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| 1 |

As filed with the Securities and Exchange Commission on February 19, 2026

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
Form 20-F
_____________________________________
(Mark one)
o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .
For the transition period from ___________________________ to ___________________________
Commission file number 001-05146-01

| 2 |

KONINKLIJKE PHILIPS NV
(Exact name of Registrant as specified in its charter)
ROYAL PHILIPS
(Translation of Registrant's name into English)
The Netherlands
(Jurisdiction of incorporation or organization)
Prinses Irenestraat 59, 1077 WV Amsterdam, The Netherlands
(Address of principal executive offices)
Marnix van Ginneken, Chief ESG & Legal Officer
+31 20 59 77232, marnix.van.ginneken@philips.com, Prinses Irenestraat 59, 1077 WV Amsterdam, The Netherlands
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Shares - par value EURO (EUR) 0.20 per share | PHG | New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.

| 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. x Yes 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. x Yes 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

| 4 |

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’s executive officers during the relevant
recovery period pursuant to §240.10D-1(b). o
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP o |  | International Financial Reporting Standards as issued by the International Accounting Standards Board x |  | Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. o Item 17 o Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

| 5 |

Contents

Introduction | 6
Forward-looking statements | 7
Form 20-F cross reference table | 8

Our management | 13
Message from the CEO | 14
Members of the Board of Management and Executive Committee | 16

Strategy | 18
Strategic focus | 19
Business | 21
Employment | 31
Philips Foundation | 32

Financial performance | 33
Performance summary | 34
Results of operations | 36
Financial position | 41
Cash flow and liquidity | 44

Governance | 47
Governance | 48

Supervisory Board | 64
Letter from the Chairman of the Supervisory Board | 65
Members of the Supervisory Board | 66
Supervisory Board report | 68
Remuneration Report 2025 | 76

Group financial statements | 92
Controls and Procedures | 93
Independent auditor’s report - PricewaterhouseCoopers Accountants N.V. (PCAOB ID: 1395) | 94
Independent auditor’s report - EY Accountants B.V. (PCAOB ID: 1396) | 97
Consolidated statements of income | 98
Consolidated statements of comprehensive income | 98
Consolidated balance sheets | 99
Consolidated statements of cash flows | 100
Consolidated statements of changes in equity | 101
Notes to the Consolidated financial statements | 102

Further information | 164
Other Corporate governance | 165
Risk factors | 170
Reconciliation of non-IFRS information | 178
Other key performance indicators | 186
Taxation | 187
Investor information | 191
Definitions and abbreviations | 193
Exhibits | 196

| 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 informatio n.
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

| 9 |

Item | Form 20-F caption | Location in this document
| C Organizational structure | Our Business structure
|  | Note 5 – Interests in entities
|  | Index of exhibits - Exhibit 8
| D Property, plant and equipment | Our Business structure – Central costs; Innovation and design
|  | Our Regions – 2025 developments North America; 2025 developments Greater China
|  | Note 2 – Information by segment and main country
|  | Note 3 – Discontinued operations and assets classified as held for sale - Assets classified as held for sale
|  | Note 10 – Property, plant and equipment
|  | Note 19 – Provisions - Environmental provisions
|  | Note 24 – Contingencies - Environmental remediation
4A | Unresolved staff comments | Not applicable
5 | Operating and financial review and prospects |
| A Operating results | Supply chain and procurement
|  | Performance Summary (excluding the information set forth under the subheading "Outlook")
|  | Factors impacting performance
|  | Results of operations
|  | Results of operations – Restructuring, acquisition-related charges and other items
|  | Acquisitions and divestments
|  | Other key performance indicators
|  | Note 1 – General information to the Consolidated financial statements - Foreign currency transactions: Foreign operations
|  | Note 3 – Discontinued operations and assets classified as held for sale
|  | Note 4 – Acquisitions and divestments
|  | Note 6 – Income from operations
|  | Note 7 – Financial income and expenses
|  | Note 8 – Income taxes - Deferred tax assets and liabilities
|  | Note 11 – Goodwill
|  | Note 12 – Intangible assets excluding goodwill
|  | Note 20 – Post-employment benefits
|  | Note 24 – Contingencies
|  | Note 29 – Details of treasury and other financial risks - Currency risk
|  | Note 30 – Subsequent events

Item | Form 20-F caption | Location in this document
| B Liquidity and capital resources | Our Regions – 2025 developments North America
|  | Financial position – Debt position
|  | Financial performance – Supply chain resilience
|  | Cash flows
|  | Liquidity position
|  | Cash obligations
|  | Note 17 – Equity
|  | Note 18 – Debt
|  | Note 23 – Cash flow statement supplementary information
|  | Note 29 – Details of treasury and other financial risks
| C Research and development, patents and licenses, etc. | Strategic focus
|  | Business – Innovation & Design; IP Royalties
|  | Business – 2025 developments North America; 2025 developments Greater China
|  | Results of operations – Research and development expenses
|  | Financial performance – Supply chain resilience
|  | Cash flows
| D Trend information | Supply chain and procurement
|  | Performance summary – The year 2025
|  | Factors impacting performance
|  | Reconciliation of non-IFRS information
|  | Other Key Performance Indicators
| E Critical accounting estimates | Not applicable
6 | Directors, senior management and employees |
| A Directors and senior management | Members of the Board of Management and Executive Committee – Members of the Board of Management
|  | Members of the Supervisory Board
|  | Board of Management and Executive Committee – Appointment and composition
|  | Supervisory Board – Appointment and composition

| 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)
|  | S tichting 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

| 13 |

Our management

| 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 i mprovements. 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 improvement s, 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, r educing
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
hav e 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 s trengthened 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. |  |

| 18 |

Strategy

| 19 |

Strategic focus
In 2023, Philips set out with a three-year plan –
focused growth, scalable patient- and people-centric
innovation, and reliable execution supported by our
culture of impact with care – to create value with
sustainable impact.
We had strengths to build on, including a large
installed base, a broad network of partnerships across
the globe, and a portfolio of innovations in
hardware, software, AI and services, supporting care
in the hospital and in the home. We have simplified
our operating model, and focused our efforts and
resources on fewer projects offering greater scale
and impact. And we have built real momentum for
the next three years and beyond.
At Philips, our purpose is to improve people’s health and well-being through meaningful innovation. As such, we see huge opportunities to make a
difference through innovation, design, and sustainability – partnering with our healthcare customers to increase productivity and deliver better care for
more people through our innovation platforms of monitoring, imaging, interventional and healthcare informatics. And, empowering more people to take
care of their health and well-being through our personal health propositions.

| 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
1 Industry 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
| Businesses 1: •Image Guided Therapy #1 •Precision Diagnosis #1 in cardiovascular ultrasound #3 in diagnostic imaging |  |  |  | Businesses 1: •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 Units 1: •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 & Treatmen t
Total sales by Business

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

1 o f which Magnetic Resonance Imaging 35%, Ultrasound 32%, Computed
Tomography 20%, Diagnostic X-ray 9%, other 5%
2 of 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. |

1 Helium-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 development s: Diagnosis & Treatment
•Philips unveiled its latest innovations in helium-free 3.0T MRI 1,
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%

1 of which Hospital Patient Monitoring 78%, Ambulatory Monitoring &
Diagnostics 13%, Emergency Care 8%
2 of 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
powered by AI, and digital parental and women’s health solutions
(Pregnancy+ and Baby+ apps).
Personal Health
Total sales by Business

| 2025
Personal Health 1 | 100%

1 o f 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. |

| 27 |

2025 developments: Personal Health
Philips launched the i9000 Prestige Ultra electric
shaver range, powered by AI and tailored to user
preferences, and it was named a Time Magazine
‘Best Invention of 2025.’ During China’s 618 festival,
Philips ranked No. 1 on JD.com in male grooming
sales (and in the electric toothbrush category).
Philips launched Lumea IPL in the US, bringing the
world’s No. 1 Intense Pulsed Light hair removal
brand to the market. The launch has seen an
encouraging start with strong consumer interest.
Philips introduced its Avent Hands-Free Breast
Pump, leveraging 40 years of breastfeeding research
to design a comfortable, hands-free pump that
imitates the baby's drinking rhythm for effective
pumping.
Philips Sonicare 5500 and 7100 secured the top
positions in an independent comparison by German
consumer protection organization Stiftung
Warentest, receiving high scores for cleaning
performance.

| 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. I P&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%

1 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.
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.

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Philips Foundation
Stichting Philips Foundation, an independent foundation organized
under Dutch law, is a registered charity established in 2014. In 2025,
Royal Philips supported Philips Foundation with a contribution of EUR
6.7 million and by providing dedicated staff capacity, as well as the
expert assistance of skilled volunteers in the execution of Philips
Foundation’s initiatives.
Philips Foundation’s mission is to enable access to quality healthcare for
underserved communities through meaningful innovation, strategic
partnerships, and catalytic funding. It does this through the provision
and application of Philips’ healthcare expertise, innovation power,
talent and resources, as well as through financial support. Together
with key partners around the globe (e.g., nonprofit organizations,
ventures, and other like-minded organizations), Philips Foundation
seeks to identify challenges where a combination of healthcare
technology expertise and partner experience can be used to create
meaningful solutions that have a positive impact on people’s lives.
Philips Foundation operates along a continuum of capital, from grant-
based projects to impact investments. Grants are typically used to test
and strengthen new healthcare models in underserved settings, while
impact investments, through its impact investments entity, are used
when solutions have proven their value and show potential to scale
sustainably.

| 33 |

Financial
performance

| 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

1 Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to
Reconciliation of non-IFRS information.
2 Shareholders in this table refers to shareholders of Koninklijke Philips N.V. Includes the effect of the share dividend with
respect to 2024 for 2024.

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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. N orth America led with
robust growth, while China faced challenges from subdued consumer
sentiment. E urope and other growth mark ets 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
agi lity 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%

1 Non-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 in 2024. 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%

1 Non-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%

1 Non-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, c ompared 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.

| 40 |

Net income and earnings per share
Net income amounted to EUR 897 million in 2025, an increase of EUR
1,595 million compared with a loss of EUR (698) million in 2024, mainly
driven by higher income from operations as previously explained, lower
tax income tax charges, lower impairments in results of associates, and
lower financial expenses. Net income is not allocated to segments, as
certain income and expense line items are monitored on a centralized
basis. Income from continuing operations attributable to shareholders
per common share (in EUR) - diluted, was EUR 0.93 in 2025, compared
with EUR (0.88), including the effect of the share dividend with respect
to 2024 of EUR 0.02, for 2024.
Non-controlling interests
Net income attributable to non-controlling interests decreased from
EUR 3 million in 2024 to EUR 1 million in 2025.
*Non-IFRS financial measure. For the definition and reconciliation of the most
directly comparable IFRS measure, refer to Reconciliation of non-IFRS information.

| 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.
I n 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 decrease d by EUR 1,049 million to EUR
10,957 million at year-end. The decrease was mainly due to currency
translation reduction s 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 mill ion, partly
offset by the net income attributable to shareholders of EUR 895
million.
In 2024, shareholders’ equity decrease d 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 gain s 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

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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

1 First, 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.
2 Philips did not cancel shares in 2025.
3 In 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.
4 As described above, under its current repurchase arrangements, Philips will only acquire shares via forward contracts for future delivery of shares.
5 All shares will be purchased through publicly announced plans or programs.
6 Calculated considering the present value of the forward purchase contract obligations.

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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)

1 Philips 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.

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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
C ontractual 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

1 Amounts in this table are undiscounted
2 This 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.
3 Purchase 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.

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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

1 In cash or shares at the election of shareholder
2 In 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.

| 47 |

Governance

| 48 |

Governance
This section describ es 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

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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.

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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

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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

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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

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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 p atient 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

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I n 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 contro l. 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

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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.
1 Compared 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

1 Includes 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 CO 2-e emissions and remain carbon
neutral in our own operations 1
2 Compared to the 2020 baseline

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•42% reduction in Scope 3 CO 2-e emissions 2
•net zero by 2045
•reduce virgin non-renewable materials use and restore land
Governance
•ambitions embedded in design, business models, AI and operations
•EcoDesign applied to new product introductions
•regulatory compliance
Nothing in our ESG commitments or other related statements in respect
of our 2030 Impact Ambitions should be read or construed to represent
or imply a guarantee or any other legally enforceable obligation vis-à-
vis our stakeholders. It is furthermore noted that our social and
environmental efforts and our globally applying aspirational ambitions,
goals and targets, including but not limited to those related to
diversity, inclusion and well-being, are subject to our compliance with
local rules and regulations, some of which may conflict across
jurisdictions.

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Risk management and internal control
Risk related to our strategy
Philips’ exposure to risks is directly impacted by our strategy, as shown in the accompanying table. A more detailed description of the material risks can
be found in Risk factors. Philips presents the risks within each category in order of the current view of their expected significance. 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 may ultimately prove to have more
significant adverse consequences than the risk factors we have listed.

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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 ther eto.
•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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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 Commissi on 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.

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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.

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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 fre e 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.

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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 | 1957 | 1964 | 1957 | 1955 | 1969 | 1953 | 1966 | 1972 | 1962
Gender | Male | Male | Female | Female | Male | Male | Female | Male | Male | Female | Male | Male
Nationality | Dutch | Belgian | Singaporean | British/Irish | American | Austrian | American | 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 | n/a | n/a
End of current term | 2028 | 2026 | 2029 | 2027 | 2026 | 2028 | 2029 | 2026 | 2025 | 2026 | 2028 | 2029
Independent | l | l | l | l | l | l | l | l | l | l |  | l
Committee memberships ¹ | RC & CGNSC | RC & CGNSC & QRC* | AC | AC | QRC | AC & QRC | CGNSC | RC | QRC | AC & RC | CGNSC | QRC
Attendance at Supervisory Board meetings | 8/8 (100%) | 8/8 (100%) | 8/8 (100%) | 8/8 (100%) | 7/8 (87,5%) | 8/8 (100%) | 8/8 (100%) | 8/8 (100%) | 4/8 (50%)** | 8/8 (100%) | 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%) | 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 | l | l | l | l | l | l | l | l | l | l | l | l
International business | l | l | l | l | l | l | l | l | l | l | l | l
ESG and sustainability | l |  |  |  |  | l | l |  |  | l |  | l
(Consumer) health and medical technology | l | l |  | l | l | l |  |  | l |  |  | l
Patient safety, quality and regulatory and product development |  | l |  |  | l | l |  |  | l |  |  | l
Finance and accounting | l | l | l | l | l | l | l | l | l | l | l | l
Human resources | l | l | l |  | l | l | l | l | l | l | l | l
Manufacturing and supply chain | l | l |  | l |  | l | l |  |  |  | l | l
Information technology and digital | l | l | l | l | l | l | l | l |  | l |  | l
Marketing | l | l |  |  |  | l | l | l | l | l |  | l
Governmental and public affairs | l | l | l | l | l | l | l | l |  | l | l | l

1 CGNSC: 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.

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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).

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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

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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 syst em for compliance with export
controls and inter national 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

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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 q uality- 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 q uality and regulatory key
performance indicators, showing the trend of performance. The
Committee also reviewed the key performance indicators for 2026.

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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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Introduction
In this Remuneration Report, the Supervisory Board provides a
comprehensive overview, in accordance with article 2:135b of the
Dutch Civil Code, of the remuneration paid and owed to the individual
members of the Board of Management and the Supervisory Board,
respectively, in the financial year 2025. The report will also be
published as a stand-alone document on the company’s website after
the AGM 2026, the agenda of which will include an advisory vote on
this Remuneration Report.
Board of Management
Summary of 2025 Remuneration Policy
The Remuneration Policy for the Board of Management (BoM), which
includes a Long-Term Incentive plan, was adopted at the AGM 2024
with a majority of 96.07% of the votes cast.
The objectives of the Remuneration Policy for members of the Board of
Management are in line with those for Philips executives throughout
the Philips Group: to focus them on pursuing our purpose to improve
people’s health and well-being through meaningful innovation, and on
delivering on our strategy, as well as to motivate and retain them to
create superior, long-term stakeholder value.

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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 growth 1, Adjusted EBITA 1 and
free cash flow 1. 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
Threshold performance | Target performance | Maximum performance | Realized performance | Resulting payout as % of target
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%

1 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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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.
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.
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.
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.
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.
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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Overall, this leads to the following total Annual Incentive realization:
Annual Incentive realization 2025
in EUR unless otherwise stated

| Annual incentive opportunity | Realized annual incentive
| Target as a % of base compensation | Target Annual Incentive | Financial performance (weighted pay-out %) | Individual performance (weighted pay-out %) | Payout as % of target Annual Incentive ¹ | Realized annual incentive
Roy Jakobs | 100% | 1,300,000 | 80.9% | 34.5% | 115.4% | 1,499,680
Charlotte Hanneman | 80% | 580,000 | 80.9% | 34.5% | 115.4% | 669,088
Marnix van Ginneken | 80% | 580,000 | 80.9% | 33.0% | 113.9% | 660,388

1 Note that figures may not add up due to rounding.
*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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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

1 Impact of variations of unhedged volatile currencies compared to the
performance period plan.
2 Impact 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 CO 2 -equivalent (in kilotonnes) in year 3 | 483 – 433 kilotonnes CO 2 | 372 kilotonnes CO 2 | Better than target range

1 Lives improved by Philips products, solutions and services and care to those in
underserved markets
2 Revenue from products, services and solutions contributing to circularity (e.g.,
optimizing and re-using materials)
3 Avoiding production of waste materials
4 Taking 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 CO 2-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

1 Lives 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%
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%
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%
2024 |  | 2,065,545 | 1,448,496 | 2,536,794 | 438,847 | 72,211 | 181,186 | 6,743,078 | 41%-59%

1 Reference date for board membership is December 31, 2025.
2 Annual Base Compensation as incurred in the year, base compensation increases are reflected proportionally.
3 The 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.
4 The 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.
5 Fixed 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

n |  | Base compensation |  | n |  | Annual incentive |  | n |  | Performance shares |  | n |  | Pension |  | n |  | Other compensation

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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”.
1 For 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.
2 Based 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.
3 Median 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.
4 A 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.
5 Annual TSR was calculated in line with the method used for the LTI Plan (i.e., based on reinvested dividends and three-month averaging)
6 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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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

1 The shares vested in 2025 are subject to a two-year holding period.
2 Awarded 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

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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

1 As ratio of Annual Base Compensation
2 The 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.

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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

1 The 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.

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Group financial statements

Consolidated statements of income | 98
Consolidated statements of comprehensive income | 98
Consolidated balance sheets | 99
Consolidated statements of cash flows | 100
Consolidated statements of changes in equity | 101

Notes to the Consolidated financial statements | 102
1 General information to the Consolidated financial statements | 102
2 Information by segment and main country | 104
3 Discontinued operations and assets classified as held for sale | 107
4 Acquisitions and divestments | 108
5 Interests in entities | 108
6 Income from operations | 110
7 Financial income and expenses | 115
8 Income taxes | 115
9 Earnings per share | 120
10 Property, plant and equipment | 120
11 Goodwill | 124
12 Intangible assets excluding goodwill | 126
13 Other financial assets | 128
14 Other assets | 129
15 Inventories | 129
16 Receivables | 130
17 Equity | 131
18 Debt | 135
19 Provisions | 138
20 Post-employment benefits | 141
21 Accrued liabilities | 145
22 Other liabilities | 145
23 Cash flow statement supplementary information | 146
24 Contingencies | 147
25 Related-party transactions | 149
26 Share-based compensation | 150
27 Information on remuneration | 153
28 Fair value of financial assets and liabilities | 154
29 Details of treasury and other financial risks | 158
30 Subsequent events | 163

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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.

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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. 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 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
1 General 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.
2 Information 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 f or 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 c entral 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.
T ransactions 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

1 Includes 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 i n 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

1 Consists 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.

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3 Discontinued 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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4 Acquisitions 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
Grou p.
5 Interests 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

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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 compa nies 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

1 Application 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.

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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.
6 Income from operations

A c counting 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. D epending 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 s ale 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.

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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.
G overnment 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)

1 Includes 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.

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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

1 Includes 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

1 PricewaterhouseCoopers Accountants N.V.
2 EY Accountants B.V.
3 Also 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.

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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.
7 Financial 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 t o 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.
8 Income 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

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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)

1 Other 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)

1 Other 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.
9 Earnings 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

1 Shareholders refers to shareholders of Koninklijke Philips N.V.
2 The 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.
10 Property, 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

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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

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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.

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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

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11 Goodwill

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

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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 |

12 Intangible 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.
Ph ilips 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 |

13 Other 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.
14 Other 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.
15 Inventories

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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16 Receivables

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

1 Write-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).
17 Equity

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: E UR 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 distrib ution 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 inter ests 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

1 Shareholders in this table refers to shareholders of Koninklijke Philips N.V.
2 Includes deferred tax assets derecognized in the line below
18 Debt

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 o f EUR 260 million (nominal value) rel ating 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%

| 137 |

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

1 Adjustments 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.

| 138 |

19 Provisions

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. T he 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 |

20 Post-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.

P ost-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

1 Other 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 i s 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)

1 The 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 |

21 Accrued 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

22 Other 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 |

23 Cash 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 |  |  |

1 Besides non-cash, other includes interest paid on leases, which is part of cash flows from operating activities.
2 In this table, current portion of long-term debt is included in long-term debt (and excluded from short-term debt).
3 The forward contracts are related to the share buyback program and LTI plans.

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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) |  |  |

1 Besides non-cash, other includes interest paid on finance leases, which is part of cash flows from operating activities.
2 In this table, current portion of long-term debt is included in long-term debt (and excluded from short-term debt).
3 The forward contracts are related to the share buyback program and LTI plans.
4 Cash flow in 2024 includes withholding tax for share buyback amounting to EUR 41 million.
24 Contingencies

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.
25 Related-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.
26 Share-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

1 Dividend declared in 2025 on outstanding shares.
2 Adjusted 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 (a s 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

1 Dividend 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-denom inated listed shar e

| 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
Outstand ing optio ns 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.
27 Information 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

1 The Executive Committee consisted of 14 members as per December 31, 2025 (2024: 13 members; 2023: 13 members)
2 The annual incentives are related to the performance in the year reported which are paid out in the subsequent year.
3 Costs 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
4 Pension allowances are gross taxable allowances paid to the Executive Committee members in the Netherlands. These
allowances are part of the pension arrangement
5 The 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

1 Reference date for board membership is December 31, 2025
2 The total shares held by the members of the Board of Management is less than 1% of the company's issued share capital.
28 Fair 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.

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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.

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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) |

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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

1 Refer to Financial income and expenses for details.
2 Includes 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)

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29 Details 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

1 Amounts in this table are undiscounted
2 This 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.
3 Purchase 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

1 There 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.

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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.

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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-cu rrent 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

1 The 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.
30 Subsequent 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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Further information

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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, 202 5.
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 relev ant 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 c ommon 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 a nnual 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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The Agent has reimbursed USD 482,077 directly to Philips in the year
ended December 31, 2025. The Agent paid a total amount of USD
189,765 directly to third parties in the year ended December 31, 2025.
Category of expense paid directly to third parties in USD

| Amount in the year ended December 31, 2025
Reimbursement of Proxy Process Expenses | 63,174
Reimbursement of DTC lists | 600
Reimbursement of Scrip Dividend Expenses | 14,750
NYSE Listing Fee | 111,241
Expense paid directly to third parties | 189,765

Under certain circumstances, including removal of the Agent or
termination of the Program by Philips, Philips is required to repay the
Agent certain amounts reimbursed and/or expenses paid to or on
behalf of Philips.

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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
P hilips 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.

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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

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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 modification s
(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 Co ntingencies.

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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.

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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.

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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.

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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

| 182 |

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
2023 |  |  |  |  |
Net Income | (463) |  |  |  |
Discontinued operations, net of income taxes | 10 |  |  |  |
Income tax expense (benefit) | (73) |  |  |  |
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 consent decree charges | 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)
Depreciation, amortization and impairment of fixed assets and other intangible assets | 971 | 217 | 267 | 101 | 385
Adding back impairment of fixed assets included in Restructuring and acquisition-related charges and Other items | (47) | (4) | (14) | - | (30)
Adjusted EBITDA | 2,845 | 1,241 | 623 | 698 | 283

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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 shareholders 1 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

1 Shareholders refers to shareholders of Koninklijke Philips N.V. Includes the effect
of the share dividend with respect to 2024 for 2024 and 2023, respectively.
2 Includes deferred tax assets derecognized in the line below.

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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

1 All line items represent the average of each of the five quarters ending before
the relevant measurement date.
2 Receivable balances consist of (Non-)Current receivables, Other (non-)current
assets, (Non-)Current derivative financial assets, and Income tax receivable.
3 Payable 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.
4 Provisions 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%

1 Includes 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 CO 2-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.

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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

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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%

1 Approximate split based on shareholders identified.
2 No 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%

1 Approximate 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

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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.
CO 2-equivalent
CO 2-equivalent or carbon dioxide equivalent is a quantity that
describes, for a given mixture and amount of greenhouse gas, the
amount of CO 2 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
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’.
Dividend yield
The dividend yield is the annual dividend payment divided by Philips’
market capitalization. All references to dividend yield are as of
December 31 of the previous year.
EcoDesigned innovation and products
Innovation with the objective a product, service or solution that
complies with all applicable legal requirements, Philips policies, and all
stated EcoDesigned product requirements in our four focal areas:
energy, substances, circularity and packaging.
EcoHero product
An EcoHero product meets all EcoDesign requirements applicable to
new product introductions and outperforms in at least one of the focal
areas of EcoDesign, either compared to their predecessor or relevant
benchmarks, or meeting a set threshold, supported by a sustainability
claim. EcoHero revenues can be expressed as percentage of the total
Philips hardware revenues.

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Employee Engagement Index
The Employee Engagement Index (EEI), a value outcome measure as
part of the International Integrated Reporting Council framework, is
measured at Philips by the People Engagement Survey. The EEI is the
single measure of the overall level of employee engagement at Philips.
It is a combination of perceptions and attitudes related to employee
satisfaction, commitment and advocacy.
Energy-using products (EuP)
An energy-using product is a product that uses, generates, transfers or
measures energy (electricity, gas, fossil fuel). Examples include boilers,
computers, televisions, transformers, industrial fans and industrial
furnaces.
Functions
In the Philips operating model, Businesses are supported by lean
Functions. The Functions deliver cost-effective services, ensure legal and
regulatory requirements are deployed, and propose enterprise policies,
standards, guidance and infrastructure, as well as provide capabilities
and expertise (e.g., via centers of excellence).
Full-time equivalent employee (FTE)
Full-time equivalent is a way to measure a worker’s involvement in a
project. An FTE of 1.0 means that the person is equivalent to a full-time
worker, while an FTE of 0.5 signals that the worker works half-time.
Global Reporting Initiative (GRI)
The Global Reporting Initiative (GRI) is a network-based organization
that pioneered the world’s most widely used sustainability reporting
framework. GRI is committed to the framework’s continual
improvement and application worldwide. GRI’s core goals include the
mainstreaming of disclosure on environmental, social and governance
performance.
Green Innovation spend
Green Innovation com prises all R&D activities directly contributing to
the intended development and maintenance of EcoDesigned
innovation and circular innovation.
Green revenues
Green revenues are revenues from EcoDesigned products, refurbished
products, rentals, leases, as-a-service, upgrades and green services.
Green revenue can be expressed as percentage of the total Philips
revenues.
Growth geographies
Growth geographies consists of the grouping Growth, which comprises
the developing geographies Asia Pacific (excluding Japan, South Korea,
Australia and New Zealand), Latin America, Central and Eastern
Europe, Middle East and Turkey (excluding Israel), and Africa.
Hazardous substances
Hazardous substances are generally defined as substances posing
imminent and substantial danger to public health and welfare or the
environment.
Income from operations (EBIT)
Income from operations as reported on the IFRS consolidated
statement of income. The term EBIT (earnings before interest and tax)
has the same meaning as income from operations.
Income from continuing operations
Income from continuing operations as reported on the IFRS
consolidated statement of income, which is net income from
continuing operations, or net income excluding discontinued
operations.
Lean
The basic insight of Lean thinking is that if every person is trained to
identify wasted time and effort in their own job and to better work
together to improve processes by eliminating such waste, the resulting
enterprise will deliver more value at less expense.
Lives improved by Philips
To calculate how many lives we are improving, market intelligence and
statistical data on the number of people touched by the products
contributing to the social or ecological dimension over the lifetime of a
product are multiplied by the number of those products delivered in a
year. After elimination of double counts – multiple different product
touches per individual are only counted once – the number of lives
improved by our innovative solutions is calculated.
Locate, Evaluate, Assess, and Prepare (LEAP)
Integrated approach for the assessment of nature-related issues that
involves four phases to identify impact, dependencies, risks and
opportunities on nature.
Long-term strategic partnership
Multi-year contractual agreement that represents a partnership to
enable long-term collaboration.
Mature geographies
Mature geographies are the highly developed markets constituting
three geographic areas: Western Europe, North America, and Other
mature (including Japan, South Korea, Israel, Australia and New
Zealand).
Natural capital
The stock of renewable and non-renewable natural resources (e.g.,
plants, animals, air, water, soils, minerals) that combine to yield a flow
of benefits to people.
Nature
The natural world, with an emphasis on the diversity of living
organisms (including people) and their interactions among themselves
and with their environment.
Net Promoter Score
Net Promoter Score®, or NPS®, measures customer experience and
predicts business growth. NPS is calculated by taking the answer to a
key question on a 0-10 scale: How likely is it that you would
recommend {brand} to a friend or colleague?
Respondents are grouped as follows:
•Promoters (score 9-10) are loyal enthusiasts who will keep buying
and refer others, fueling growth.
•Passives (score 7-8) are satisfied but unenthusiastic customers who
are vulnerable to competitive offerings.
•Detractors (score 0-6) are unhappy customers who can damage the
brand and impede growth through negative word-of-mouth.

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Subtracting the percentage of detractors from the percentage of
promoters yields the Net Promoter Score, which can range from a low
of -100 (if every customer is a detractor) to a high of 100 (if every
customer is a promoter).
Operational carbon footprint
A carbon footprint is the total set of greenhouse gas emissions caused
by an organization, event, product or person; usually expressed in
kilotonnes CO 2-equivalent. Philips' operational carbon footprint is
calculated on a monthly basis and includes industrial sites
(manufacturing and assembly sites), non-industrial sites (offices,
warehouses, IT centers and R&D facilities), business travel (lease and
rental cars and airplane travel) and logistics (air, sea and road
transport).
Philips Lighting/Signify
References to 'Signify' in this Annual Report relate to Philips' former
Lighting segment (prior to deconsolidation as from the end of
November 2017 and when reported as discontinued operations), Philips
Lighting N.V. (before or after such deconsolidation) or Signify N.V.
(after its renaming in May 2018), as the context requires.
Polyvinyl chloride (PVC)
Polyvinyl chloride, better known as PVC or vinyl, is an inexpensive
plastic so versatile it has become pervasive in modern society.
REACH
Registration, Evaluation, Authorization and Restriction of Chemicals
(REACH; Regulation (EC) No 1907/2006) is an EU regulation that
addresses the production and use (e.g., in products) of chemical
substances, and their potential impact on both human health and the
environment. This regulation is covered in the Philips Regulated
Substances List.
Regulated Substance List
The Philips Regulated Substances List (RSL) combines legal, industry,
and voluntary Philips requirements regarding chemical substances used
in Philips products and their packaging, either on a homogenous
material level or present in the product as such. The RSL contains
restricted and declarable substances.
Respironics recall
The voluntary recall notification in the US and field safety notice
outside the US for certain sleep and respiratory care products initiated
by Philips Respironics in 2021.
Responsible Business Alliance (RBA)
The Responsible Business Alliance (formerly known as The Electronic
Industry Citizenship Coalition) was established in 2004 to promote a
common code of conduct for the electronics and information and
communications technology industry. RBA now includes more than 100
global companies and their suppliers.
Restriction on Hazardous Substances (RoHS)
The RoHS Directive prohibits all new electrical and electronic
equipment placed on the market in the European Economic Area from
containing lead, mercury, cadmium, hexavalent chromium, poly-
brominated biphenyls (PBB) or polybrominated diphenyl ethers (PBDE)
and four phthalates (DEHP, DBP, BBP and DiHP), except in certain
specific applications, in concentrations greater than the values decided
by the European Commission. These values have been established as
0.01% by weight per homogeneous material for cadmium and 0.1% for
the other nine substances. This regulation is covered in the Philips
Regulated Substances List.
Segment
The Philips operating model identifies three operating segments –
Diagnosis & Treatment, Connected Care and Personal Health –
comprised of Businesses and Business Units, as well as segment Other.
Other includes Innovation & Design, IP royalties, central costs, and
other small items. See also the entry under Business/Business Unit.
Solution
A combination of Philips (and third-party) systems, devices, software,
consumables and services, configured and delivered in a way to solve
customer (segment)-specific needs and challenges.
Sustainable Development Goals
The SDGs are a collection of 17 global goals set by the United Nations.
The broad goals are interrelated, though each has its own targets. The
SDGs cover a broad range of social and economic development issues.
These include poverty, hunger, health, education, climate change,
water, sanitation, energy, environment and social justice.
Sustainable innovation
Innovation with the objective to create a sustainable product, service,
or solution.
Sustainable product
Products and solutions that contribute to public health or to lowering
the environmental footprint. Philips has distinct categories of
sustainable products: healthy products (care, healthy living), circular
products, and EcoDesigned products.
VOCs
Volatile organic compounds (VOCs) are organic chemicals that have a
high vapor pressure at ordinary room temperature. Their high vapor
pressure results from a low boiling point, which causes large numbers
of molecules to evaporate or sublimate from the liquid or solid form of
the compound and enter the surrounding air, a trait known as
volatility.
Voluntary turnover
Voluntary turnover covers all employees who resigned of their own
volition.
Waste Electrical and Electronic Equipment (WEEE)
The WEEE Directive is the European Community directive on waste
electrical and electronic equipment, setting collection, recycling and
recovery targets for all types of electrical goods. The directive imposes
the responsibility for the disposal of waste electrical and electronic
equipment on the manufacturers of such equipment.
Weighted Average Statutory Income Tax Rate (WASTR)
The reconciliation of the effective tax rate is based on the applicable
statutory tax rate, which is a weighted average of all applicable
jurisdictions. This WASTR is the aggregation of the result before tax
multiplied by the applicable statutory tax rate without adjustment for
losses, divided by the group result before tax.

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Exhibits
Index of Exhibits

Exhibit 1 | English translation of the Articles of Association of the company (incorporated by reference to Exhibit 1 to the Annual Report on Form 20-F (File No. 001-05146-01) filed with the SEC on February 27, 2019)
Exhibit 2 (a) | Description of securities registered under Section 12 of the Exchange Act (Incorporated by reference to Exhibit 2 to the Annual Report on Form 20-F (File No. 001-05146-01) filed with the SEC on February 25, 2020)
Exhibit 2 (b) | Amended and Restated Trust Deed Related to a €10,000,000,000 Euro Medium Term Note Programme between the company and Citicorp Trustee Company Limited (as Trustee), dated March 8, 2024 Philips agrees to furnish copies of any or all other instruments under which the long-term debt securities of Philips or its subsidiaries are authorized to the SEC upon request.
Exhibit 4 (a) | Services contract between the company and R.W.O. Jakobs (Incorporated by reference to Exhibit 4 (a) to the Annual Report on Form 20-F (File No. 001-05146-01) filed with the SEC on February 21, 2023)
Exhibit 4 (b) | Services contract between the company and C.M. Hanneman (Incorporated by reference to Exhibit 4 (b) to the Annual Report on Form 20-F (File No. 001-05146-01) filed with the SEC on February 21, 2025)
Exhibit 4 (c) | Services contract between the company and M.J. van Ginneken
Exhibit 4 (d) | Global Philips Performance Share Plan applicable to the Board of Management of Koninklijke Philips N.V. (Incorporated by reference to Exhibit 4(d) to the Annual Report on Form 20-F (File No. 001-05146-01) filed with the SEC on February 23, 2021)
Exhibit 4 (e) | Global Long-Term Incentive plan for the Board of Management of Koninklijke Philips N.V. (2024) (Incorporated by reference to Exhibit 4.8 to the Post-Effective Amendment No. 4 to the Registration Statement on Form S-8 (File No. 333-186849) filed with the SEC on May 14, 2024)
Exhibit 4 (f) | Relationship Agreement between the company and Exor N.V. (Incorporated by reference to Exhibit 4 (f) to the Annual Report on Form 20-F (File No. 001-05146-01) filed with the SEC on February 21, 2025)
Exhibit 8 | List of Subsidiaries.
Exhibit 11 | Rules of Conduct with respect to Trading in Royal Philips Securities (Incorporated by reference to Exhibit 11 to the Annual Report on Form 20-F (File No. 001-05146-01) filed with the SEC on February 21, 2025)
Exhibit 12 (a) | Certification of R.W.O. Jakobs filed pursuant to 17 CFR 240. 13a-14(a).
Exhibit 12 (b) | Certification of C.M. Hanneman filed pursuant to 17 CFR 240. 13a-14(a).
Exhibit 13 (a) | Certification of R.W.O. Jakobs furnished pursuant to 17 CFR 240. 13a-14(b).
Exhibit 13 (b) | Certification of C.M. Hanneman furnished pursuant to 17 CFR 240. 13a-14(b).
Exhibit 15 (a) | PWC Consent of independent registered public accounting firm.
Exhibit 15 (b) | EY Consent of independent registered public accounting firm.
Exhibit 97 | Clawback policy (Incorporated by reference to Exhibit 97 to the Annual Report on Form 20-F (File No. 001-05146-01) filed with the SEC on February 21, 2025)
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH | XBRL Taxonomy Extension Schema Document.
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB | XBRL Taxonomy Extension Label Linkbase Document.
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document

* Portions of this exhibit have been omitted pursuant to Instructions as to Exhibits of Form 20-F because the omitted information is not material.

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Signatures
The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this Annual Report on its behalf.

KONINKLIJKE PHILIPS N.V. (Registrant)
/s/ R.W.O. Jakobs R.W.O. Jakobs (Chief Executive Officer, Chairman of the Board of Management and the Executive Committee) | /s/ C.M. Hanneman C.M. Hanneman (Chief Financial Officer, Member of the Board of Management and the Executive Committee)
Date: 19 February 2026