is dependent on its people for leadership and

specialized skills and may be unable to attract and

retain personnel

The attraction and retention of talented employees is critical to Philips’

success, and the loss of employees with specialized skills could result in

business interruptions, especially given the strong competition for

talent in key capability segments. Philips is competing with other

companies for the best talent and most sought-after skills, and there is

no assurance of succeeding in attracting and retaining the highly

qualified employees needed in the future. Wage inflation is increasing

the competition for talent, as well as the cost of labor. This may

negatively impact our ability to realize our plan for creating value with

sustainable impact, and if we are unable to offset the increased costs of

labor through higher selling prices and increased productivity, then

rising costs could also have a material adverse impact on Philips’

business, financial condition and operating results.

Philips could be exposed to a significant enterprise

cybersecurity breach

Philips relies on information technology to operate and manage its

businesses, as well as to store and process confidential data (relating to

patients, employees, customers, intellectual property, suppliers and

other partners). Philips’ products, solutions and services increasingly

contain sophisticated and complex information technology, and the use

of AI capabilities may further heighten the risks related to cybersecurity

attacks and other disruptions to information systems. The healthcare

industry is subject to strict privacy, security and safety regulations. At

the same time, geopolitical conflicts and criminal activity continue to

drive increases in the number, speed and sophistication of cyberattacks

globally. Considering the general increase in cybercrime, our customers

and other stakeholders are becoming more demanding regarding the

cybersecurity of our products and services. As a global health

technology company, Philips is inherently and increasingly exposed to

the risk of cyberattacks and potential impact of attacks on suppliers.

Information systems may be damaged, disrupted (including the

provision of services to customers), or shut down due to cyberattacks. In

addition, breaches in the security of our systems (or the systems of our

customers, suppliers, or other partners) could result in

misappropriation, destruction, or unauthorized disclosure of

confidential information (including intellectual property) or personal

data belonging to us or to our employees, customers, suppliers or other

partners.

These risks are particularly significant with respect to the safety and

medical records of patients. Cyberattacks may result in substantial costs

and other negative consequences, which may include, but are not

limited to, lost revenues, reputational damage, remediation and

enhancement costs, penalties, and other liabilities to regulators,

customers and other partners. Philips has not encountered any material

breaches or other major cybersecurity incidents in 2025. While Philips

deals with the operational threat of cybercrime on a continuous basis

and has so far been able to prevent significant damage or significant

monetary cost in taking corrective action, there can be no assurance

that future cyberattacks will not result in material or other

consequences than as described previously, which may result in a

material adverse impact on Philips’ business, financial condition and

operating results.

Philips may face challenges to drive excellence and

speed in bringing innovations to market

It is important that Philips delivers its innovations in close collaboration

with its customers on a timely basis and at scale. The emergence of new

low-cost competitors, particularly in Asia, the emergence of healthcare

solutions with low-carbon environmental footprints, the continuously

and rapidly changing field of AI and data-driven solutions, and the

increasing importance of product security and cybersecurity, further

underlines the importance of improvements in the innovation process.

Success in launching innovations depends on a number of factors,

including development of value propositions, architecture and platform

creation, product development, market acceptance, production, and

delivery ramp-up. It is also dependent on addressing potential quality

issues or other defects in the early stages of introduction, and on

attracting and retaining skilled employees. Costs of developing new

products and solutions may partially be reflected on Philips’ balance

sheet and may be subject to write-down or impairment depending on

the performance of such products or services. The significance and

timing of such write-downs or impairments are uncertain, as is the

ultimate commercial success of new product introductions. Accordingly,

Philips cannot determine in advance the ultimate effect that

innovations will have on its financial condition and operating results. If

Philips fails to create and commercialize its innovations in a timely way

and at scale, it may lose market share and competitiveness, which could

have a material adverse effect on its financial condition and operating

results.

Financial and reporting risks

Philips is exposed to a variety of treasury and

financing risks, including liquidity, currency, credit

and country risk

Negative developments impacting the liquidity of global capital

markets could affect Philips’ ability to raise or re-finance debt in the

capital markets or could lead to significant increases in the cost of such

borrowing in the future. If the markets expect a downgrade by the

rating agencies, or if such a downgrade has actually taken place, this

could increase the cost of borrowing, reduce our potential investor

base and adversely affect our business.

Philips’ financing and liquidity position may also impact its ability to

implement or complete any share-buyback program, or to distribute

any dividends in accordance with its dividend policy or at all. Any

announced share-buyback program or dividend policy may also be

amended, suspended or terminated at any time, including at Philips’

discretion or as a result of applicable law, regulation or regulatory

guidance, and any such amendment, suspension or termination could

negatively affect the trading price of, increase trading price volatility

of, or reduce the market liquidity of Philips shares or other securities.

Additionally, any share-buyback program or distribution of dividend

could diminish Philips’ cash or other reserves, which may impact its

ability to finance future growth and to pursue potential future

strategic opportunities. Any share-buyback program or dividend


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payment will depend on factors such as availability of financing,

liquidity position, business outlook, cash flow requirements and

financial performance, the state of the market and the general

economic climate, and other factors, including tax and other regulatory

considerations. Philips and its subsidiaries may also be subject to

limitations on the distribution of shareholders’ equity under applicable

law.

Philips operates in over 100 countries and its reported earnings and

equity are therefore inevitably exposed to fluctuations in the exchange

rates of foreign currencies against the euro. Philips’ sales and net

investments in its foreign subsidiaries are sensitive in particular to

movements in the US dollar, Japanese yen, Chinese renminbi, and a

wide range of other currencies from developed and emerging

economies. Philips’ sourcing and manufacturing spend is concentrated

in the EU, the United States and China. Income from operations is

particularly sensitive to movements in currencies of countries where

Philips has no or very small-scale manufacturing/local sourcing activities

but significant sales of its products or services, such as Japan, Canada,

Australia, the United Kingdom, and a range of emerging markets, such

as Indonesia, India and Brazil.

In view of the long life cycle of health technology solution sales and

long-term strategic partnerships, the financial risk of counterparties

with outstanding payment obligations creates exposure risks for Philips,

particularly in relation to accounts receivable from customers, liquid

assets, and the fair value of derivatives and insurance contracts with

financial counterparties. A default by counterparties in such

transactions can have a material adverse effect on Philips’ financial

condition and operating results.

Contingent liabilities may have a significant impact on the company’s

consolidated financial position, results of operations and cash flows.

For an overview of current cases please refer to the note Contingencies.

Philips is exposed to tax risks which could have a

significant adverse financial impact

Philips is exposed to tax risks that could result in double taxation,

penalties and interest payments. The source of the risks could originate

from local tax laws and regulations as well as international and EU

regulatory frameworks. These tax risks include transfer pricing risks on

internal cross-border deliveries of goods and services, as well as tax risks

relating to changes in the transfer pricing model. Examples of

initiatives that may result in changing tax rules include, but are not

limited to, the OECD/G20 Inclusive Framework to address the allocation

of income to user markets (Pillar One) and a 15% minimum corporate

income tax rate (Pillar Two).

The formal adoption of the Council Directive (EU) 2022/2523 (the Pillar

Two Directive) in December 2022 achieved a coordinated

implementation of Pillar Two in EU Member States. The Dutch

government adopted the Minimum Tax Rate Act 2024 (MTR Act) in

December 2023, and the Pillar Two legislation has been applicable in

local law with effect from 2024 in the Netherlands, the EU and many

other countries around the world. However, the US withdrawal from

the OECD Pillar agreements, the pending implementation in local laws

of the statement issued by the Group of Seven (G7) on June 28, 2025 on

outlining a compromise on certain aspects of Pillar Two, including the

January 5, 2026 ‘side-by-side’ package agreed between the United

States and the OECD Inclusive Framework exempting US-parented

multinational enterprises from Pillar Two brings uncertainty and

potential risk of retaliatory tax measures.

As Philips maintains substance in the form of relevant assets and

personnel in the countries in which it operates, Philips meets the

transitional safe harbor rules enacted by OECD in most countries and

therefore exposure to Pillar Two taxation is currently not material from

a group perspective. However, the future of the safe harbor rules,

including the implementation of the side-by-side safe harbors is

uncertain and Pillar Two increases Philips’ tax compliance burden

significantly globally.

For Pillar One, the OECD’s final guidance on Amount B (a simplified

and streamlined approach for applying the arm’s length principle to in-

scope baseline marketing and distribution activities, as incorporated

into the OECD Transfer Pricing Guidelines), effective for fiscal years

commencing on or after January 1, 2025, introduces a standardized

approach for determining the arm’s length returns for such activities.

While the framework aims to enhance tax certainty and reduce

compliance costs, it may also give rise to new tax risks. These include

the risk of double taxation due to potential mismatches between

implementation in local law and existing transfer pricing policies and

challenges in determining eligibility for the simplified regime.

The enactment of the One Big Beautiful Bill Act in July 2025 introduces

significant changes to US tax rules, including revised R&D expense

amortization, enhanced export incentives, and a permanent 10.5%

Base Erosion and Anti-Abuse Tax rate effective 2026, favoring US-based

companies and operations. While the immediate financial impact on

Philips is limited, these measures and ongoing US discussions on tax

retaliatory measures, for example against jurisdictions imposing digital

service taxes (being a tax on gross revenue derived from a variety of

digital services), expose Philips to financial risk and uncertainty.

Furthermore, Philips is exposed to tax risks related to acquisition and

divestment, permanent establishments, tax loss, interest and tax credits

carried forward, and potential changes in tax law that could result in

higher tax expenses and payments. The risks may have a significant

impact on local financial tax results, which could adversely affect

Philips’ financial condition and operating results. The value of the

deferred tax assets, such as tax losses carried forward, is subject to the

availability of sufficient taxable income within the tax loss-carry-

forward period. Accordingly, there can be no absolute assurance that

all deferred tax assets, such as (net) tax losses and credits carried

forward, will be realized.

Implemented and potential tariffs and other restrictions on imports

proposed by the US administration, and retaliatory trade measures in

response thereto, have impacted and may continue to impact

international trade relations, supply chains and pricing strategies, with

notable consequences in the countries where we are present. In

addition, protectionism may increase general uncertainty on the

development of local regulations in response to those measures. These

uncertainties expose Philips to financial risk linked to increased trade

defense measures resulting in additional tariffs and customs duties.

Significant changes in import duties levied on the import of products

could materially impact Philips.


	176

Flaws in internal controls could adversely affect our

reporting and management process

Accurate disclosures provide investors and other market professionals with

significant information for a better understanding of Philips’ Businesses.

Failures in internal controls or other issues with respect to Philips’ public

disclosures, including disclosures with respect to cybersecurity risks and

incidents, could create market uncertainty regarding the reliability of the

information (including financial data) presented. This could have a

negative impact on the price of Philips securities. In addition, the reliability

of revenue and expenditure data is key for steering the Businesses and for

managing top-line and bottom-line growth. The long life cycle of health

technology solution sales, from order acceptance to accepted installation

and servicing, together with the complexity of the accounting rules

recognizing revenue in the accounts, presents a challenge in terms of

ensuring consistent and correct application of the accounting rules

throughout Philips’ global business. Significant changes in the way of

working, such as the changes made to our operating model, restructuring,

and shifting processes to remote Philips Capability Centers locations, may

have an adverse impact on the environment under which controls are

executed, monitored, reviewed, and tested. Any flaws in internal controls,

or regulatory or investor actions in connection with flaws in internal

controls, could have a material adverse effect on Philips’ business, financial

condition, operation results, reputation and brand.

Compliance risks

Philips products and services may be exposed to the

risk of non-compliance with various regulations and

standards involving quality, safety, and security

Our reputation and license to operate depend on our compliance with

global regulations and standards. Operating in a highly regulated

health-technology industry, our products and services, including parts

and materials from suppliers, are subject to regulation by various

government and regulatory agencies, e.g., FDA (US), EMA (Europe),

NMPA (China), MHRA (UK), ASNM (France), BfArM (Germany), and IGZ

(the Netherlands). In the EU, the Medical Device Regulation (EU MDR)

became effective in May 2021 and imposes significant additional pre-

market and post-market requirements. The current EU MDR

transitional provisions allow medical devices that were CE marked

under the previous directives (MDD and AIMDD) to continue being

placed on the market or put into service until 2027 or 2028, dependent

upon the risk class of the equipment. Examples of other product-

related regulations are the EU’s Waste from Electrical and Electronic

Equipment (WEEE), Restriction of Hazardous Substances (RoHS),

Registration, Evaluation, Authorization and Restriction of Chemicals

(REACH) and Energy-using Products (EuP) regulations. We are subject to

various domestic and foreign environmental laws and regulations,

which are continuing to develop. Any failure to comply with such laws

and regulations could jeopardize product quality, safety, and security

or expose us to lawsuits, administrative penalties, and civil remedies, all

of which may have a material adverse impact on Philips’ business,

financial condition, and operating results.

Philips has observed an increase in safety and security requirements in

new and upcoming legislation dealing with market access of consumer

goods, medical devices, information and communication technology

products, cloud services, and specific areas such as data protection,

cybersecurity, AI, and supply chain.

The legal and regulatory environment relating to AI is uncertain and

rapidly evolving due to concerns about bias, discrimination,

transparency, and security. Despite training and risk management

efforts, AI models we use, particularly generative AI models, may

produce output or take action that is incorrect, that reflects biases

included in the data on which they are trained, that results in the

release of private, confidential, or proprietary information, or that is

otherwise harmful. The complexity of AI models may make it difficult

to understand why they are generating particular outputs, increasing

the challenges associated with assessing the proper operation of AI

models, understanding and monitoring the capabilities of the AI

models, reducing erroneous output, eliminating bias, and complying

with regulations that require documentation or explanation of the

basis on which decisions are made. Further, we may rely on AI models

developed by third parties, and, to that extent, would be dependent in

part on the manner in which those third parties develop and train their

models, including risks arising from the inclusion of any unauthorized

material in the training data for their models and from the

effectiveness of the steps these third parties have taken to limit the

risks associated with the output of their models, matters over which we

may have limited visibility. Any of these risks could expose us to liability

or adverse legal or regulatory consequences, and harm our reputation

and the public perception of our business or the effectiveness of our

security measures.

Both regulators and customers require us to demonstrate legal

compliance and adequate security management using national and

international standards and associated certifications. Non-compliance

with conditions imposed by regulatory authorities could result in product

recalls, temporary product unavailability, stoppages at production

facilities, remediation costs, fines, disgorgement of profits, and/or claims

for damages. Product safety incidents or user concerns could jeopardize

patient safety and/or trigger inspections by the FDA or other regulatory

agencies, which, depending on the results of such inspections, could

trigger the impacts described above, as well as other consequences.

These issues could adversely impact Philips’ financial condition or

operating results through lost revenue and cost of any required remedial

actions, penalties or claims for damages. They could also negatively

impact Philips’ reputation, brand, relationship with customers and

market share. Philips is exposed to the ongoing impact of the Respironics

voluntary recall/field action and related matters, including securities

claims and regulatory investigations. Please refer to the section Patient

safety, quality and regulatory and the Medical Office and the note

Contingencies


	177

Philips is exposed to the risks of non-compliance

with business conduct rules and regulations,

including privacy and upcoming ESG disclosure and

due diligence requirements

In the execution of its strategy, Philips could be exposed to the risk of

non-compliance with business conduct rules and regulations and our

General Business Principles, including, but not limited to, patient safety,

quality, anti-bribery, anti-money laundering, antitrust, sanctions,

healthcare compliance, transparency, accountability and fairness in the

development and use of AI tools, privacy and data protection, as well

as the evolving and expanding ESG disclosure requirements and due

diligence requirements across jurisdictions. Examples of compliance risk

areas include commission and incentive payments to third parties and

remuneration payments to agents, distributors, consultants and similar

entities, as well as the acceptance of gifts, which may be considered in

some markets to be normal local business practice. The use of AI and

ongoing digitalization of Philips products and services, including the

processing of personal data, increases the importance of compliance,

and the risk of non-compliance, with privacy, data protection and

emerging AI governance frameworks such as the EU AI Act. If we do

not have sufficient rights to use the data on which AI relies or to the

outputs produced by AI applications, we may incur liability through the

violation of certain laws, third-party privacy or other rights, or contracts

to which we are a party. These risks could adversely affect Philips’

financial condition, reputation and brand and trigger the additional

risk of exposure to governmental investigations, inquiries and legal

proceedings and fines. The EU or its Member States or other regions

may introduce more regulatory and legislative initiatives to advance

ESG objectives. Such changes may introduce new compliance

requirements and may require Philips to expand the range of

mandatory ESG disclosures. Examples of these initiatives are the EU

Corporate Sustainability Reporting Directive (CSRD) and European

Sustainability Reporting Standards (ESRS), the European Carbon Border

Adjustment Mechanism (CBAM), and the EU Deforestation Regulation.

Regulatory and legislative initiatives such as the EU Corporate

Sustainability Due Diligence Directive (CSDDD) and case law developed

by courts will introduce or extend a duty of care, requiring Philips to

identify and act on adverse environmental and human rights impacts

arising from the organization and operations, and related to our

activities, beyond or different from our current efforts. Failure to meet

these requirements could trigger the additional risk of exposure to

inquiries from supervisory bodies and adversely affect Philips’ reputation

or could adversely impact Philips’ financial condition or operating results

through lost revenue and cost of any required remedial actions,

penalties or claims for damages. The risk of non-compliance is

heightened by the evolving and unpredictable nature of ESG-related

legislative initiatives, which continue to undergo frequent modifications

(e.g., the EU Omnibus legislative measures) with relatively short

implementation timelines.

In addition, we may also face potentially conflicting supervisory

directives, for example, as certain US regulatory and non-US authorities

have prioritized ESG-related issues, while others have signaled pursuing

potentially conflicting priorities. These circumstances, among others,

may result in pressure from investors, unfavorable reputational

impacts, including inaccurate perceptions or a misrepresentation of our

actual ESG-related practices, and diversion of management’s attention

and resources. Any failure or perceived failure by us to adhere to our

public statements, comply fully with developing interpretations of ESG-

related laws and regulations (both ‘pro-ESG’ and ‘anti-ESG’), or meet

evolving and varied stakeholder expectations and standards, could

adversely affect Philips’ reputation or could adversely impact Philips’

financial condition or operating results through lost revenue and cost

of any required remedial actions, penalties or claims for damages.

For further details, please refer to the sub-section Legal proceedings

within the note Contingencies.


	178

Reconciliation of non-IFRS information

In this Annual Report Philips presents certain financial measures when

discussing Philips’ performance that are not measures of financial

performance or liquidity under IFRS (‘non-IFRS’). These non-IFRS

measures (also known as non-GAAP or alternative performance

measures) are presented because management considers them

important supplemental measures of Philips’ performance and believes

that they are widely used in the industry in which Philips operates as a

means of evaluating a company’s operating performance and liquidity.

Philips believes that an understanding of its sales performance,

profitability, financial strength and funding requirements is enhanced

by reporting the following non-IFRS measures:

•comparable sales growth

•EBITA

•Adjusted EBITA

•Adjusted EBITDA

•adjusted income from continuing operations attributable to

shareholders

•adjusted income from continuing operations attributable to

shareholders per common share (in EUR) - diluted (Adjusted EPS)

•free cash flow

•net debt : group equity ratio

•organic Return on Invested Capital (ROIC)

Non-IFRS measures do not have standardized meanings under IFRS and

not all companies calculate non-IFRS measures in the same manner or

on a consistent basis. As a result, these measures may not be

comparable to measures used by other companies that have the same

or similar names. Accordingly, undue reliance should not be placed on

the non-IFRS measures contained in this Annual Report and they should

not be considered as substitutes for sales, net income, net cash

provided by operating activities or other financial measures computed

in accordance with IFRS.

This chapter contains the definitions of the non-IFRS measures used in

this Annual Report as well as reconciliations from the most directly

comparable IFRS measures. The non-IFRS measures discussed in this

Annual Report are cross referenced to this chapter. These non-IFRS

measures should not be viewed in isolation or as alternatives to

equivalent IFRS measures and should be used in conjunction with the

most directly comparable IFRS measures.

The non-IFRS financial measures presented are not measures of

financial performance or liquidity under IFRS, but measures used by

management to monitor the underlying performance of Philips’

business and operations and, accordingly, they have not been audited

or reviewed by Philips’ external auditors.

Additionally, Philips provides forward-looking targets for comparable

sales growth, adjusted EBITA margin improvement, free cash flow and

organic ROIC, which are non-IFRS financial measures. Philips has not

provided a quantitative reconciliation of these targets to the most

directly comparable IFRS measures because certain information needed

to reconcile these non-IFRS financial measures to the most comparable

IFRS financial measures are dependent on specific items or impacts

which are not yet determined, are subject to uncertainty and variability

in timing and amount due to their nature, are outside of Philips’

control, or cannot be predicted, including items and impacts such as

currency exchange rates, acquisitions and disposals, legal and tax gains

and losses and pension settlements, charges and costs such as

impairments, restructuring and acquisition-related charges,

amortization of intangible assets and net capital expenditures.

Accordingly, reconciliations of these non-IFRS forward-looking financial

measures to the most directly comparable IFRS financial measures are

not available without unreasonable effort. Such unavailable reconciling

items could significantly impact the results of operations and financial

condition.

Comparable sales growth

Comparable sales growth represents the period-on-period growth in

sales excluding the effects of currency movements and changes in

consolidation. As indicated in General information to the Consolidated

financial statements, foreign currency sales and costs are translated

into Philips’ presentation currency, the euro, at the exchange rates

prevailing at the respective transaction dates. As a result of significant

foreign currency sales and currency movements during the periods

presented, the effects of translating foreign currency sales amounts

into euros could have a material impact on the comparability of sales

between periods. Therefore, these impacts are excluded when

presenting comparable sales in euros by translating the foreign

currency sales of the previous period and the current period into euros

at the same average exchange rates. In addition, the years presented

were affected by a number of acquisitions and divestments, as a result

of which various activities were consolidated or deconsolidated. The

effect of consolidation changes has also been excluded in arriving at

the comparable sales. For the purpose of calculating comparable sales,

when a previously consolidated entity is sold or control is lost, relevant

sales of that entity for the corresponding prior year period are

excluded. Similarly, when an entity is acquired and consolidated,

relevant sales of that entity for the current year period are excluded.

Comparable sales growth is presented for the Philips Group, operating

segments and geographic area. Philips believes that the presentation of

comparable sales growth is meaningful for investors to evaluate the

performance of Philips’ business activities over time. Comparable sales

growth may be subject to limitations as an analytical tool for investors,

because comparable sales growth figures are not adjusted for other

effects, such as increases or decreases in prices or quantity/volume. In

addition, interaction effects between currency movements and changes

in consolidation are not taken into account.


	179

Philips Group

Sales growth composition by segment in %


	nominal growth	consolidation changes	currency effects	comparable growth
2025 versus 2024
Diagnosis & Treatment	(2.9)	0.3	2.8	0.1
Connected Care	(1.1)	0.8	3.1	2.8
Personal Health	5.4	-	3.1	8.4
Philips Group	(1.0)	0.5	2.8	2.3
2024 versus 2023
Diagnosis & Treatment	(0.4)	0.0	1.7	1.3
Connected Care	(0.1)	0.8	1.3	2.0
Personal Health	(3.2)	0.0	2.5	(0.7)
Philips Group	(0.8)	0.3	1.7	1.2
2023 versus 2022
Diagnosis & Treatment	6.3	0.2	4.5	11.0
Connected Care	(2.5)	0.3	3.3	1.1
Personal Health	(0.7)	0.0	3.9	3.2
Philips Group	1.9	0.2	3.9	6.0

Philips Group

Sales growth composition by geographic area in %


	nominal growth	consolidation changes	currency effects	comparable growth
2025 versus 2024
Western Europe	(1.4)	1.0	(0.1)	(0.5)
North America	(1.5)	0.6	3.6	2.7
Other mature geographies	(4.8)	-	4.1	(0.7)
Mature geographies	(1.9)	0.6	2.6	1.3
Growth geographies	1.2	0.1	3.6	4.8
Philips Group	(1.0)	0.5	2.8	2.3
2024 versus 2023
Western Europe	4.2	0.7	(0.4)	4.5
North America	1.2	0.4	0.5	2.2
Other mature geographies	(6.2)	0.1	5.0	(1.1)
Mature geographies	1.2	0.5	0.8	2.5
Growth geographies	(5.8)	(0.1)	3.8	(2.1)
Philips Group	(0.8)	0.3	1.7	1.2
2023 versus 2022
Western Europe	6.0	0.3	0.3	6.6
North America	(0.3)	0.2	2.7	2.5
Other mature geographies	(1.0)	0.1	8.2	7.3
Mature geographies	1.4	0.2	2.7	4.2
Growth geographies	3.4	0.2	6.9	10.5
Philips Group	1.9	0.2	3.9	6.0

EBITA and Adjusted EBITA

The term Adjusted EBITA is used to evaluate the performance of Philips

and its segments. EBITA represents Income from operations excluding

amortization and impairment of acquired intangible assets and

impairment of goodwill. Adjusted EBITA represents EBITA excluding

gains or losses from restructuring costs, acquisition-related charges and

other items.

Restructuring costs are defined as the estimated costs of initiated

reorganizations, the most significant of which have been approved by

the Executive Committee, and which generally involve the realignment

of certain parts of the industrial and commercial organization.

Acquisition-related charges are defined as costs that are directly

triggered by the acquisition of a company, such as transaction costs,

purchase accounting related costs and integration-related expenses.

Other items are defined as any individual item with an income

statement impact (loss or gain) that is deemed by management to be

both significant and incidental to normal business activity. This includes

the following: litigation costs and settlements in favor of (or against)

the company, gains (or losses) on sale of businesses or assets,

remediation costs (also referred to as quality actions), impairment of

assets, portfolio realignment charges, environmental charges and other

items which are individually above an amount of EUR 20 million in a

quarter, or an individual item which is above EUR 40 million across

multiple quarters. Refer to Restructuring, acquisition-related charges

and other items in the Results of operations section of Financial

performance.

Philips considers the use of Adjusted EBITA appropriate as Philips uses it

as a measure of segment performance and as one of its strategic drivers

to increase profitability through re-allocation of its resources toward

opportunities offering more consistent and higher returns. This is done

with the aim of making the underlying performance of the Businesses

more transparent.

EBITA excludes amortization and impairment of acquired intangible

assets (which primarily relates to brand names, customer relationships

and technology) and impairment of goodwill, as Philips believes that

such amounts are inconsistent in amount and frequency, are

significantly impacted by the timing and/or size of acquisitions and do

not factor into its decisions on allocation of its resources across

segments. Although we exclude amortization and impairment of

acquired intangible assets from the Adjusted EBITA measure, Philips

believes that it is important for investors to understand that these

acquired intangible assets contribute to revenue generation.


	180

Philips believes Adjusted EBITA is useful to evaluate financial

performance on a comparable basis over time by factoring out

restructuring costs, acquisition-related charges and other incidental

items that are not directly related to the operational performance of

Philips Group or its segments.

Adjusted EBITA may be subject to limitations as an analytical tool for

investors, as it excludes restructuring costs, acquisition-related charges

and other incidental items and therefore does not reflect the expense

associated with such items, which may be significant and have a

significant effect on Philips’ net income.

Adjusted EBITA margin refers to Adjusted EBITA divided by sales

expressed as a percentage.

Adjusted EBITA is not a recognized measure of financial performance

under IFRS. The reconciliation of Adjusted EBITA to the most directly

comparable IFRS measure, Net income, for the years indicated is

presented in the accompanying table. Net income is not allocated to

segments as certain income and expense line items are monitored on a

centralized basis, resulting in them being shown on a Philips Group

level only.

Adjusted EBITDA

Adjusted EBITDA is defined as Income from operations excluding

amortization and impairment of intangible assets, impairment of

goodwill, depreciation and impairment of property, plant and

equipment, restructuring costs, acquisition-related charges and other

items.

Philips understands that Adjusted EBITDA is broadly used by analysts,

rating agencies and investors in their evaluation of different companies

because it excludes certain items that can vary widely across different

industries or among companies within the same industry. Philips

considers Adjusted EBITDA useful when comparing its performance to

other companies in the health tech industry. However, Adjusted

EBITDA may be subject to limitations as an analytical tool because of

the range of items excluded and their significance in a given reporting

period. Furthermore, comparisons with other companies may be

complicated due to the absence of a standardized meaning and

calculation framework. Philips management compensates for the

limitations of using Adjusted EBITDA by using this measure to

supplement IFRS results to provide a more complete understanding of

the factors and trends affecting the business rather than IFRS results

alone. In addition to the limitations noted above, Adjusted EBITDA

excludes items that may be recurring in nature and should not be

disregarded in the evaluation of performance. However, we believe it is

useful to exclude such items to provide a supplemental analysis of

current results and trends compared to other periods. This is because

certain excluded items can vary significantly depending on specific

underlying transactions or events. Also, the variability of such items

may not relate specifically to ongoing operating results or trends, and

certain excluded items, while potentially recurring in future periods,

may not be indicative of future results. Net income for the years

indicated is included in the accompanying table. Net income is not

allocated to segments as certain income and expense line items are

monitored on a centralized basis, resulting in them being shown on a

Philips Group level only.


	181

Philips Group

Reconciliation of Net income to Adjusted EBITA and Adjusted EBITDA in millions of EUR


	Philips Group	Diagnosis & Treatment	Connected Care	Personal Health	Other
2025
Net Income	897
Discontinued operations, net of income taxes	4
Income tax expense (benefit)	282
Results of associates	9
Financial expenses	346
Financial income	(113)
Income from operations	1,424	804	89	631	(100)
Amortization and impairment of acquired intangible assets	240	73	141	14	12
EBITA	1,665	877	230	645	(88)
Restructuring and acquisition-related charges	260	43	126	17	74
Other items:	270	77	188	-	5
Respironics field-action running costs	112	-	112	-	-
Respironics consent decree charges	97	-	97	-	-
Quality actions	89	77	12	-	-
Contract settlement gain	(27)	-	(27)	-	-
Remaining items	(1)	-	(6)	-	5
Adjusted EBITA	2,195	998	544	662	(9)
Depreciation, amortization and impairment of fixed assets and other intangible assets	885	191	263	98	332
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items	(33)	(1)	(17)	(9)	(7)
Adjusted EBITDA	3,046	1,188	791	752	316

Philips Group

Reconciliation of Net income to Adjusted EBITA and Adjusted EBITDA in millions of EUR


	Philips Group	Diagnosis & Treatment	Connected Care	Personal Health	Other
2024
Net Income	(698)
Discontinued operations, net of income taxes	(142)
Income tax expense (benefit)	963
Results of associates	124
Financial expenses	387
Financial income	(105)
Income from operations	529	592	(466)	544	(142)
Amortization and impairment of acquired intangible assets	392	225	141	15	12
EBITA	921	817	(324)	559	(130)
Restructuring and acquisition-related charges	326	157	53	25	92
Other items:	830	45	765	-	20
Respironics litigation provision	984	-	984	-	-
Respironics insurance income	(538)	-	(538)	-	-
Respironics field-action running costs	133	-	133	-	-
Respironics consent decree charges	113	-	113	-	-
Quality actions	123	45	78	-	-
Remaining items	16	-	(4)	-	20
Adjusted EBITA	2,077	1,018	494	584	(18)
Depreciation, amortization and impairment of fixed assets and other intangible assets	998	240	262	102	394
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items	(93)	(39)	(8)	(7)	(39)
Adjusted EBITDA	2,982	1,219	747	679	337


	183

Adjusted income from continuing operations

attributable to shareholders

The term Adjusted income from continuing operations attributable to

shareholders represents income from continuing operations less

continuing operations attributable to non-controlling interests;

amortization and impairment of acquired intangible assets; impairment

of goodwill, excluding gains or losses from restructuring costs and

acquisition-related charges; and other items, as well as adjustments to

net finance expenses, adjustments to results of associates and

adjustments to tax expense. ‘Shareholders’ refers to shareholders of

Koninklijke Philips N.V.

Restructuring costs, acquisition-related charges and other items are all

defined in the previous sections about EBITA and Adjusted EBITA.

Net finance expenses are defined as either the financial income or

expense component of an individual item already identified to be

excluded as part of the Adjusted income from continuing operations,

fair value movements of equity investments in limited life funds

recognized at fair value through profit or loss or a financial income, or

expense component with an income statement impact (gain or loss)

that is deemed by management to be both significant and incidental to

normal business activity.

The adjustments to tax expense include the tax impact on adjustments

to income from continuing operations, as well as tax-only adjusting

items (such as the derecognition of deferred tax assets).

Philips considers the use of Adjusted income from continuing

operations attributable to shareholders appropriate as Philips uses it as

the basis for the Adjusted income from continuing operations

attributable to shareholders per common share (in EUR) - diluted, a

non-IFRS measure.

Adjusted income from continuing operations attributable to

shareholders may be subject to limitations as an analytical tool for

investors, as it excludes certain items and therefore does not reflect the

expense associated with such items, which may be significant and have

a significant effect on Philips’ net income. Net income for the years

indicated is included in the accompanying table.

Adjusted income from continuing operations attributable to

shareholders is not a recognized measure of financial performance

under IFRS. The reconciliation of Adjusted income from continuing

operations attributable to shareholders to the most directly

comparable IFRS measure, Net income for the years indicated, is

included in the accompanying table.

Adjusted income from continuing operations

attributable to shareholders per common share (in

EUR) - diluted (Adjusted EPS)

Adjusted income from continuing operations attributable to

shareholders per common share (in EUR) - diluted is calculated by

dividing the Adjusted income from continuing operations attributable

to shareholders by the diluted weighted average number of shares

(after deduction of treasury shares) outstanding during the period, as

defined in General information to the Consolidated financial

statements, Earnings per share section.

Philips considers the use of Adjusted income from continuing

operations attributable to shareholders per common share (in EUR) -

diluted appropriate as it is a measure that is useful when comparing its

performance to other companies in the health tech industry. However,

it may be subject to limitations as an analytical tool for investors, as it

uses Adjusted income from continuing operations attributable to

shareholders, which has certain items excluded.

Adjusted income from continuing operations attributable to

shareholders per common share (in EUR) - diluted is not a recognized

measure of financial performance under IFRS. The most directly

comparable IFRS measure, income from continuing operations

attributable to shareholders per common share (in EUR) - diluted for

the years indicated, is included in the following table.

Philips Group

Adjusted income from continuing operations attributable to shareholders1 in

millions of EUR unless otherwise stated


	2025	2024	2023
Net income	897	(698)	(463)
Discontinued operations, net of income taxes	4	(142)	10
Income from continuing operations	901	(840)	(454)
Income from continuing operations attributable to non-controlling interests	(1)	(3)	(2)
Income from continuing operations attributable to shareholders ¹	899	(843)	(456)
Adjustments for:
Amortization and impairment of acquired intangible assets	240	392	290
Impairment of goodwill	-	-	8
Restructuring costs and acquisition-related charges	260	326	381
Other items:	270	830	1,358
Respironics litigation provision	-	984	575
Respironics insurance income	-	(538)	-
Respironics consent decree charges	97	113	363
Respironics field-action running costs	112	133	224
Quality actions	89	123	175
Contract settlement gain	(27)	-	-
Provision for a legal matter	-	-	31
Investment re-measurement loss	-	-	23
Loss (gain) on divestment of business	-	-	(35)
Remaining items	(1)	16	2
Net finance income/expenses	28	23	18
Tax impact on adjusting items ²	(192)	(370)	(450)
Tax effect of derecognition of US deferred tax asset	-	941	-
Adjusted Income from continuing operations attributable to shareholders 1	1,506	1,300	1,148
Earnings per common share:
Income from continuing operations attributable to shareholders¹ per common share (in EUR) - diluted	0.93	(0.88)	(0.47)
Adjusted income from continuing operations attributable to shareholders¹ per common share (in EUR) - diluted	1.56	1.36	1.19

1Shareholders refers to shareholders of Koninklijke Philips N.V. Includes the effect

of the share dividend with respect to 2024 for 2024 and 2023, respectively.

2Includes deferred tax assets derecognized in the line below.


	184

Free cash flow

Free cash flow is defined as net cash flows from operating activities

minus net capital expenditures. Net capital expenditures are composed

of the purchase of intangible assets, expenditures on development

assets, capital expenditures on property, plant and equipment, and

proceeds from sales of property, plant and equipment.

Philips discloses free cash flow as a supplemental non-IFRS financial

measure, as Philips believes it is a meaningful measure to evaluate the

performance of its business activities over time. Philips understands

that free cash flow is broadly used by analysts, rating agencies and

investors in assessing its performance. Philips also believes that the

presentation of free cash flow provides useful information to investors

regarding the cash generated by the Philips operations after deducting

cash outflows for purchases of intangible assets, capitalization of

product development, expenditures on development assets, capital

expenditures on property, plant and equipment and proceeds from

disposal of property, plant and equipment. Therefore, the measure

gives an indication of the long-term cash generating ability of the

business. In addition, because free cash flow is not impacted by

purchases or sales of businesses and investments, it is generally less

volatile than the total of net cash provided by (used for) operating

activities and net cash provided by (used for) investing activities.

Free cash flow may be subject to limitations as an analytical tool for

investors, as free cash flow is not a measure of cash generated by

operations available exclusively for discretionary expenditures, and

Philips requires funds in addition to those required for capital

expenditures for a wide variety of non-discretionary expenditures, such

as payments on outstanding debt, dividend payments or other

investing and financing activities. In addition, free cash flow does not

reflect cash payments that may be required in future for costs already

incurred, such as restructuring costs.

Philips Group

Composition of free cash flow in millions of EUR


	2025	2024	2023
Net cash flows provided by operating activities	1,172	1,569	2,136
Net capital expenditures:	(660)	(663)	(554)
Purchase of intangible assets	(136)	(118)	(96)
Expenditures on development assets	(263)	(241)	(203)
Capital expenditures on property, plant and equipment	(269)	(317)	(345)
Proceeds from disposals of property, plant and equipment	9	13	90
Free cash flow	512	906	1,582

Net debt : group equity ratio

Net debt : group equity ratio is presented to express the financial

strength of Philips. Net debt is defined as the sum of long- and short-

term debt minus cash and cash equivalents. Group equity is defined as

the sum of shareholders’ equity and non-controlling interests. This

measure is used by Philips Treasury management and investment

analysts to evaluate financial strength and funding requirements. This

measure may be subject to limitations because cash and cash

equivalents are used for various purposes, not only debt repayment.

The net debt calculation deducts all cash and cash equivalents, whereas

these items are not necessarily available exclusively for debt repayment

at any given time.

Philips Group

Composition of net debt to group equity in millions of EUR unless otherwise

stated


	2025	2024	2023
Long-term debt	6,934	7,113	7,035
Short-term debt	1,151	526	654
Total debt	8,084	7,639	7,689
Cash and cash equivalents	2,794	2,401	1,869
Net debt	5,290	5,238	5,820
Shareholders’ equity	10,957	12,006	12,028
Non-controlling interests	32	37	33
Group equity	10,990	12,043	12,061
Net debt : group equity ratio	32:68	30:70	33:67

Organic Return on Invested Capital

Organic Return on Invested Capital (ROIC) is defined as organic return

divided by average net operating capital, expressed as a percentage.

Organic return is calculated using income from operations, adjusted to

exclude income or loss from operations of businesses acquired within

the five years preceding the measurement date, the related tax effects

on such income or loss, certain other items, the tax impact of adjusting

items, and certain tax only adjusting items that management considers

material and requiring separate disclosure. The organic return is then

divided by the average net operating capital calculated over the five

quarters ending on the measurement date, excluding the average net

operating capital of businesses acquired within the same five year

period.

Net operating capital is defined as tangible fixed assets and intangible

fixed assets, including goodwill, inventories and receivable balances,

minus payable balances and provisions, all as further defined in

subsequent sections. Net operating capital is adjusted to exclude assets

and liabilities of businesses acquired in the five-year period prior to the

relevant measurement date, and adjustments determined by

management to be necessary for comparability.

Other items are defined as material in nature and require separate

disclosure and have the same nature as the items excluded from

Adjusted EBITA. In the years 2023-2025 these other items included

(legal) provisions, insurance income, consent degree charges, results on

remeasurement and result on divestments. Refer to Restructuring,

acquisition-related charges and other items, Net income, Income from

operations (EBIT), and Adjusted EBITA within the Results of operations

section of Financial performance. Organic ROIC is calculated after taxes.

Organic ROIC is used by management to evaluate Philips’ efficiency at

allocating the capital under its control to profitable investments and

how well the company uses capital to generate returns. Philips believes

that Organic ROIC provides useful information to investors because it

excludes the impact of recently acquired businesses, giving a more

accurate representation of how the Philips integrated operating model

is leveraged to drive operational excellence, and removes irregularity

caused by various operating models of recently acquired businesses.

Philips also believes that excluding certain items determined by


	185

management to be material in nature and requiring separate disclosure

enhances comparability across several periods. Organic ROIC may be

subject to limitations as an analytical tool for investors, as it excludes

income or loss from operations of acquired businesses, the related tax

effects on such income or loss, the tax impact on adjusting items and

certain tax-only adjusting items, which may have a significant effect on

ROIC. Organic ROIC is not a recognized measure of financial

performance under IFRS.

The most comparable IFRS measure to Organic ROIC is Return on total

assets, calculated as Income from operations for the year divided by

total assets as of the end of the year.

Philips Group

Return on total assets in millions of EUR unless otherwise stated


	2025	2024	2023
Income from operations	1,424	529	(115)
Total assets	26,944	28,976	29,406
Return on total assets (%)	5.3%	1.8%	(0.4%)

The reconciliation of average net operating capital and the

reconciliation of Net income to Organic ROIC for the years ended

December 31, 2025, 2024 and 2023 are included in the accompanying

tables.

Philips Group

Reconciliation of average net operating capital 1 in millions of EUR


	2025	2024	2023
Tangible fixed assets	2,307	2,467	2,553
Intangible assets (including goodwill)	12,435	13,175	13,475
Inventories	3,178	3,499	3,984
Receivable balances ²	4,512	4,761	4,981
Payable balances ³	(5,935)	(6,440)	(6,810)
Provisions ⁴	(1,965)	(2,909)	(2,420)
Group average net operating capital	14,533	14,554	15,763
Net operating capital of businesses acquired	(3,163)	(3,579)	(4,081)
Average net operating capital	11,370	10,974	11,681

1All line items represent the average of each of the five quarters ending before

the relevant measurement date.

2Receivable balances consist of (Non-)Current receivables, Other (non-)current

assets, (Non-)Current derivative financial assets, and Income tax receivable.

3Payable balances consist of Accounts payable, Accrued liabilities, (Non-)Current

contract liabilities, Other (Non-)Current liabilities, (Non-)Current derivative

financial liabilities, and (Non-)Current tax liabilities.

4Provisions consist of Long-term and Short-term provisions.

Philips Group

Reconciliation of Net Income to Organic ROIC in millions of EUR unless otherwise

stated


	2025	2024	2023
Net Income	897	(698)	(463)
Discontinued operations, net of income taxes	4	(142)	10
Income tax expense (benefit)	282	963	(73)
Results of associates	9	124	98
Financial expenses	346	387	376
Financial income	(113)	(105)	(63)
Income from operations	1,424	529	(115)
Income tax (expense) benefit	(282)	(963)	73
Loss from operations of businesses acquired	88	174	253
Tax effects on loss from operations of businesses acquired	(21)	(41)	(56)
Goodwill impairment	-	-	8
Impairment of acquired intangible asset	27	132
Other items:	213	691	1,181
Respironics litigation provision	4	984	575
Respironics insurance income		(538)
Respironics consent decree charges	97	113	363
Respironics field-action running costs	112	133	224
Provision for specified legal matters			31
Investment re-measurement loss			23
Loss (gain) on divestment of business			(35)
Tax impact on adjusting item ¹	(50)	(165)	(140)
Tax effect of derecognition of US deferred tax asset		941
Organic return	1,400	1,299	1,204
Average net operating capital	11,370	10,974	11,681
Organic ROIC (%)	12.3%	11.8%	10.3%

1Includes deferred tax assets derecognized in the line below.


	186

Other key performance indicators

In addition to monitoring the IFRS and non-IFRS financial measures

discussed under Financial performance, Philips management also uses

the following key performance indicators to monitor performance and

manage the business.

Philips Group

Other key performance indicators


	2025	2024	2023
Lives improved, in billions	2.00	1.96	1.88
Operational carbon footprint, in kilotonnes CO₂-equivalent	372	424	418
Circular revenues	27.9%	24.4%	20.0%
Waste to landfill	-%	-%	-%
Closing the loop	19.1%	19.5%	20.5%
Comparable order intake	6%	1%	(6)%

Lives improved

We aimed to improve the lives of 2 billion people a year by 2025,

including 300 million in underserved communities, and aim to improve

the lives of 2.5 billion and 400 million, respectively, by 2030. We use lives

improved as a measurement of our societal impact. We calculate lives

improved as the number of individual interactions for each product sold

(based on market intelligence and statistical data) and multiply by the

number of those products delivered in a year (eliminating double

counting for multiple different product touches per individual). Philips’

reported lives improved results only include contributions by Philips

Group, not contributions by the Philips Foundation.

Operational carbon footprint

We use the operational carbon footprint as one of the measurements

of our impact. We define operational carbon footprint as the total

greenhouse gas emissions caused by an organization, event, product or

person, expressed in kilotonnes CO2-equivalent. We calculate our

operational carbon footprint on a monthly basis and include our Scope

1, Scope 2 and Scope 3 – business travel and transportation and

distribution emissions.

Circular revenues

Propositions that qualify for circular revenues must comply with the

requirements for at least one of the circular revenue categories (circular

design, circular delivery and financing models, circular in-use phase and

circular end-of-use management). These include, among others, products

with low weight or containing a minimum threshold of recycled or bio-

based plastics, as-a-service models, software running on cloud,

telehealth, upgrades, lifetime extensions, and refurbished equipment.

We calculate circular revenues as a percentage of total revenues from

products, services and solutions contributing to circularity.

Waste to Landfill

We define waste to landfill as total waste that is delivered for landfill

and exclude one-time-only waste and waste delivered to landfill due to

regulatory requirements. We calculate waste to landfill in kilotonnes

per year.

Closing the loop

Closing the loop means we are embedding a policy to responsibly take

back all professional medical equipment sold directly to customers as

part of a trade-in offer or as a service at customer request. As part of

the policy, we will ensure that equipment coming back to us is, where

feasible, made available for refurbishment and/or parts recovery, or

locally recycled in a certified way to ensure it does not end up in

landfill. We monitor the impact of our policies by measuring the

amount of equipment that we collect from our customers. We report

on this as ‘reclaimed equipment’. We calculate closing the loop as the

number of systems or pieces of equipment taken back per year.

Philips believes that the five other key performance indicators described

above (lives improved, operational carbon footprint, circular revenues,

waste to landfill and closing the loop) provide important information to

investors and are important to understanding the long-term

performance and prospects of the business. In addition, these other key

performance indicators are also used for management compensation

purposes. Members of the Board of Management are eligible for grants

of performance shares under the Long-Term Incentive (LTI) plan, and

the vesting of the performance shares is subject to performance over a

period of three years and based on certain criteria, including a 10%

weighting for Sustainability Objectives, which Philips defines as the five

other key performance indicators described above. Philips believes that

including these other key performance indicators in our remuneration

policy encourages management to act responsibly and sustainably,

supporting the company’s overall performance and enhancing the long-

term value of the company. See Remuneration Report 2025 for more

information on the Philips LTI plan.

Comparable order intake

Comparable order intake represents the period-on-period growth,

expressed as a percentage, in order intake excluding the effects of

currency movements and changes in consolidation. Comparable order

intake is reported for equipment and software in the Diagnosis &

Treatment and Connected Care segments, and is defined as the total

contractually committed value of equipment and software to be

delivered within a specified timeframe, and is an approximation of

expected future revenue growth in the respective Businesses.

Comparable order intake does not derive from the financial statements

and a quantitative reconciliation is thus not provided.

Philips uses comparable order intake as an indicator of business activity

and performance. Comparable order intake is not an alternative to

revenue and may be subject to limitations as an analytical tool due to

differences in amount and timing between booking orders and revenue

recognition. Due to divergence in practice, other companies may

calculate this or a similar measure (such as order backlog) differently and

therefore comparisons between companies may be complicated.

Comparable order intake increased to 6% in 2025, compared with a 1%

increase in 2024. Comparable order intake is presented when discussing

the Philips Group’s performance.


	187

Taxation

Dutch taxation

The statements below are only a general summary of certain material

Dutch tax consequences for holders of common shares that are non-

residents of the Netherlands based on Dutch tax laws, presently in

force, and the Tax Convention of December 18, 1992, as amended by

the protocol that entered into force on December 28, 2004, between

the United States of America and the Kingdom of the Netherlands (the

US Tax Treaty) and are not to be read as extending by implication to

matters not specifically referred to herein. For general entity

qualification rules, reference is made to the last paragraph of this

statement. As to individual tax consequences, investors in common

shares should consult their own professional tax advisor.

With respect to a holder of common shares that is an individual who

receives income or derives capital gains from common shares and this

income received or capital gains derived are attributable to past,

present or future employment activities of such holder, the income of

which is taxable in the Netherlands, the Dutch tax position is not

discussed in this summary.

Dividend withholding tax

•In general, a distribution to shareholders by a company resident in

the Netherlands (such as the company) is subject to a withholding tax

imposed by the Netherlands at a rate of 15%, which is withheld on

the gross amount of the dividend. The term “dividends” within the

meaning of the Dutch Dividend Withholding Tax Act 1965 (Wet op

de Dividendbelasting 1965) includes, but is not limited to:

•distributions in cash or in kind, deemed and constructive

distributions and repayments of paid-in capital not recognized for

Dutch dividend withholding tax purposes

•liquidation proceeds, proceeds of redemption of ordinary shares, or,

generally, consideration for the repurchase of ordinary shares in

excess of the average paid-in capital of those ordinary shares

recognized for Dutch dividend withholding tax purposes

•the nominal value of ordinary shares issued to a holder or an

increase of the nominal value of ordinary shares, as the case may be,

to the extent that it does not appear that a contribution to the

capital recognized for Dutch dividend withholding tax purposes was

made or will be made

•partial repayment of paid-in capital, recognized for Dutch dividend

withholding tax purposes, if and to the extent that there are net

profits (zuivere winst), within the meaning of the Dutch Dividend

Withholding Tax Act 1965, unless the general meeting of

shareholders has resolved in advance to make such payment and

provided that the nominal value of the ordinary shares concerned

has been reduced by a corresponding amount by way of an

amendment of the article of association of the company

Under the Dutch Dividend Withholding Tax Act 1965, relief at source

applies to certain qualifying corporate holders of common shares if

such common shares are attributable to a business carried out in the

Netherlands, provided that such holder demonstrates that it is the

beneficial owner of the dividend. Relief at source also applies for

dividend distributions to certain qualifying corporate holders of

common shares resident in EU/EEA member states, and to certain

qualifying corporate holders of common shares resident in non-EU/EEA

states with which the Netherlands has concluded a tax treaty that

includes a dividend article, provided that such holder demonstrates

that it is the beneficial owner of the dividend unless such holder holds

the common shares of the company with the primary aim or one of the

primary aims to avoid the levy of Dutch dividend withholding tax from

another person and the shareholding is put in place without valid

commercial reasons that reflect economic reality.

Upon request and under certain conditions, certain qualifying non-

resident individual and corporate holders of common shares resident in

EU/EEA member states or in a qualifying non-EU/EEA state may be

eligible for a refund of Dutch dividend withholding tax to the extent

that the withholding tax levied is higher than the personal and

corporate income tax which would have been due if they were resident

in the Netherlands. However, this refund is not applicable when, based

on the US Tax Treaty, the Dutch dividend withholding tax can be fully

credited in the United States by the US holder.

Pursuant to the provisions of the US Tax Treaty, a reduced rate may be

applicable in respect of dividends paid by the company to a beneficial

owner holding directly 10% or more of the voting power of the

company, if such owner is a company resident in the United States (as

defined in the US Tax Treaty) and entitled to the benefits of the US Tax

Treaty.

Pursuant to Dutch anti-dividend stripping legislation, a holder of

common shares who is the recipient of dividends will in any case not be

considered the beneficial owner of the dividends if (i) as a consequence

of a combination of transactions, a person other than the recipient

benefits, in full or in part, directly or indirectly, from the dividends; (ii)

whereby such other person retains, directly or indirectly, an interest

similar to that in the common shares on which the dividends were paid;

and (iii) that other person is entitled to a credit, reduction or refund of

dividend withholding tax that is less than that of the recipient. To

further combat dividend stripping, the record date for dividend

entitlement with respect to listed shares has been codified in the Dutch

Dividend Withholding Tax Act 1965 and the burden of proof lies with

the taxpayer that wants to credit or claim a refund of Dutch dividend

withholding tax.

Dividends paid to qualifying exempt US pension trusts and qualifying

exempt US organizations are, under certain conditions, exempt from

Dutch withholding tax under the US Tax Treaty. Qualifying exempt US

pension trusts normally remain subject to withholding at the rate of

15% and are required to file for a refund of the tax withheld. Only if

certain conditions are fulfilled, such pension trusts may be eligible for

relief at source upon payment of the dividend. However, for qualifying

exempt US organizations no relief at source upon payment of the

dividend is currently available under the US Tax Treaty; such exempt US

organizations should apply for a refund of the 15% withholding tax

withheld.


	188

Further, under certain circumstances, certain exempt organizations (e.g.

pension funds) may be eligible for a refund of Dutch withholding tax

upon their request pursuant to Dutch tax law. Provided certain

conditions are met, such tax exempt (US) organizations may be eligible

for relief at source upon request of a qualification decision

(kwalificatiebeschikking). The paying agent should in such case be

notified.

In addition to Dutch dividend withholding tax, Dutch conditional

withholding tax may apply at a statutory rate of 25.8% on dividends to

certain affiliated corporate holders in abuse situations. The term

“dividends” for Dutch conditional withholding tax purposes is equal to

the term “dividends” for Dutch dividend withholding tax purposes. A

corporate holder is generally considered to be affiliated (gelieerd) to

the company for the purpose of the Dutch Withholding Tax Act 2021

(Wet bronbelasting 2021) i) if the corporate shareholder alone or

together with other entities that belong to a qualifying unit

(kwalificerende eenheid) hold a qualifying interest in the company, or

ii) if the company alone or together with other entities that belong to

the qualifying unit hold a qualifying interest in the shareholder. There

is a qualifying unit if the entities act jointly with the main purpose or

one of the main purposes to avoid the levying of withholding. For the

purpose of the Dutch Withholding Tax Act 2021 a qualifying interest is

an interest in an entity enabling that decisions can be influenced in

such a way that the activities of that entity can be determined.

These abuse situations include and are not limited to i) a corporate

holder that is considered to be resident in a jurisdiction that is listed in

the yearly updated Dutch Regulation on low-taxing states and non-

cooperative jurisdictions for tax purposes (Regeling laagbelastende

staten en niet-coöperatieve rechtsgebieden voor belastingdoeleinden),

or ii) a corporate holder that holds the shares through a permanent

establishment to which the shares are attributable located in a

jurisdiction as defined under i), or iii) a corporate holder that is

considered a (reverse) hybrid mismatch for Dutch conditional

withholding tax purposes. Specific rules and exceptions apply with

respect to payments to hybrid entities.

Income and capital gains

Income and capital gains derived from the common shares by a non-

resident individual or non-resident corporate shareholder are generally

not subject to Dutch income or corporation tax, unless (i) such income

and gains are attributable to a (deemed) permanent establishment or

(deemed) permanent representative of the shareholder in the

Netherlands; or (ii) the shareholder is entitled to a share in the profits

of an enterprise or (in the case of a non-resident corporate shareholder

only) a co-entitlement to the net worth of an enterprise that is

effectively managed in the Netherlands (other than by way of

securities) and to which enterprise the common shares are attributable;

or (iii) such income and capital gains are derived from a direct, indirect

or deemed substantial participation in the share capital of the

company, and, in the case of a non-resident individual shareholder,

such substantial participation not being a business asset, and, in the

case of a non-resident corporate shareholder only, it is being held with

the primary aim or one of the primary aims to avoid the levy of income

tax from another person and is put in place without valid commercial

reasons that reflect economic reality; or (iv) in the case of a non-

resident corporate shareholder, such shareholder is a resident of Aruba,

Curacao or Saint Martin with a permanent establishment or permanent

representative in Bonaire, Eustatius or Saba to which the common

shares are attributable and certain conditions are met; or (v) in the case

of a non-resident individual, such individual derives income or capital

gains from the common shares that are taxable as benefits from

‘miscellaneous activities’ in the Netherlands (resultaat uit overige

werkzaamheden, as defined in the Dutch Income Tax Act 2001(Wet

inkomstenbelasting 2001)), which includes the performance of activities

with respect to the common shares that exceed regular portfolio

management.

In general, a holder of common shares has a substantial participation if

he holds either directly or indirectly and either independently or jointly

with his partner (as defined in the Dutch Income Tax Act 2001), the

ownership of, or certain other rights over, at least 5% of the total

issued share capital or total issued particular class of shares of the

company or rights to acquire direct or indirect shares, whether or not

already issued, that represent at any time 5% or more of the total

issued capital (or the total issued particular class of shares) or the

ownership of certain profit participating certificates that relate to 5%

or more of the annual profit or to 5% or more of the liquidation

proceeds. A shareholder will also have a substantial participation in the

company if one or more of certain relatives of the shareholder hold a

substantial participation in the company. A deemed substantial

participation amongst others exists if (part of) a substantial

participation has been disposed of, or is deemed to have been disposed

of, on a nonrecognition basis.

Estate and gift taxes

No estate, inheritance or gift taxes are imposed by the Netherlands on

the transfer or deemed transfer of common shares by way of gift by or

on the death of a shareholder if, at the time of the death of the

shareholder or the gift of the common shares (as the case may be), such

shareholder is not a (deemed) resident of the Netherlands.

Inheritance or gift taxes (as the case may be) are due, however, if:

•such shareholder has Dutch nationality and has been a resident of

the Netherlands at any time during the 10 years preceding the time

of their death or gift

•such shareholder does not have Dutch nationality but has been a

resident of the Netherlands at any time during the 12 months

preceding the time of the gift (for Netherlands gift taxes only)

•in case of a gift of the shares under a condition precedent

(opschortende voorwaarde) by an individual who at the time of the

gift was not a (deemed) resident of the Netherlands, but such

individual is (deemed) resident of the Netherlands at the time of

fulfillment of the condition

Other taxes and duties

No Netherlands VAT and Netherlands registration tax, customs duty,

stamp duty or other similar documentary tax or duty will be payable by

a holder of common shares in connection with the holding or the

disposal of the ordinary shares.

As from January, 1 2025 a new qualification policy for foreign legal

forms took effect, which may be relevant for the qualification of holder

of shares as a transparent vehicle or as an entity from a Dutch tax

perspective. This new qualification policy consists of i) the

discontinuation of the Netherlands open limited partnership (open

commanditaire vennootschap), ii) changes to the definition of a mutual


	189

fund (fonds voor gemene rekening), iii) the enshrinement in law of the

legal comparison method, iv) a new Decree on the Comparison of

Foreign Legal Forms, and v) the introduction of a fixed and symmetrical

qualification method for non-comparable legal forms. Shareholders

that have a foreign legal form comparable to a Netherlands limited

partnership or mutual fund should confirm if their tax classification

(opaque or transparent) may have changed.

United States federal taxation

This section describes the material United States federal income tax

consequences to a US holder (as defined below) of owning common

shares. It applies only if the common shares are held as capital assets

for United States federal income tax purposes. This discussion addresses

only United States federal income taxation and does not discuss all of

the tax consequences that may be relevant to a US holder in light of its

individual circumstances, including foreign, state or local tax

consequences, estate and gift tax consequences, and tax consequences

arising under the Medicare contribution tax on net investment income

or the alternative minimum tax. This section does not apply to a

member of a special class of holders subject to special rules, including:

•a dealer in securities

•a trader in securities that elects to use a mark-to-market method of

accounting for securities holdings

•a tax-exempt organization

•a life insurance company

•a person that actually or constructively owns 10% or more of the

combined voting power of our voting stock or of the total value of

our stock

•a person that holds common shares as part of a straddle or a hedging

or conversion transaction

•a person that purchases or sells common shares as part of a wash sale

for tax purposes

•a person whose functional currency is not the US dollar

This section is based on the Internal Revenue Code of 1986, as

amended, its legislative history, existing and proposed regulations,

published rulings and court decisions, all as currently in effect, as well

as on the US Tax Treaty. These authorities are subject to change,

possibly on a retroactive basis.

If an entity or arrangement that is treated as a partnership for United

States federal income tax purposes holds the common shares, the

United States federal income tax treatment of a partner will generally

depend on the status of the partner and the tax treatment of the

partnership. A partner in a partnership holding the common shares

should consult its tax advisor with regard to the United States federal

income tax treatment of an investment in the common shares.

A US holder is defined as a beneficial owner of common shares that is,

for US federal income tax purposes:

•a citizen or resident of the US

•a domestic corporation

•an estate whose income is subject to US federal income tax

regardless of its source

•a trust if a United States court can exercise primary supervision over

the trust’s administration and one or more United States persons are

authorized to control all substantial decisions of the trust

A US holder should consult its own tax advisor regarding the United

States federal, state and local tax consequences of owning and

disposing of common shares in its particular circumstances.

The tax treatment of common shares will depend in part on whether or

not we are classified as a passive foreign investment company, or PFIC,

for US federal income tax purposes. Except as discussed below under

“—PFIC Rules”, this discussion assumes that we are not classified as a

PFIC for US federal income tax purposes.

Taxation of distributions

Under the United States federal income tax laws, the gross amount of

any distribution paid in stock or cash out of our current or accumulated

earnings and profits (as determined for United States federal income

tax purposes), other than certain pro-rata distributions of our common

shares, will be treated as a dividend that is subject to United States

federal income taxation. For a non-corporate US holder, dividends paid

that constitute qualified dividend income will be taxable at the

preferential rates applicable to long-term capital gains, provided that

the non-corporate US holder holds the common shares for more than

60 days during the 121-day period beginning 60 days before the ex-

dividend date and provided it meets other holding period

requirements. Dividends paid with respect to the common shares

generally will be qualified dividend income provided that, in the year

in which the dividend is received, the common shares are readily

tradable on an established securities market in the United States. Our

common shares are listed on the New York Stock Exchange and we

therefore expect that dividends will be qualified dividend income. A US

holder must include any Dutch tax withheld from the dividend

payment in this gross amount even though it does not in fact receive it.

The dividend is taxable to a US holder when it receives the dividend,

actually or constructively. The dividend will not be eligible for the

dividends-received deduction generally allowed to United States

corporations in respect of dividends received from other United States

corporations. For dividend payments made in euro, the amount of the

dividend distribution that a US holder must include in its income will be

the US dollar value of the euro payments made, determined at the spot

euro/US dollar rate on the date the dividend is distributed, regardless

of whether the payment is in fact converted into US dollars. Generally,

any gain or loss resulting from currency exchange fluctuations during

the period from the date the dividend is distributed to the date a US

holder converts the payment into US dollars will be treated as ordinary

income or loss and will not be eligible for the special tax rate applicable

to qualified dividend income. The gain or loss generally will be income

or loss from sources within the United States for foreign tax credit

limitation purposes. Distributions in excess of current and accumulated

earnings and profits, as determined for United States federal income

tax purposes, will be treated as a non-taxable return of capital to the

extent of a US holder’s basis in the common shares and thereafter as

capital gain. However, we do not expect to calculate earnings and

profits in accordance with United States federal income tax principles.

Accordingly, US holders should expect to generally treat distributions

we make as dividends.

Subject to certain limitations (including, but not limited to, those

described in this paragraph), the Dutch tax withheld in accordance with

the US Tax Treaty and paid over to the Netherlands will be creditable

or deductible against a US holder’s United States federal income tax

liability. However, the Dutch withholding tax may not be creditable or

deductible to the extent that we reduce (as described above under

“Dutch taxation - Dividend withholding tax”) the amount of

withholding tax paid over to the Netherlands by crediting taxes


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withheld from certain dividends received by us. In addition, special

rules apply in determining the foreign tax credit limitation with respect

to dividends that are subject to the preferential tax rates. To the extent

reduction or refund of the tax withheld is available under Dutch law, or

under the US Tax Treaty, the amount of tax withheld that could have

been reduced or that is refundable will not be eligible for credit

against United States federal income tax liability. Dividends will

generally be income from sources outside the United States, and will

generally be “passive” income for purposes of computing the foreign

tax credit allowable to the holder. In addition, to the extent an amount

of Dutch tax withheld is contingent on the availability of a credit

against the amount of income tax owed to another country, that

amount of Dutch tax withheld will not be eligible for a credit against

the US holder’s United States federal income tax liability.

Taxation of capital gains

A US holder that sells or otherwise disposes of its common shares will

recognize capital gain or loss for United States federal income tax

purposes equal to the difference between the US dollar value of the

amount that it realizes and its tax basis, determined in US dollars, in its

common shares. Capital gain of a non-corporate US holder is generally

taxed at preferential rates where the property is held more than one

year. The gain or loss will generally be income or loss from sources

within the United States for foreign tax credit limitation purposes.

Passive Foreign Investment Company Rules

We believe that the common shares should currently not be treated as

stock of a PFIC for United States federal income tax purposes, and we

do not expect to become a PFIC in the foreseeable future. However,

this conclusion is a factual determination that is made annually and

thus may be subject to change. It is therefore possible that we could

become a PFIC in a future taxable year. If we are treated as a PFIC, gain

realized on the sale or other disposition of the common shares would

in general not be treated as capital gain. Instead, unless a US holder

elects to be taxed annually on a mark-to-market basis with respect to

the common shares, a US holder would generally be treated as if it had

realized such gain and certain “excess distributions” ratably over the

holding period for the common shares and would be taxed at the

highest tax rate in effect for each such year to which the gain was

allocated, in addition to which an interest charge in respect of the tax

attributable to each such year would apply. Any dividends received by a

US holder will not be eligible for the special tax rates applicable to

qualified dividend income if we are treated as a PFIC with respect to

such US holder either in the taxable year of the distribution or the

preceding taxable year, but instead will be taxable at rates applicable

to ordinary income and subject to the excess distribution regime

described above.


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Investor information

Share information

Philips Group

Share information at year-end 2025


Share listings	Euronext Amsterdam, New York Stock Exchange
Ticker code	PHIA, PHG
No. of shares issued	963 million
No. of shares issued and outstanding	951 million
Market capitalization	EUR 22 billion
Industry classification
MSCI: Health Care Equipment	35101010
ICB: Medical Equipment	4535
Members of indices	AEX, NYSE, STOXX Europe 600 Healthcare, MSCI Europe Health Care

The following information is based on a shareholder base analysis

carried out for investor relations purposes by an independent provider

in December 2025.

Philips Group

Shareholders by region at year-end 1


	2025
United States	42%
Netherlands	19%
United Kingdom	10%
Switzerland	3%
Rest of Europe	7%
Retail and Other ²	19%

1Approximate split based on shareholders identified.

2No geography identified for Retail; Other represents other smaller geographies

and unidentified shareholders.

Philips Group

Shareholders by style at year-end 1


	2025
Value	53%
Index	13%
GARP	11%
Growth	6%
Retail	9%
Other	7%
Hedge Fund	1%

1Approximate split based on shareholders identified.

Financial calendar

The financial calendar for the current year, which contains the

publication dates of significant financial communications, is published

on the company’s website.

2026 Annual General Meeting of Shareholders

Upon convocation of the Annual General Meeting of Shareholders, to

be held on May 8, 2026, the agenda with explanatory notes will be

published on the company’s website.

For the 2026 Annual General Meeting of Shareholders, a record date of

April 10, 2026 will apply. Those persons who, on that date, hold shares

in the company, and are registered as such in one of the registers to be

designated by the Board of Management, will be entitled to participate

in, and vote at, the meeting.


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Investor contact

Shareholder services

Shareholders and other interested parties can make inquiries about the

Annual Report 2025 to:

Royal Philips

Annual Report Office

Philips Center

Prinses Irenestraat 59

1077 WV Amsterdam, The Netherlands

Email: annual.report@philips.com

The Annual Report on Form 20-F is filed electronically with the US

Securities and Exchange Commission.

Holders of shares listed on Euronext Amsterdam

Communications concerning share transfers, share certificates,

dividends and change of address should be directed to:

ABN AMRO Bank N.V.

Department Equity Capital Markets/Corporate Broking and Issuer

Services HQ7212

Gustav Mahlerlaan 10

1082 PP Amsterdam, The Netherlands

Telephone: +31-20-628-6070

Email: corporate.broking@nl.abnamro.com

Holders of New York Registry shares

Communications concerning share transfers, share certificates,

dividends and change of address should be directed to:

Deutsche Bank Trust Company Americas

C/O Equiniti Trust Company LLC

Peck Slip Station, PO Box 2050, New York, NY 10272-2050

Telephone (toll-free US): +1-866-706-8374

Telephone (outside of US): +1-718-921-8137

Website: www.equiniti.com/us/ast-access

Email: adr@equiniti.com

International direct investment program

Royal Philips offers a Dividend Reinvestment and Direct Stock Purchase

Plan designed for the US market. This program provides existing

shareholders and interested investors with an economical and

convenient way to purchase and sell Philips New York Registry shares

(listed at the New York Stock Exchange) and to reinvest cash dividends.

Deutsche Bank (the registrar of Philips NY Registry shares) has been

authorized to implement and administer both plans for registered

shareholders of and new investors in Philips NY Registry shares. Philips

does not administer or sponsor the program and assumes no obligation

or liability for the operation of the plan. For further information on

this program and for enrollment forms, contact:

Deutsche Bank Trust Company Americas

C/O Equiniti Trust Company LLC

PO Box 10027, Newark, NJ 07101

Telephone (toll free US): +1-866-706-8374

Telephone (outside of US): +1-718-921-8137

Website: www.equiniti.com/us/ast-access

Email: adr@equiniti.com

Analysts’ coverage

Royal Philips is covered by approximately 20 analysts. For a list of our

current analysts, please refer to the company’s website.

How to reach us

Investor Relations

Royal Philips

Philips Center

Prinses Irenestraat 59

1077 WV Amsterdam, The Netherlands

Telephone: +31-20-59 77222

Website: www.philips.com/investor

Email: investor.relations@philips.com

Sustainability

Royal Philips

High Tech Campus 34, 4th floor

5656 AE Eindhoven, The Netherlands

Website: www.philips.com/sustainability

Email: philips.sustainability@philips.com

Media and press

Royal Philips

Philips Center

Prinses Irenestraat 59

1077 WV Amsterdam, The Netherlands

Email: group.communications@philips.com

For media contacts please refer to the company’s website.

Registered address

High Tech Campus 52, 5656 AG Eindhoven, The Netherlands


	193

Definitions and abbreviations

Actionable

In the context of the Respironics recall, actionable registrations are

those that contain the necessary information needed to complete the

remediation and are not awaiting further information, including from

patient registrants.

Artificial intelligence (AI)

While recognizing that Philips must abide by definitions of AI set by

applicable regulations in different regions in the world, Philips applies

the AI definition from the Organization for Economic Cooperation and

Development (OECD): “An AI system is a machine-based system that,

for explicit or implicit objectives, infers, from the input it receives, how

to generate outputs such as predictions, content, recommendations, or

decisions that can influence physical or virtual environments. Different

AI systems vary in their levels of autonomy and adaptiveness after

deployment.”

Biodiversity and ecosystem services (BES)

Biodiversity is the variability among living organisms from all sources

including terrestrial, marine and other aquatic ecosystems and the

ecological complexes of which they are part. This includes diversity

within species, between species and of ecosystems. Ecosystem services

refers to the contributions of ecosystems to the benefits that are used

in economic and other human activity.

Biome

Global-scale zones, generally defined by the type of plant life that they

support in response to average rainfall and temperature patterns, e.g.,

tundra, coral reefs or savannas.

Brominated flame retardants (BFR)

Brominated flame retardants are a group of chemicals that have an

inhibitory effect on the ignition of combustible organic materials. Of

the commercialized chemical flame retardants, the brominated variety

are most widely used.

Business/Business Unit

In the Philips operating model, our three operating segments are made

up of six Businesses, which are in turn comprised of 15 Business Units.

See also the entry under Segment.

CO2-equivalent

CO2-equivalent or carbon dioxide equivalent is a quantity that

describes, for a given mixture and amount of greenhouse gas, the

amount of CO2 that would have the same global warming potential

(GWP), when measured over a specified timescale (generally 100 years).

Circular economy

A circular economy aims to decouple economic growth from the

consumption of natural resources by optimizing their use, eliminating

waste and pollution, and circulating products and materials for as long

as possible, while giving natural systems the opportunity to regenerate

themselves.

Circular innovation

Innovation with the objective to create a product, service or solution

contributing to circular practices.

Circular materials management

Circular materials management is a KPI for promoting an increase in

the proportion of waste treated using waste management hierarchy

levels that are circular: prevention, re-use, and recycling. Circular

materials management percentage is the proportion of materials

managed circularly in comparison to the total used materials baseline.

The total used materials baseline is the total of both circular and linear

waste, excluding linear disposal of waste that is required by law.

Circular materials management includes recycling, re-use, prevention

and other recovery (e.g., repurposing). It excludes all linear disposal,

which is classified as waste to energy, incineration and landfill.

Circular revenues

Circular revenues are revenues from Philips products, services and

solutions that contribute to circular practices. Circular revenues can be

expressed as percentage of the total Philips revenues.

Closing the loop / reclaimed equipment