# EDGAR Filing Document

**Accession Number:** 0000313216
**File Stem:** 0001628280-26-009470
**Filing Date:** 2026-2
**Character Count:** 1436425
**Document Hash:** 999a6b52744c9f2575a1154482538c0b
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001628280-26-009470.hdr.sgml**: 20260219

**ACCESSION NUMBER**: 0001628280-26-009470

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 270

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260219

**DATE AS OF CHANGE**: 20260219

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** KONINKLIJKE PHILIPS NV
- **CENTRAL INDEX KEY:** 0000313216
- **STANDARD INDUSTRIAL CLASSIFICATION:** X-RAY APPARATUS & TUBES & RELATED IRRADIATION APPARATUS [3844]
- **ORGANIZATION NAME:** 08 Industrial Applications and Services
- **EIN:** 000000000
- **STATE OF INCORPORATION:** P7
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-05146-01
- **FILM NUMBER:** 26651424

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** PRINSES IRENESTRAAT 59
- **CITY:** AMSTERDAM
- **PROVINCE COUNTRY:** P7
- **ZIP:** 1077WV
- **BUSINESS PHONE:** 31 20 59 77777

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** PRINSES IRENESTRAAT 59
- **CITY:** AMSTERDAM
- **PROVINCE COUNTRY:** P7
- **ZIP:** 1077WV

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** KONINKLIJKE PHILIPS ELECTRONICS NV
- **DATE OF NAME CHANGE:** 19981217

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PHILIPS ELECTRONICS N V
- **DATE OF NAME CHANGE:** 19930727

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PHILIPS NV
- **DATE OF NAME CHANGE:** 19910903

?xml version='1.0' encoding='ASCII'? phg-20251231

1<br>

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)

□ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

⌧ 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

□ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

□ 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<br>

**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 2059 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) <br>0.20 per share<br>| PHG | New York Stock Exchange |

---

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

3<br>

**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. ⌧Yes □ 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. □ Yes ⌧ 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. ⌧Yes □ 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). ⌧ Yes □ 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 ⌧ Accelerated filer □ Non-accelerated filer □ Emerging growth company □

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. □

† 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. ⌧

4<br>

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. □

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). □

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

---

| | | |
|:---|:---|:---|
| U.S. GAAP □ | International Financial Reporting Standards as issued by the International <br>Accounting Standards Board ⌧<br>| Other □ |

---

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. □ Item 17 □ 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). □ Yes ⌧ No

5<br>

**Contents**

---

| | |
|:---|:---|
| [Introduction](#i239b6e1f262940669af87636a97ac463) | [6](#i239b6e1f262940669af87636a97ac463) |
| [Forward-looking statements](#ib9e6ba46224946acac7c53042e35dd55) | [7](#ib9e6ba46224946acac7c53042e35dd55) |
| [Form 20-F cross reference table](#i04daf6ed70a94b24a40829af8c2e42c6) | [8](#i04daf6ed70a94b24a40829af8c2e42c6) |

---

---

| | |
|:---|:---|
| **[Our management](#ifc8bbf11d39a4986bad6fbcfb0e08271)** | **[13](#ifc8bbf11d39a4986bad6fbcfb0e08271)** |
| [Message from the CEO](#i4bffab0ee12945b390053fe9630dfe41) | [14](#i4bffab0ee12945b390053fe9630dfe41) |
| [Members of the Board of Management and Executive Committee](#i683a486254bb4f30ab052e5c8750fbd2) | [16](#i683a486254bb4f30ab052e5c8750fbd2) |

---

---

| | |
|:---|:---|
| **[Strategy](#i0e02ec294241465bb6bdc95ab06670ca)** | **[18](#i0e02ec294241465bb6bdc95ab06670ca)** |
| [Strategic focus](#i2061ac828c5d4379bd0c150251d05d5f) | [19](#i2061ac828c5d4379bd0c150251d05d5f) |
| [Business](#i09d52f8fb88244de842fe18cb452089a) | [21](#i09d52f8fb88244de842fe18cb452089a) |
| [Employment](#if09eb3addcb042d99fc234d4384459c0) | [31](#if09eb3addcb042d99fc234d4384459c0) |
| [Philips Foundation](#i0a69ef8aa2f545edbb498fbe47b9f612) | [32](#i0a69ef8aa2f545edbb498fbe47b9f612) |

---

---

| | |
|:---|:---|
| **[Financial performance](#i52f8d6f85d494385978d92c18c7c4bc5)** | **[33](#i52f8d6f85d494385978d92c18c7c4bc5)** |
| [Performance summary](#ieea438e071d64e9a8d7472a863730a25) | [34](#ieea438e071d64e9a8d7472a863730a25) |
| [Results of operations](#idc218808bdca4906ba6bdcdfeab0b427) | [36](#idc218808bdca4906ba6bdcdfeab0b427) |
| [Financial position](#i7ce78f33bf534a0b87ec311b09bbe779) | [41](#i7ce78f33bf534a0b87ec311b09bbe779) |
| [Cash flow and liquidity](#i7d501f09f0a64475919fda9d43444edc) | [44](#i7d501f09f0a64475919fda9d43444edc) |

---

---

| | |
|:---|:---|
| **[Governance](#ic34fadeb337347f58f8f6caffd775cd0)** | **[47](#ic34fadeb337347f58f8f6caffd775cd0)** |
| [Governance](#i96f33f7699d34af78a4e03b3112a49ef) | [48](#i96f33f7699d34af78a4e03b3112a49ef) |

---

---

| | |
|:---|:---|
| **[Supervisory Board](#i8a7d6b1e682542bba8b3bb5068e48e08)** | **[64](#i8a7d6b1e682542bba8b3bb5068e48e08)** |
| [Letter from the Chairman of the Supervisory Board](#i4bdceb438b864d6c91d1fadb80311daf) | [65](#i4bdceb438b864d6c91d1fadb80311daf) |
| [Members of the Supervisory Board](#i3da482558748475a8d7651bb08036e6c) | [66](#i3da482558748475a8d7651bb08036e6c) |
| [Supervisory Board report](#i4bc4ba5c07904bd38d69c7d9992fe05f) | [68](#i4bc4ba5c07904bd38d69c7d9992fe05f) |
| [Remuneration Report 2025](#ida3cb5c870f14195b01091cf7bebecb8) | [76](#ida3cb5c870f14195b01091cf7bebecb8) |

---

---

| | |
|:---|:---|
| **[Group financial statements](#i73104f511fdc447c9657f0ddf38dd19c)** | **[92](#i73104f511fdc447c9657f0ddf38dd19c)** |
| [Controls and Procedures](#i8492f4075edf486d9fa9087ea71b32d2) | [93](#i8492f4075edf486d9fa9087ea71b32d2) |
| [Independent auditor's report - PricewaterhouseCoopers](#i87f94e5959d4414e967655689fbaeea3)<br>[Accountants N.V. (PCAOB ID: 1395)](#i87f94e5959d4414e967655689fbaeea3)<br>| [94](#i87f94e5959d4414e967655689fbaeea3) |
| [Independent auditor's report - EY Accountants B.V. (PCAOB ID:](#ia685ee6aa6354a748ae510d50e58c6c5)<br>[1396)](#ia685ee6aa6354a748ae510d50e58c6c5)<br>| [97](#ia685ee6aa6354a748ae510d50e58c6c5) |
| [Consolidated statements of income](#i1ef61551b458434b89ec959c05e00433) | [98](#i1ef61551b458434b89ec959c05e00433) |
| [Consolidated statements of comprehensive income](#i4ff45ef3f6934a6fb5550867cdad32e5) | [98](#i4ff45ef3f6934a6fb5550867cdad32e5) |
| [Consolidated balance sheets](#ie53f7fc6cb0f4a8f8c6a1a8cb4cfd2f3) | [99](#ie53f7fc6cb0f4a8f8c6a1a8cb4cfd2f3) |
| [Consolidated statements of cash flows](#i2c7c6a977fec4a8aa45fd07d09daf603) | [100](#i2c7c6a977fec4a8aa45fd07d09daf603) |
| [Consolidated statements of changes in equity](#i2000d14a871944d5b394b7bd101d22bd) | [101](#i2000d14a871944d5b394b7bd101d22bd) |
| [Notes to the Consolidated financial statements](#i08ed4406d17e4b479620f012c04457a3) | [102](#i08ed4406d17e4b479620f012c04457a3) |

---

---

| | |
|:---|:---|
| **[Further information](#idec62d141ae14dc48a31ff74ded26097)** | **[164](#idec62d141ae14dc48a31ff74ded26097)** |
| [Other Corporate governance](#i6d9bfaeae2d64cae9dd476f021598ca0) | [165](#i6d9bfaeae2d64cae9dd476f021598ca0) |
| [Risk factors](#i56232e90fd82425a96ae2be47fdc171f) | [170](#i56232e90fd82425a96ae2be47fdc171f) |
| [Reconciliation of non-IFRS information](#i385b44d7ec0a48b3861f89fdd5a7adb8) | [178](#i385b44d7ec0a48b3861f89fdd5a7adb8) |
| [Other key performance indicators](#i2d3250326c7a4a76b3e7292679691057) | [186](#i2d3250326c7a4a76b3e7292679691057) |
| [Taxation](#ib390ddc044294ffa818af9e6ca969217) | [187](#ib390ddc044294ffa818af9e6ca969217) |
| [Investor information](#iaf9b1e0541cd4ba3b9238534ead7a54c) | [191](#iaf9b1e0541cd4ba3b9238534ead7a54c) |
| [Definitions and abbreviations](#i12c7d3a68b9d45fcb2b6cebf137aea8a) | [193](#i12c7d3a68b9d45fcb2b6cebf137aea8a) |
| [Exhibits](#i4d110ecd40ed4bc2ae12cc61261397d2) | [196](#i4d110ecd40ed4bc2ae12cc61261397d2) |

---

6<br>

**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](#i709b790389b445bdbcabcc2c3c292121_736)[n](#i709b790389b445bdbcabcc2c3c292121_736).

**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](#i709b790389b445bdbcabcc2c3c292121_763)

[abbreviations](#i709b790389b445bdbcabcc2c3c292121_763)

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

provided in this report.

7<br>

**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](#i709b790389b445bdbcabcc2c3c292121_712).

8<br>

**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](#i6c41898dbfc54571a84a384262df6263_3457)-[8](#i88759f7c6dc147bb9224c66f483fe7bd_1155), 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** <br>**management and advisors**<br>| Not applicable |
| **2** | **Offer statistics and expected** <br>**timetable**<br>| Not applicable |
| **3** | **Key information** |  |
|  | A [Reserved] | Not applicable |
|  | B Capitalization and indebtedness | Not applicable |
|  | C Reason for the offer and use of <br>proceeds<br>| Not applicable |
|  | D Risk factors | [Risk factors](#i709b790389b445bdbcabcc2c3c292121_712) |
|  |  | [Strategic risks](#i709b790389b445bdbcabcc2c3c292121_715) |
|  |  | [Operational risks](#i709b790389b445bdbcabcc2c3c292121_718) |
|  |  | [Financial and reporting risks](#i709b790389b445bdbcabcc2c3c292121_721) |
|  |  | [Compliance risks](#i709b790389b445bdbcabcc2c3c292121_724) |
|  |  | [Factors impacting performance](#i709b790389b445bdbcabcc2c3c292121_118) |

---

---

| | | |
|:---|:---|:---|
| **Item** | **Form 20-F caption** | **Location in this document** |
| **4** | **Information on the Company** |  |
|  | A History and development of the <br>company<br>| [Cover](#i709b790389b445bdbcabcc2c3c292121_1) |
|  |  | [Introduction](#i709b790389b445bdbcabcc2c3c292121_10) – Documents on display |
|  |  | [Strategy](#i709b790389b445bdbcabcc2c3c292121_55)[– Strategic focus](#i709b790389b445bdbcabcc2c3c292121_55) |
|  |  | [Our Business structure](#i709b790389b445bdbcabcc2c3c292121_61) |
|  |  | [Business](#i709b790389b445bdbcabcc2c3c292121_73)[– Connected Care segment](#i709b790389b445bdbcabcc2c3c292121_73) |
|  |  | [Factors impacting performance](#i709b790389b445bdbcabcc2c3c292121_118) – Operating model |
|  |  | [Results of operations](#i709b790389b445bdbcabcc2c3c292121_127) – Discontinued operations |
|  |  | [Results of operations](#i709b790389b445bdbcabcc2c3c292121_127) – Restructuring, acquisition-related charges and <br>other items<br>|
|  |  | [Acquisitions and divestments](#i709b790389b445bdbcabcc2c3c292121_136) |
|  |  | [Cash flows](#i709b790389b445bdbcabcc2c3c292121_154) |
|  |  | [Corporate governance](#i709b790389b445bdbcabcc2c3c292121_217) |
|  |  | [Other Corporate governance](#i709b790389b445bdbcabcc2c3c292121_655) |
|  |  | [Corporate information](#i709b790389b445bdbcabcc2c3c292121_688) |
|  |  | [Investor contact](#i709b790389b445bdbcabcc2c3c292121_760) – How to reach us |
|  |  | [Note 3 – Discontinued operations and assets classified as held for sale](#i709b790389b445bdbcabcc2c3c292121_388) |
|  |  | [Note 4 – Acquisitions and divestments](#i709b790389b445bdbcabcc2c3c292121_391) |
|  |  | [Note 5 – Interests in entities](#i709b790389b445bdbcabcc2c3c292121_394) |
|  |  | [Note 30 – Subsequent events](#i709b790389b445bdbcabcc2c3c292121_469) |
|  | B Business Overview | [Introduction](#i709b790389b445bdbcabcc2c3c292121_10) [–](#i709b790389b445bdbcabcc2c3c292121_55) Third-party market share data |
|  |  | [Strategic focus](#i709b790389b445bdbcabcc2c3c292121_55) |
|  |  | [Our Business structure](#i709b790389b445bdbcabcc2c3c292121_61) |
|  |  | [Business](#i709b790389b445bdbcabcc2c3c292121_58) – Our business structure; Diagnosis and Treatment segment; <br>Connected Care segment; Personal Health segment; Segment other<br>|
|  |  | [Our Regions](#i709b790389b445bdbcabcc2c3c292121_88) |
|  |  | [Supply chain and procurement](#i709b790389b445bdbcabcc2c3c292121_100) |
|  |  | [Performance Summary](#i709b790389b445bdbcabcc2c3c292121_115) (excluding the information set forth under the <br>subheading "Outlook")<br>|
|  |  | [Results of operations](#i709b790389b445bdbcabcc2c3c292121_127) – Sales per geographic area |
|  |  | [Patient safety, quality and regulatory and the Medical Office](#i709b790389b445bdbcabcc2c3c292121_238) |
|  |  | [Note 2 – Information by segment and main country](#i709b790389b445bdbcabcc2c3c292121_385) |

---

9<br>

---

| | | |
|:---|:---|:---|
| **Item** | **Form 20-F caption** | **Location in this document** |
|  | C Organizational structure | [Our Business structure](#i709b790389b445bdbcabcc2c3c292121_61) |
|  |  | [Note 5 – Interests in entities](#i709b790389b445bdbcabcc2c3c292121_394) |
|  |  | [Index of exhibits](#i709b790389b445bdbcabcc2c3c292121_769) - Exhibit 8 |
|  | D Property, plant and equipment | [Our Business structure](#i709b790389b445bdbcabcc2c3c292121_61) – Central costs; Innovation and design |
|  |  | [Our Regions](#i709b790389b445bdbcabcc2c3c292121_91) – 2025 developments North America; 2025 developments <br>Greater China<br>|
|  |  | [Note 2 – Information by segment and main country](#i709b790389b445bdbcabcc2c3c292121_385) |
|  |  | [Note 3 – Discontinued operations and assets classified as held for sale](#i709b790389b445bdbcabcc2c3c292121_388)- <br>Assets classified as held for sale<br>|
|  |  | [Note 10 – Property, plant and equipment](#i709b790389b445bdbcabcc2c3c292121_409) |
|  |  | [Note 19 – Provisions](#i709b790389b445bdbcabcc2c3c292121_436) - Environmental provisions |
|  |  | [Note 24 – Contingencies](#i709b790389b445bdbcabcc2c3c292121_451) - Environmental remediation |
| **4A** | **Unresolved staff comments** | Not applicable |
| **5** | **Operating and financial review and** <br>**prospects**<br>|  |
|  | A Operating results | [Supply chain and procurement](#i709b790389b445bdbcabcc2c3c292121_100) |
|  |  | [Performance Summary](#i709b790389b445bdbcabcc2c3c292121_115) (excluding the information set forth under the <br>subheading "Outlook")<br>|
|  |  | [Factors impacting performance](#i709b790389b445bdbcabcc2c3c292121_118) |
|  |  | [Results of operations](#i709b790389b445bdbcabcc2c3c292121_127) |
|  |  | [Results of operations](#i709b790389b445bdbcabcc2c3c292121_127) – Restructuring, acquisition-related charges and <br>other items<br>|
|  |  | [Acquisitions and divestments](#i709b790389b445bdbcabcc2c3c292121_136) |
|  |  | [Other key performance indicators](#i709b790389b445bdbcabcc2c3c292121_742) |
|  |  | [Note 1 – General information to the Consolidated financial statements](#i709b790389b445bdbcabcc2c3c292121_382) <br>- Foreign currency transactions: Foreign operations<br>|
|  |  | [Note 3 – Discontinued operations and assets classified as held for sale](#i709b790389b445bdbcabcc2c3c292121_388) |
|  |  | [Note 4 – Acquisitions and divestments](#i709b790389b445bdbcabcc2c3c292121_391) |
|  |  | [Note 6 – Income from operations](#i709b790389b445bdbcabcc2c3c292121_397) |
|  |  | [Note 7 – Financial income and expenses](#i709b790389b445bdbcabcc2c3c292121_400) |
|  |  | [Note 8 – Income taxes](#i709b790389b445bdbcabcc2c3c292121_403) - Deferred tax assets and liabilities |
|  |  | [Note 11 – Goodwill](#i709b790389b445bdbcabcc2c3c292121_412) |
|  |  | [Note 12 – Intangible assets excluding goodwill](#i709b790389b445bdbcabcc2c3c292121_415) |
|  |  | [Note 20 – Post-employment benefits](#i709b790389b445bdbcabcc2c3c292121_439) |
|  |  | [Note 24 – Contingencies](#i709b790389b445bdbcabcc2c3c292121_451) |
|  |  | [Note 29 – Details of treasury and other financial risks](#i709b790389b445bdbcabcc2c3c292121_466) - Currency risk |
|  |  | [Note 30 – Subsequent events](#i709b790389b445bdbcabcc2c3c292121_469) |

---

---

| | | |
|:---|:---|:---|
| **Item** | **Form 20-F caption** | **Location in this document** |
|  | B Liquidity and capital resources | [Our Regions](#i709b790389b445bdbcabcc2c3c292121_88) – 2025 developments North America |
|  |  | [Financial position](#i709b790389b445bdbcabcc2c3c292121_130) – Debt position |
|  |  | [Financial performance](#i709b790389b445bdbcabcc2c3c292121_109) – Supply chain resilience |
|  |  | [Cash flows](#i709b790389b445bdbcabcc2c3c292121_154) |
|  |  | [Liquidity position](#i709b790389b445bdbcabcc2c3c292121_157) |
|  |  | [Cash obligations](#i709b790389b445bdbcabcc2c3c292121_160)  |
|  |  | [Note 17 – Equity](#i709b790389b445bdbcabcc2c3c292121_430) |
|  |  | [Note 18 – Debt](#i709b790389b445bdbcabcc2c3c292121_433) |
|  |  | [Note 23 – Cash flow statement supplementary information](#i709b790389b445bdbcabcc2c3c292121_448) |
|  |  | [Note 29 – Details of treasury and other financial risks](#i709b790389b445bdbcabcc2c3c292121_466) |
|  | C Research and development, patents <br>and licenses, etc.<br>| [Strategic focus](#i709b790389b445bdbcabcc2c3c292121_55)  |
|  |  | [Business](#i709b790389b445bdbcabcc2c3c292121_58) – Innovation & Design; IP Royalties |
|  |  | [Business](#i709b790389b445bdbcabcc2c3c292121_58)– 2025 developments North America; 2025 developments <br>Greater China<br>|
|  |  | [Results of operations](#i709b790389b445bdbcabcc2c3c292121_127) – Research and development expenses |
|  |  | [Financial performance](#i709b790389b445bdbcabcc2c3c292121_109) – Supply chain resilience |
|  |  | [Cash flows](#i709b790389b445bdbcabcc2c3c292121_154) |
|  | D Trend information | [Supply chain and procurement](#i709b790389b445bdbcabcc2c3c292121_100) |
|  |  | [Performance summary](#i709b790389b445bdbcabcc2c3c292121_115) – The year 2025 |
|  |  | [Factors impacting performance](#i709b790389b445bdbcabcc2c3c292121_118) |
|  |  | [Reconciliation of non-IFRS information](#i709b790389b445bdbcabcc2c3c292121_736) |
|  |  | [Other Key Performance Indicators](#i709b790389b445bdbcabcc2c3c292121_742) |
|  | E Critical accounting estimates | Not applicable |
| **6** | **Directors, senior management and** <br>**employees**<br>|  |
|  | A Directors and senior management | [Members of the Board of Management and Executive Committee](#i709b790389b445bdbcabcc2c3c292121_46) – <br>Members of the Board of Management<br>|
|  |  | [Members of the Supervisory Board](#i709b790389b445bdbcabcc2c3c292121_310) |
|  |  | [Board of Management and Executive Committee](#i709b790389b445bdbcabcc2c3c292121_220) – Appointment and <br>composition<br>|
|  |  | [Supervisory Board](#i709b790389b445bdbcabcc2c3c292121_223) – Appointment and composition |

---

10<br>

---

| | | |
|:---|:---|:---|
| **Item** | **Form 20-F caption** | **Location in this document** |
|  | B Compensation | [Remuneration report 2025](#i709b790389b445bdbcabcc2c3c292121_337) |
|  |  | [Remuneration report 2025](#i709b790389b445bdbcabcc2c3c292121_337) – Letter from the Remuneration Committee <br>Chair<br>|
|  |  | [Remuneration report 2025](#i709b790389b445bdbcabcc2c3c292121_337) – Board of management  |
|  |  | [Note 26 – Share-based compensation](#i709b790389b445bdbcabcc2c3c292121_457) |
|  |  | [Note 27 – Information on remuneration](#i709b790389b445bdbcabcc2c3c292121_460) |
|  | C Board practices | [Members of the Supervisory Board](#i709b790389b445bdbcabcc2c3c292121_310)  |
|  |  | [Members of the Board of Management and Executive Committee](#i709b790389b445bdbcabcc2c3c292121_46) – <br>Members of the Board of Management <br>|
|  |  | [Governance](#i709b790389b445bdbcabcc2c3c292121_211)– Annual financial statements and external audit |
|  |  | [Supervisory Board report](#i709b790389b445bdbcabcc2c3c292121_316) – Supervisory Board Committees |
|  |  | [Report of the Audit Committee](#i709b790389b445bdbcabcc2c3c292121_328) |
|  |  | [Remuneration report 2025](#i709b790389b445bdbcabcc2c3c292121_337) – Letter from the Remuneration Committee <br>Chair, Main elements of the Remuneration Policy; Services agreements<br>|
|  |  | [Board of Management and Executive Committee](#i709b790389b445bdbcabcc2c3c292121_220) – Appointment and <br>composition<br>|
|  |  | [Supervisory Board](#i709b790389b445bdbcabcc2c3c292121_223) – Appointment and composition; Supervisory Board <br>committees<br>|
|  |  | [Other Corporate governance](#i709b790389b445bdbcabcc2c3c292121_655) – Committees of our Supervisory Board |
|  | D Employees | [Employment](#i709b790389b445bdbcabcc2c3c292121_103) |
|  |  | [Note 6 – Income from operations](#i709b790389b445bdbcabcc2c3c292121_397) – Employees |
|  | E Share ownership | [Remuneration report 2025](#i709b790389b445bdbcabcc2c3c292121_337) – Historical LTI grants and holdings |
|  |  | [Remuneration report 2025](#i709b790389b445bdbcabcc2c3c292121_337) – Remuneration of the Board of <br>Management in 2025<br>|
|  |  | [Other Board-related matters](#i709b790389b445bdbcabcc2c3c292121_226) – Remuneration and share ownership |
|  |  | [Further information](#i709b790389b445bdbcabcc2c3c292121_634) – Voting rights; Equity compensation plans |
|  |  | [Note 26 – Share-based compensation](#i709b790389b445bdbcabcc2c3c292121_457) |
|  |  | [Note 27 – Information on remuneration](#i709b790389b445bdbcabcc2c3c292121_460) - Supervisory Board members' <br>and Board of Management members' interest in Philips shares<br>|
|  | F Disclosure of registrant's action to <br>recover erroneously awarded <br>compensation<br>| Not applicable |

---

---

| | | |
|:---|:---|:---|
| **Item** | **Form 20-F caption** | **Location in this document** |
| **7** | **Major shareholders and related party** <br>**transactions**<br>|  |
|  | A Major shareholders | [General Meeting of Shareholders](#i709b790389b445bdbcabcc2c3c292121_229) – Share capital; issue and repurchase <br>of (rights to) shares (second and third paragraphs)<br>|
|  |  | S[tichting Preferente Aandelen Philips](#i709b790389b445bdbcabcc2c3c292121_676) |
|  |  | [Major shareholders](#i709b790389b445bdbcabcc2c3c292121_685) |
|  |  | [Other Corporate governance](#i709b790389b445bdbcabcc2c3c292121_655) – Voting Rights (last sentence) |
|  | B Related party transactions | [Other Board-related matters](#i709b790389b445bdbcabcc2c3c292121_226)– Conflicts of interest; Remuneration and <br>share ownership (fifth paragraph)<br>|
|  |  | [Note 5 – Interests in entities](#i709b790389b445bdbcabcc2c3c292121_394) |
|  |  | [Note 25 – Related-party transactions](#i709b790389b445bdbcabcc2c3c292121_454) |
|  | C Interests of experts and counsel | Not applicable |
| **8** | **Financial information** |  |
|  | A Consolidated statements and other <br>financial information<br>| [Dividend](#i709b790389b445bdbcabcc2c3c292121_163) – Dividend policy |
|  |  | [Group financial statements](#i709b790389b445bdbcabcc2c3c292121_340) |
|  | B Significant changes | [Note 30 – Subsequent events](#i709b790389b445bdbcabcc2c3c292121_469) |
| **9** | **The offer and listing** |  |
|  | A Offer and listing details | [Share information](#i709b790389b445bdbcabcc2c3c292121_754) |
|  | B Plan of distribution | Not applicable |
|  | C Markets | [Share information](#i709b790389b445bdbcabcc2c3c292121_754) |
|  | 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 <br>association<br>| [Board of Management and Executive Committee](#i709b790389b445bdbcabcc2c3c292121_220) – Appointment and <br>composition<br>|
|  |  | [Supervisory Board](#i709b790389b445bdbcabcc2c3c292121_223) – Appointment and composition |
|  |  | [Other Board-related matters](#i709b790389b445bdbcabcc2c3c292121_226) – Remuneration and share ownership <br>(fifth paragraph); Conflicts of interest<br>|

---

11<br>

---

| | | |
|:---|:---|:---|
| **Item** | **Form 20-F caption** | **Location in this document** |
|  |  | [General Meeting of Shareholders](#i709b790389b445bdbcabcc2c3c292121_229) – Meetings; Main powers of the <br>General Meeting of Shareholders<br>|
|  |  | [Stichting Preferente Aandelen Philips](#i709b790389b445bdbcabcc2c3c292121_676) |
|  |  | [Other Corporate governance](#i709b790389b445bdbcabcc2c3c292121_655) – Articles of association |
|  |  | [Index of exhibits](#i709b790389b445bdbcabcc2c3c292121_769) – Exhibit 1; Exhibit 2 |
|  | C Material contracts | [Remuneration report 2025](#i709b790389b445bdbcabcc2c3c292121_337) – Letter from the Remuneration Committee <br>Chair (sixth paragraph); Services agreements<br>|
|  |  | [Board of Management and Executive Committee](#i709b790389b445bdbcabcc2c3c292121_220) - Appointment and <br>composition (third paragraph)<br>|
|  |  | [Supervisory Board](#i709b790389b445bdbcabcc2c3c292121_223) – Appointment and composition (last paragraph) |
|  |  | [Note 24 Contingencies](#i709b790389b445bdbcabcc2c3c292121_451)[- Product liability claims](#i709b790389b445bdbcabcc2c3c292121_451) |
|  |  | [Note 25 – Related-party transactions](#i709b790389b445bdbcabcc2c3c292121_454) |
|  |  | [Note 26 – Share-based compensation](#i709b790389b445bdbcabcc2c3c292121_457) |
|  |  | [Note 27 – Information on remuneration](#i709b790389b445bdbcabcc2c3c292121_460) |
|  |  | [Index of exhibits](#i709b790389b445bdbcabcc2c3c292121_769) – Exhibit 4(a) |
|  |  | [Index of exhibits](#i709b790389b445bdbcabcc2c3c292121_769) – Exhibit 4(b) |
|  |  | [Index of exhibits](#i709b790389b445bdbcabcc2c3c292121_769) – Exhibit 4(c) |
|  |  | [Index of exhibits](#i709b790389b445bdbcabcc2c3c292121_769) – Exhibit 4(d) |
|  |  | [Index of exhibits](#i709b790389b445bdbcabcc2c3c292121_769) – Exhibit 4(e) |
|  |  | [Index of exhibits](#i709b790389b445bdbcabcc2c3c292121_769) – Exhibit 4(f) |
|  | D Exchange controls | [Other Corporate governance](#i709b790389b445bdbcabcc2c3c292121_655) – Exchange controls |
|  |  | [Note 29 – Details of treasury and other financial risks](#i709b790389b445bdbcabcc2c3c292121_466) - Liquidity risk |
|  | E Taxation | [Taxation](#i709b790389b445bdbcabcc2c3c292121_745) |
|  | F Dividends and paying agents | Not applicable |
|  | G Statements by experts | Not applicable |
|  | H Documents on display | [Introduction](#i709b790389b445bdbcabcc2c3c292121_10) - 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 <br>holders in electronic format as an exhibit to a current report on Form <br>6-K.<br>|

---

---

| | | |
|:---|:---|:---|
| **Item** | **Form 20-F caption** | **Location in this document** |
| **11** | **Quantitative and qualitative** <br>**disclosure about market risk**<br>|  |
|  | A Quantitative information about market <br>risk<br>| [Forward-looking statements](#i709b790389b445bdbcabcc2c3c292121_13) |
|  |  | [Note 29 – Details of treasury and other financial risks](#i709b790389b445bdbcabcc2c3c292121_466) |
|  | B Qualitative information about market <br>risk<br>| [Forward-looking statements](#i709b790389b445bdbcabcc2c3c292121_13) |
|  |  | [Note 29 – Details of treasury and other financial risks](#i709b790389b445bdbcabcc2c3c292121_466) |
|  | C Interim periods | Not applicable |
|  | D Safe harbor | [Forward-looking statements](#i709b790389b445bdbcabcc2c3c292121_13) |
|  |  | [Note 29 – Details of treasury and other financial risks](#i709b790389b445bdbcabcc2c3c292121_466) |
|  | E Smaller reporting companies | Not applicable |
| **12** | **Description of securities other than** <br>**equity securities**<br>|  |
|  | A Debt securities | Not applicable |
|  | B Warrant and rights | Not applicable |
|  | C Other securities | Not applicable |
|  | D American depository shares | [Other Corporate governance](#i8430199ec0bd4df4a2daf8989a94df12_17920)[– New York Registry Shares](#i8430199ec0bd4df4a2daf8989a94df12_17920) |
| **Part 2** |  |  |
| **13** | **Defaults, dividend arrearages and** <br>**delinquencies**<br>| Not applicable |
| **14** | **Material modifications to the rights** <br>**of security holders and use of** <br>**proceeds**<br>| Not applicable |
| **15** | **Controls and procedures** |  |
|  | A Disclosure controls and procedures | [Disclosure controls and procedures](#i709b790389b445bdbcabcc2c3c292121_346) |
|  | B Management's Annual Report on <br>internal control over financial reporting<br>| [Management's annual report on internal control over financial](#i709b790389b445bdbcabcc2c3c292121_349)<br>[reporting](#i709b790389b445bdbcabcc2c3c292121_349)<br>|
|  |  | [Attestation report of the registered public accounting firm](#i709b790389b445bdbcabcc2c3c292121_352) |
|  | C Attestation report of the registered <br>public accounting firm<br>| [Attestation report of the registered public accounting firm](#i709b790389b445bdbcabcc2c3c292121_352) |

---

12<br>

---

| | | |
|:---|:---|:---|
| **Item** | **Form 20-F caption** | **Location in this document** |
|  |  | [Independent auditor's report - PricewaterhouseCoopers Accountants](#i709b790389b445bdbcabcc2c3c292121_358)<br>[N.V. (PCAOB ID: 1395)](#i709b790389b445bdbcabcc2c3c292121_358)<br>|
|  | D Changes in internal control over <br>financial reporting<br>| [Changes in internal control over financial reporting](#i709b790389b445bdbcabcc2c3c292121_355) |
| **16A** | **Audit Committee Financial Expert** | [Supervisory Board](#i709b790389b445bdbcabcc2c3c292121_223) - Supervisory Board Committees (fifth paragraph) |
| **16B** | **Code of Ethics** | [General Business Principles (GBP)](#i709b790389b445bdbcabcc2c3c292121_244) (last paragraph) |
| **16C** | **Principal Accountant Fees and** <br>**Services**<br>| [Report of the Audit Committee](#i709b790389b445bdbcabcc2c3c292121_328) |
|  |  | [Annual financial statements and external audit](#i709b790389b445bdbcabcc2c3c292121_295) |
|  |  | [Note 6 – Income from operations](#i709b790389b445bdbcabcc2c3c292121_397) - Audit and audit-related fees |
| **16D** | **Exemptions from the Listing** <br>**Standards for Audit Committees**<br>| Not applicable |
| **16E** | **Purchases of Equity Securities by the** <br>**Issuer and Affiliated Purchasers**<br>| [Shareholders' equity](#i709b790389b445bdbcabcc2c3c292121_148) – Share repurchase methods for long-term <br>incentive plans and capital reduction purposes<br>|
| **16F** | **Change in Registrant's Certifying** <br>**Accountant**<br>| [Annual financial statements and external audit](#i709b790389b445bdbcabcc2c3c292121_295) (second paragraph, last <br>sentence)<br>|
| **16G** | **Corporate Governance** | [Other Corporate governance](#i709b790389b445bdbcabcc2c3c292121_655) – Significant differences in corporate <br>governance practices<br>|
| **16H** | **Mine Safety Disclosure** | Not applicable |
| **16I** | **Disclosure regarding Foreign** <br>**Jurisdictions that prevent** <br>**inspections**<br>| Not applicable |
| **16J** | **Insider Trading Policies** | [General Business Principles (GBP)](#i709b790389b445bdbcabcc2c3c292121_244) |
|  |  | [Index of exhibits](#i709b790389b445bdbcabcc2c3c292121_769) - Exhibit 11 |
| **16K** | **Cybersecurity** | [Cybersecurity](#i709b790389b445bdbcabcc2c3c292121_250) |
| **Part 3** |  |  |
| **17** | **Financial statements** | Not applicable |
| **18** | **Financial statements** | [Group financial statements](#i709b790389b445bdbcabcc2c3c292121_340) |
| **19** | **Exhibits** | [Index of exhibits](#i709b790389b445bdbcabcc2c3c292121_769) |

---

![our-management.jpg](phg-20251231_g1.jpg)

13<br>

**Our management**

14<br>

**Message from the CEO**

![message_from-theceo.jpg](phg-20251231_g2.jpg)

---

| |
|:---|
| *"We delivered for those who count on us and strengthened our* <br>*foundations. Looking ahead, we are energized by our plan to drive* <br>*profitable growth to deliver sustainable value."*<br>|
| **Roy Jakobs** CEO Royal Philips |

---

Dear stakeholder,

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

care for more people to create value with sustainable impact.

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

circumstances. Committed to rebuilding our foundations and boosting

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

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

the results of this work became increasingly visible.

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

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

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

company, creating the foundations to drive sustainable growth in the

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

focus and determination in executing our strategy while living our

culture of impact with care.

Throughout the year, we delivered solid progress. We improved

order intake and comparable sales growth, reflecting strong

demand for our innovations, while achieving meaningful

operational improvements. We continued to advance patient

safety and quality in a focused, disciplined way.

Despite ongoing global uncertainty and an uneven environment,

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

developments, rigorously managing costs and productivity, and

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

gross and Adjusted EBITA margin expansion and free cash flow

generation throughout the year.

**Seeing the results of our plan in action**

Reflecting our commitment to patient safety and quality, our number

one priority, we continued to strengthen processes, controls and

culture. We improved early warning systems and completed major

elements of our quality management improvements, and continued to

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

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

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

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

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

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

These initiatives enhanced our open, meaningful conversations about

patient safety, quality, integrity and speaking up.

![](phg-20251231_g3.gif)

<sup>\*</sup> 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<br>

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<sup>\*</sup>. Verida, the

diagnostic precision while improving clinical and operational

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

image-guided therapy and expanded our portfolio in the coronary

intervention segment. We also launched new propositions that help

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

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

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

removal brand to more people. We introduced an innovative

monitoring platform designed to help address critical challenges in

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

Telemetry Monitor 5500.

Beyond individual innovations, we focused on how we scale impact

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

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

providing nationwide coverage of image-guided therapy systems,

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

of more than 280 million people. Such partnerships reinforce our

conviction that sustained transformation in healthcare requires deep

collaboration across the ecosystem.

Executing our plan meant strengthening our operational resilience,

which allowed us to quickly respond to the impact of tariff

developments. We continued to simplify, reduce complexity and drive

productivity. Our teams delivered substantial savings, contributing to

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

we continued our commitment to responsible and sustainable business

by advancing our efforts to decarbonize healthcare and operate with

transparency across the environmental, social and governance

dimensions.

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

own workforce, strengthened our leadership team and grew vital

capabilities, including deepening our domain expertise. I see a

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

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

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

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

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

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

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

manufacturing capability for our AI-powered health technology.

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

grateful for impactful collaboration with our customers and partners,

and I thank our shareholders for their continued support.

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

risk and strengthening our balance sheet, along with the importance

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

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

shareholder.

**Building on our momentum to deliver impact**

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

have launched our plan to drive profitable growth to deliver

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

next phase of our strategy having strengthened our core fundamentals,

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

foundation, Philips leverages its scalable platform-based innovation

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

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

support our strategy and purpose by embedding three priorities into

our business operations and management: improving people's health

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

strong governance for sustainable long-term value creation.

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

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

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

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

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

our ambition to deliver better care for more people.

**Roy Jakobs**

Chief Executive Officer

![](phg-20251231_g3.gif)

<sup>\*</sup>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<br>

**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.

---

| | | | | |
|:---|:---|:---|:---|:---|
| ![AR2025_ExCo icons_260218-02.jpg](phg-20251231_g4.jpg) | 14 members | ![AR2025_ExCo icons_260218-04.jpg](phg-20251231_g5.jpg) | ![AR2025_ExCo icons_260218-04.jpg](phg-20251231_g5.jpg) | 50% female<br>50% male<br>|
| ![AR2025_ExCo icons_260218-01.jpg](phg-20251231_g6.jpg) | 8 nationalities | ![AR2025_ExCo icons_260218-03.jpg](phg-20251231_g7.jpg) | Average 25+ years <br>leadership experience <br>within healthcare | Average 25+ years <br>leadership experience <br>within healthcare |

---

---

| | | |
|:---|:---|:---|
| Members of the Board of Management<sup>\*</sup> | Members of the Board of Management<sup>\*</sup> | Members of the Board of Management<sup>\*</sup> |
| ![roy-jakobs.jpg](phg-20251231_g8.jpg) | ![charlotte-hanneman.jpg](phg-20251231_g9.jpg) | ![marnix-vanginniken.jpg](phg-20251231_g10.jpg) |
| **Roy Jakobs**<br>**Born 1974, Dutch and German**<br>Chief Executive Officer (CEO)<br>**Chairman of the Board of Management and** <br>**the Executive Committee** (since October 2022)<br>Roy joined Philips in 2010 and has held various <br>global leadership positions across the company, <br>starting as Chief Marketing & Strategy Officer for <br>Philips Lighting. In 2012, he became Market Leader <br>for Philips Middle East & Turkey, leading the <br>Healthcare, Consumer, and Lighting businesses out <br>of Dubai. Subsequently, he became global Business <br>Leader of Domestic Appliances, based in Shanghai, <br>in 2015. In 2018, Roy joined the Executive <br>Committee as Chief Business Leader of Personal <br>Health and in early 2020 he started as Chief Business <br>Leader of Connected Care. As Chief Executive Officer <br>and Chairman of the Board of Management and the <br>Executive Committee, he also holds direct <br>responsibility for Patient Safety and Quality, Medical <br>Office, and Internal Audit. Prior to his career at <br>Philips, he held various management positions at <br>Royal Dutch Shell and RELX.<br>| **Charlotte Hanneman**<br>**Born 1978, Dutch**<br>Chief Financial Officer<br>**Member of the Board of Management and** <br>**the Executive Committee** (since October 2024)<br>Charlotte joined Philips in 2024 and is responsible <br>for Finance, including Investor Relations, Strategy <br>and M&A, as well as Real Estate and Security. Prior <br>to joining Philips, Charlotte served as Controller and <br>Head of Financial Planning & Analysis at global <br>medical technology company Stryker. In this role, <br>she was responsible for external reporting, <br>enterprise financial planning and analysis, and <br>business development finance. She also oversaw <br>indirect procurement and had direct responsibility <br>for finance teams across Europe, the Middle East and <br>Africa, Canada, and Latin America. Earlier in her <br>career, Charlotte held several international finance <br>leadership roles at Stryker and other multinational <br>healthcare companies, including Merck, Schering-<br>Plough and Organon. She has extensive experience <br>working in the US and has lived in multiple countries <br>across Asia and Europe.<br>| **Marnix van Ginneken**<br>**Born 1973, Dutch**<br>Chief ESG & Legal Officer<br>**Member of the Board of Management and the** <br>**Executive Committee** (since November 2017)<br>Marnix became a member of the Executive <br>Committee in 2014 and was appointed a member of <br>Philips' Board of Management in 2017. He is <br>responsible for driving Environmental, Social and <br>Governance efforts across the company, including <br>sustainability. Marnix is also responsible for Legal, <br>Intellectual Property & Standards, Government & <br>Public Affairs and Communications & Brand. He <br>became Chair of the Board of the Philips Foundation <br>in 2024. He has also been a Professor of <br>International Corporate Governance at the Erasmus <br>School of Law in Rotterdam since 2011. In 2025, <br>Marnix was appointed to the Dutch Monitoring <br>Committee Corporate Governance Code by the <br>Minister of Economic Affairs. Before joining Philips <br>in 2007, Marnix worked for Akzo Nobel, and prior to <br>that he was an attorney in private practice.<br>|

---

![](phg-20251231_g3.gif)

<sup>\*</sup> 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<br>

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Other members of the Executive Committee<sup>\*</sup> | Other members of the Executive Committee<sup>\*</sup> | Other members of the Executive Committee<sup>\*</sup> | Other members of the Executive Committee<sup>\*</sup> |  |  |
| ![williem-appelo.jpg](phg-20251231_g11.jpg) | ![steve-cdebaca.jpg](phg-20251231_g12.jpg) | ![jeff-dilullo.jpg](phg-20251231_g13.jpg) | ![ozlem-fidanci.jpg](phg-20251231_g14.jpg) | ![deeptha-khanna.jpg](phg-20251231_g15.jpg) | ![ling-liu.jpg](phg-20251231_g16.jpg) |
| **Willem Appelo**<br>**Born 1964, Dutch**<br>Executive Vice President<br>**Chief Operations Officer**<br>Wim joined Philips in 2022, bringing <br>over 30 years of experience in <br>technology and the medical device <br>technology industry, in finance and <br>supply chain management.<br>| **Steve C de Baca**<br>**Born 1968, American**<br>Executive Vice President<br>**Chief Patient Safety & Quality** <br>**Officer**<br>Steve joined Philips in 2023 and <br>brings over 30 years of quality and <br>regulatory affairs experience in the <br>medical technology industry.<br>| **Jeff DiLullo**<br>**Born 1969, American**<br>Executive Vice President<br>**Chief Region Leader, Philips** <br>**North America**<br>Jeff joined Philips in 2019, drawing <br>on more than 30 years of leadership <br>experience in the US Army and the <br>information technology industry.<br>| **Özlem Fidanci**<br>**Born 1970, Turkish**<br>Executive Vice President<br>**Chief of International Region**<br>Özlem rejoined in 2025 and has <br>been with Philips more than 27 <br>years. She has extensive expertise <br>and proven leadership across <br>multiple geographies in both the <br>health systems and personal health <br>domains.<br>| **Deeptha Khanna**<br>**Born 1976, Singaporean**<br>Executive Vice President<br>**Chief Business Leader Personal** <br>**Health**<br>Deeptha joined Philips in 2020. She <br>has over 25 years of leadership <br>experience working across Europe, <br>the US and Asia on major global <br>brands and across personal care and <br>the consumer health industry. <br>| **Ling Liu**<br>**Born 1974, Chinese**<br>Executive Vice President<br>**Chief Region Leader, Philips** <br>**Greater China**<br>Ling joined Philips in 1998 and has <br>more than 28 years of experience in <br>leadership roles in Greater China, <br>the Netherlands and North America.<br>|
| ![bert-van_meurs.jpg](phg-20251231_g17.jpg) | ![shez-partovi.jpg](phg-20251231_g18.jpg) | ![heidi-sichien.jpg](phg-20251231_g19.jpg) | ![julia-strandberg.jpg](phg-20251231_g20.jpg) | ![jie-xue.jpg](phg-20251231_g21.jpg) |  |
| **Bert van Meurs**<br>**Born 1961, Dutch**<br>Executive Vice President<br>**Chief Business Leader Diagnosis** <br>**and Treatment**<br>Bert joined Philips in 1985 and has <br>more than 40 years of experience in <br>the medical imaging interventional <br>and healthcare business.<br>| **Shez Partovi**<br>**Born 1967, Canadian**<br>Executive Vice President<br>**Chief Innovation Officer and** <br>**Chief Business Leader** <br>**Enterprise Informatics**<br>Shez joined Philips in 2021, bringing <br>over 30 years of clinical <br>(neuroradiology) and healthcare <br>informatics experience, including <br>cloud transformation, machine <br>learning, and AI.<br>| **Heidi Sichien**<br>**Born 1974, Belgian**<br>Executive Vice President<br>**Chief People Officer**<br>Heidi joined Philips in 2006 and <br>brings over 19 years of experience <br>in leadership roles in HR across <br>many parts of the company.<br>| **Julia Strandberg**<br>**Born 1974, American**<br>Executive Vice President<br>**Chief Business Leader** <br>**Connected Care**<br>Julia joined Philips in 2023 and has <br>over 20 years of leadership <br>experience in the medical <br>technology industry, especially in <br>monitoring and North America.<br>| **Jie Xue**<br>**Born 1973, American and** <br>**Chinese**<br>Executive Vice President<br>**Chief Business Leader Diagnosis** <br>**and Treatment**<br>Jie joined Philips in 2025 with over <br>25 years of leadership experience in <br>the imaging industry, especially in <br>the US.<br>|  |

---

![strategy.jpg](phg-20251231_g22.jpg)

18<br>

**Strategy**

19<br>

**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.

![strategic-focus.jpg](phg-20251231_g23.jpg)

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<br>

**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](#i709b790389b445bdbcabcc2c3c292121_238) ►

• end-to-end supply chain resilience [Read more](#i709b790389b445bdbcabcc2c3c292121_100) ►

• a simplified operating model with an agile way of working

[Read more](#i709b790389b445bdbcabcc2c3c292121_235)►

![igt-zenition.jpg](phg-20251231_g24.jpg)

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](#i709b790389b445bdbcabcc2c3c292121_67)►

![pd-blueseal.jpg](phg-20251231_g25.jpg)

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](#i709b790389b445bdbcabcc2c3c292121_67)►

![](phg-20251231_g3.gif)

<sup>1</sup>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<br>

**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.<sup>1</sup>

---

| | | |
|:---|:---|:---|
| Segments |  |  |
| Diagnosis & Treatment | Connected Care | Personal Health |
| ![segment1_diagnosis-treatment.jpg](phg-20251231_g26.jpg) | ![segment2_connected-care.jpg](phg-20251231_g27.jpg) | ![segment3_personal-health.jpg](phg-20251231_g28.jpg) |
| **Businesses**<sup>1</sup>**:**<br>**•Image Guided Therapy**

#1<br>**•Precision Diagnosis**

#1 in cardiovascular ultrasound

#3 in diagnostic imaging<br>| **Businesses**<sup>1</sup>**:**<br>**•Monitoring**

#1 in hospital and ambulatory<br>**•Enterprise Informatics**

#1 in PACS and interoperability<br>**•Sleep & Respiratory Care**

#2 in sleep therapy devices and masks<br>| **The Personal Health Business includes** <br>**three Business Units**<sup>1</sup>**:**<br>**•Personal Care**

#1 in grooming<br>**•Oral Healthcare**

#2<br>**•Mother and Child Care**

#2 in infant feeding<br>|

---

Philips Group

**Total sales by reportable segment**

Diagnosis & Treatment

![603](phg-20251231_g29.gif)

Connected Care

![620](phg-20251231_g30.gif)

Personal Health

![638](phg-20251231_g31.gif)

Other

![646](phg-20251231_g32.gif)

22<br>

Diagnosis & Treatment segment

The portfolio of innovative AI-enabled solutions supports precision

diagnosis and minimally invasive treatment.

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

integrating our intelligent imaging systems with our informatics

solutions to optimize workflow efficiency and improve productivity. By

expanding access to care, we help healthcare providers reach more

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

our products and improve resource efficiency.

We also provide integrated solutions that combine imaging systems

and advanced clinical software, as well as diagnostic and therapeutic

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

and more complex patient pools, using clinical and economic evidence

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

guidelines and reimbursement.

The Diagnosis & Treatment segment consists of the following

Businesses:

**•Precision Diagnosis** – This Business offers a range of diagnostic

imaging products, solutions and services to address some of our

customers' biggest challenges, from staff shortages and burnout to

image quality and workflow, to ultimately delivering better care for

their patients.

• Ultrasound Business Unit – imaging solutions that are enabled by

proprietary AI software, advanced imaging technology and tele-

ultrasound to offer guidance for cardiac, general imaging,

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

• Magnetic Resonance Imaging (MRI) Business Unit – BlueSeal

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

enabled software.

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

software, including detector-based Spectral CT and systems

equipped with advanced AI capabilities, for diagnosis,

interventional procedures and screening.

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

with associated software.

**•Image Guided Therapy** – This Business includes a portfolio of

integrated interventional imaging systems, smart devices, and

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

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

clinical segments with high procedural growth rates, such as

coronary artery disease, peripheral artery and venous disease,

electrophysiology, structural heart disease, neuroradiology, and

oncology.

• Image Guided Therapy Systems Business Unit – integrated

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

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

routine and complex interventional procedures.

• Image Guided Therapy Devices Business Unit – interventional

specialty devices and software to aid in diagnosis, navigation,

treatment and confirmation. Complemented by integration with

Image Guided Therapy Systems.

Diagnosis & Treatment

**Total sales by Business**

---

| | |
|:---|:---|
|  | **2025** |
| Precision Diagnosis <sup>1</sup> | 59% |
| Image Guided Therapy ² | 41% |

---

<sup>1</sup>of which Magnetic Resonance Imaging 35%, Ultrasound 32%, Computed

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

<sup>2</sup>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**<br>In 2025, we took steps to strengthen the performance and <br>impact of our Precision Diagnosis business, including actions <br>aimed at enhancing quality and operations across all Business <br>Units and stepping up commercial execution to land our latest <br>innovations. We worked on fostering a culture of continuous <br>improvement and accountability. We also built strong <br>momentum in our Image Guided Therapy Business, driving <br>continued growth and reinvesting gains into innovation. We <br>continued our efforts to, year-on-year, improve productivity; <br>shorten delivery timelines by reducing variability; and optimize <br>our portfolio. These are enablers to increase resilience and <br>reduce the negative impact of tariff developments.<br>

![](phg-20251231_g3.gif)

<sup>1</sup>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<br>

2025 developments: Diagnosis & Treatment

• Philips unveiled its latest innovations in helium-free 3.0T MRI<sup>1</sup>,

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.

![image-guided_therapy.jpg](phg-20251231_g33.jpg)

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<br>

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 <sup>1</sup> | 59% |
| Enterprise Informatics <sup>2</sup> | 22% |
| Sleep & Respiratory Care  | 19% |

---

<sup>1</sup>of which Hospital Patient Monitoring 78%, Ambulatory Monitoring &

Diagnostics 13%, Emergency Care 8%

<sup>2</sup>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**<br>In 2025, we took action to address geopolitical risks impacting <br>health systems directly. Tariff developments globally led to a <br>focus on cost predictability. This was compounded by changes in <br>healthcare funding in the US and the EU, which led to Medicaid, <br>rural and home-based care initiatives. We positioned Philips as a <br>partner in driving productivity improvements, reducing vendor <br>complexity, and supporting financial predictability – through <br>Enterprise Monitoring as-a-service and productivity-driving <br>software solutions. We also worked with government agencies, <br>industry partners and providers to mitigate cybersecurity threats <br>by closing security gaps and by strengthening digital resilience. <br>

25<br>

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.

![monitoring.jpg](phg-20251231_g34.jpg)

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.

![](phg-20251231_g3.gif)

<sup>\*</sup> Hard plastic parts excluding silicone nipple (mass balance approach).

26<br>

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<sup>\*</sup>, 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

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

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

hair removal, including Lumea premium Intense Pulsed Light hair

removal devices and solutions with the latest SenseIQ technology

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

through subscription models.

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

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

a young audience to premium power toothbrushes connected to the

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

available as a subscription service; and products for interdental

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

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

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

pumps, baby bottles and sterilizers), connected baby monitors

(Pregnancy+ and Baby+ apps).

Personal Health

**Total sales by Business**

---

| | |
|:---|:---|
|  | **2025** |
| Personal Health <sup>1</sup> | 100% |

---

<sup>1</sup>of 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**<br>In 2025, we took action to address the cost-management <br>challenges posed by tariff developments in various jurisdictions. <br>Through close planning with key retail and distribution partners, <br>we adjusted supply chain strategies, improved forecasting, and <br>adapted pricing structures. This disciplined approach helped us <br>manage volatility in our operating environment while <br>maintaining supply continuity and supporting long-term <br>customer relationships.<br>

27<br>

2025 developments: Personal Health

![personal-health_i9000.jpg](phg-20251231_g35.jpg)

Philips launched the i9000 Prestige Ultra electric

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).

![personal-health_lumea.jpg](phg-20251231_g36.jpg)

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.

![personal-health_avent.jpg](phg-20251231_g37.jpg)

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.

![personal-health_sonicare.jpg](phg-20251231_g38.jpg)

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<br>

Segment Other

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

Central costs, and other small items.

**Innovation & Design**

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

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

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

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

patient-centric.

Our Innovation & Design organization supports our businesses by

providing capabilities in software and systems engineering for

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

systems. We advance breakthrough and exploratory innovation

programs, working on a consistent, trusted user experience through

strong design principles. We are also accelerating the responsible and

sustainable application of AI, embedding AI into solutions designed to

improve care delivery and operational efficiency.

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

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

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

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

integrated in the existing development and quality management

processes, with the aim of meeting international regulations.

Guidelines and guardrails for AI usage by employees are being

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

orchestrating the enterprise level policies, standards, guidelines and

guardrails.

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

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

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

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

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

understand diverse healthcare needs, and anticipate emerging trends

everywhere Philips operates.

Philips was the leading applicant in medical technology at the

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

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

Global Innovators 2025. The Philips brand also received 160 design

awards in 2025.

**IP royalties**

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

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

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

industrial IP organization providing world-class IP solutions to Philips

Businesses to support their growth, competitiveness and profitability.

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

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

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

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

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

Philips earns substantial annual income from license fees and royalties

to third parties.

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

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

third-party patents and licenses.

**Central costs**

Philips is present in 71 countries globally and has its corporate

headquarters in Amsterdam, the Netherlands. Our real estate locations

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

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

headquarters to a new location in Amsterdam in 2025 has been

completed.

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

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

includes costs related to the Executive Committee and Group Functions

such as Legal & ESG and Internal Audit.

**Other small items**

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

legacy items relating to previously disposed businesses.

29<br>

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

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

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

30<br>

**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 % <sup>1</sup>

---

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

---

<sup>1</sup>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<br>

**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 | 65340 | 66678 |
| Contingent workers | 1614 | 1741 |
| **Total** | **66954** | **68419** |

---

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** | **67823** | **69656** | **77233** |
| Consolidation changes: |  |  |  |
| Acquisitions | - | - | 27 |
| Divestments | (109) | (227) | (353) |
| Other changes | (1313) | (1606) | (7251) |
| **Balance as of December 31** | **66401** | **67823** | **69656** |

---

**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 <br>employees | Permanent <br>employees | Temporary <br>employees | Temporary <br>employees | Other | Other | Philips Group | Philips Group |
|  | **2025** | 2024 1 | **2025** | 2024 1 | **2025** | 2024 | **2025** | 2024 1 |
| Western Europe | 15589 | 16156 | 211 | 256 | 7 | 1 | 15807 | 16413 |
| North America | 16362 | 17176 | 2 | 5 | - | - | 16364 | 17181 |
| Other mature geographies | 3685 | 3737 | 113 | 109 | - | - | 3798 | 3846 |
| **Mature geographies** | **35636** | **37069** | **326** | **370** | **7** | **1** | **35969** | **37440** |
| **Growth geographies** | **25440** | **25562** | **3929** | **3676** | **2** | **-** | **29371** | **29238** |
| **Philips Group** | **61076** | **62631** | **4255** | **4046** | **9** | **1** | **65340** | **66678** |

---

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.

32<br>

**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.

![financial-performance.jpg](phg-20251231_g39.jpg)

33<br>

**Financial** 

**performance**

34<br>

---

| | |
|:---|:---|
| ![charlotte-hanneman_square.jpg](phg-20251231_g40.jpg) |  |
| ![charlotte-hanneman_square.jpg](phg-20251231_g40.jpg) | *"In 2025, we delivered on our commitments and* <br>*drove performance every quarter. Successfully* <br>*navigating a complex macro-environment, including* <br>*tariffs, we increased comparable sales, expanded* <br>*margins, and strengthened cash flow through* <br>*industry-leading innovation and productivity* <br>*improvements."*<br>**Charlotte Hanneman** CFO Royal Philips<br>|
| ![charlotte-hanneman_square.jpg](phg-20251231_g40.jpg) |  |

---

**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 | 17834 | 18021 |
| Nominal sales growth | (1%) | (1%) |
| Comparable sales growth ¹ | 2% | 1% |
| Income from operations | 1424 | 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 | 2195 | 2077 |
| *as a % of sales* | *12.3%* | *11.5%* |
| Income from continuing operations attributable to shareholders ² per common share <br>(in EUR) - diluted<br>| 0.93 | (0.88) |
| Adjusted income from continuing operations attributable to shareholders ² per <br>common share (in EUR) - diluted ¹<br>| 1.56 | 1.36 |

---

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

[Reconciliation of non-IFRS information](#i709b790389b445bdbcabcc2c3c292121_736).

<sup>2</sup>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.

35<br>

**Factors impacting performance**

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

Philips' performance during the year.

**Macro-economic landscape**

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

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

robust growth, while China faced challenges from subdued consumer

sentiment. Europe and other growth markets performed steadily.

**Innovation**

Philips' growth was driven by new product launches and Personal

Health acceleration. We prioritized patient- and people-driven

innovation at scale, leveraging AI to enhance product offerings.

Investments in technology facilitated ongoing productivity

improvements to reduce operating costs.

**Operating model**

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

simplified operating model to increase agility and structurally lower the

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

Workforce-related restructuring charges were EUR 124 million in 2025

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

enterprise Functions and on reduction of non-core activities.

**Supply chain resilience**

Philips has taken action to boost supply chain resilience, including

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

improving component and material availability. These efforts enhanced

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

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

expand US manufacturing and R&D.

**Geopolitical environment**

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

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

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

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

Treatment and Connected Care.

**Outlook**

For 2026, Philips expects:

• Comparable sales growth: 3%-4.5%

• Adjusted EBITA margin: 12.5%-13.0%

• Free cash flow: EUR 1.3-1.5 billion

Furthermore, Philips plans to drive profitable growth to deliver

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

for 2026-2028:

• Comparable sales growth at mid-single-digits CAGR

• Adjusted EBITA margin at mid-teens in 2028

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

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

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

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

exclude ongoing Respironics-related proceedings, including the

investigation by the US Department of Justice.

On January 15, 2026, Philips completed the acquisition of

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

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

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

Philips' Diagnosis & Treatment segment and complements its

intravascular imaging and physiology portfolio.

<sup>\*</sup> Non-IFRS financial measure. For the definition and reconciliation of the most

directly comparable IFRS measure, refer to [Reconciliation of non-IFRS](#i709b790389b445bdbcabcc2c3c292121_736)

[information](#i709b790389b445bdbcabcc2c3c292121_736).

36<br>

**Results of operations**

**Sales**

Philips Group

**Sales** in millions of EUR unless otherwise stated

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| |  | **2025** |  |  | 2024 |  |
|  | Sales | Nominal <br>sales <br>growth<br>| Comparable <br>sales <br>growth ¹<br>| Sales | Nominal <br>sales <br>growth<br>| Comparable <br>sales <br>growth ¹<br>|
| Diagnosis & <br>Treatment<br>| 8531 | (3%) | 0% | 8790 | 0% | 1% |
| Connected Care | 5076 | (1%) | 3% | 5134 | 0% | 2% |
| Personal Health | 3673 | 5% | 8% | 3486 | (3%) | (1%) |
| *Other* | *554* |  |  | *611* | *1%* | *4%* |
| **Philips Group** | **17834** | **(1%)** | **2%** | **18021** | **(1%)** | **1%** |

---

<sup>1</sup>Non-IFRS financial measure. For the definition and reconciliation of the most

directly comparable IFRS measure, refer to [Reconciliation of non-IFRS](#i709b790389b445bdbcabcc2c3c292121_736)

[information](#i709b790389b445bdbcabcc2c3c292121_736).

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](#i709b790389b445bdbcabcc2c3c292121_742).

**Diagnosis & Treatment**

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

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

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

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

low-single-digit decline in Precision Diagnosis.

**Connected Care**

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

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

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

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

single-digit growth in Enterprise Informatics.

**Personal Health**

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

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

consolidation impact, growth in comparable sales was 8%.

**Other**

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

million in 2024, mainly due to lower royalty income.

**Sales per geographic area**

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

based on similar economic characteristics: Western Europe, North

America, Other mature geographies, and Growth geographies.

Western Europe, North America and Other mature geographies are

collectively grouped as Mature geographies in reporting on sales.

Philips Group

**Sales by geographic area** in millions of EUR unless otherwise stated

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | **2025** |  |  | 2024 |  |
|  | Sales | Nominal <br>sales <br>growth<br>| Comparable <br>sales <br>growth ¹<br>| Sales | Nominal <br>sales <br>growth<br>| Comparable <br>sales <br>growth ¹<br>|
| Western Europe | 3921 | (1%) | (1%) | 3978 | 4% | 5% |
| North America | 7542 | (1%) | 3% | 7655 | 1% | 2% |
| Other mature <br>geographies<br>| 1452 | (5%) | (1%) | 1526 | (6%) | (1%) |
| **Mature** <br>**geographies**<br>| **12915** | **(2%)** | **1%** | **13159** | **1%** | **2%** |
| Growth <br>geographies<br>| 4919 | 1% | 5% | 4863 | (6%) | (2%) |
| **Philips Group** | **17834** | **(1%)** | **2%** | **18021** | **(1%)** | **1%** |

---

<sup>1</sup>Non-IFRS financial measure. For the definition and reconciliation of the most

directly comparable IFRS measure, refer to [Reconciliation of non-IFRS](#i709b790389b445bdbcabcc2c3c292121_736)

[information](#i709b790389b445bdbcabcc2c3c292121_736).

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<br>

**Cost of sales** 

Philips Group

**Cost of sales components** in millions of EUR unless otherwise stated

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **As a % of** <br>**sales**<br>| 2024 | As a % of <br>sales<br>|
| Costs of materials used | 4120 | 23% | 4213 | 23% |
| Salaries and wages | 2249 | 13% | 2313 | 13% |
| Depreciation and <br>amortization<br>| 431 | 2% | 609 | 3% |
| Other manufacturing costs | 2976 | 17% | 3113 | 17% |
| **Cost of sales** | **9776** | **55%** | **10248** | **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** | **1700** | **1747** |
| *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<br>

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](#i709b790389b445bdbcabcc2c3c292121_436).

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<br>

**Income from operations (EBIT) and Adjusted EBITA**[\*](#i76a85b6449cf4433aab3b65b004ccc20_12392)

Philips Group

**Income from operations and Adjusted EBITA** <sup>1</sup> in millions of EUR unless

otherwise stated

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Income <br>from <br>operations<br>| As a % of <br>sales<br>| Adjusted <br>EBITA ¹<br>| As a % of <br>sales<br>|
| **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** | **1424** | **8%** | **2195** | **12.3%** |
| **2024** |  |  |  |  |
| Diagnosis & Treatment | 592 | 7% | 1018 | 11.6% |
| Connected Care | (466) | (9%) | 494 | 9.6% |
| Personal Health | 544 | 16% | 584 | 16.7% |
| *Other* | *(142)* |  | *(18)* |  |
| **Philips Group** | **529** | **3%** | **2077** | **11.5%** |

---

<sup>1</sup>Non-IFRS financial measure. For the definition and reconciliation of the most

directly comparable IFRS measure, refer to [Reconciliation of non-IFRS](#i709b790389b445bdbcabcc2c3c292121_736)

[information](#i709b790389b445bdbcabcc2c3c292121_736).

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

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

driven by higher gross margin, lower depreciation and amortization,

lower Respironics-related expenses, and lower charges for

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

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

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

mainly driven by comparable sales growth, favorable mix effects,

operational improvements and productivity actions, and partly offset

by cost inflation and higher tariffs. Amortization of acquired intangible

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

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

2023, which also included goodwill impairment charges of EUR 8

million.

Diagnosis & Treatment

Income from operations increased to EUR 804 million in 2025,

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

operational improvements and productivity actions and favorable mix

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

sales in 2025.

Amortization charges in 2025 were EUR 73 million. Amortization

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

acquired intangible assets following product discontinuation.

Amortization and goodwill impairment charges in 2023 were EUR 98

million and included EUR 89 million amortization charges and EUR 8

million goodwill impairment charges.

Connected Care

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

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

comparative impact of EUR 984 million for the Respironics litigation

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

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

higher comparable sales, operational improvements and productivity

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

EBITA\* improved to 11% of sales in 2025.

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

2024 and EUR 178 million in 2023.

Personal Health

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

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

operational improvements and productivity actions, partly offset by

higher tariffs and advertising and promotion spend. Adjusted EBITA\*

increased to 18% of sales in 2025.

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

2024 and EUR 14 million in 2023.

Other

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

Central costs and Other.

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

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

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

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

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

by lower royalty income.

**Financial income and expense**

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

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

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

compared with 2024.

**Income taxes**

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

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

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

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

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

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

**Investment in associates**

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

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

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

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

**Discontinued operations**

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

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

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

related to past divestments, including the Domestic Appliance business,

which were previously reported as discontinued operations. For further

information, refer to [Discontinued operations and assets classified as](#i709b790389b445bdbcabcc2c3c292121_388)

[held for sale](#i709b790389b445bdbcabcc2c3c292121_388).

40<br>

**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.](#i709b790389b445bdbcabcc2c3c292121_736)

41<br>

**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](#i709b790389b445bdbcabcc2c3c292121_391).

**Summary balance sheet**

For details refer to [Consolidated balance sheets](#i709b790389b445bdbcabcc2c3c292121_370).

Philips Group

**Summary balance sheet information** in millions of EUR

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Total non-current assets | 17012 | 18955 |
| Total current assets | 9932 | 10022 |
| **Total assets** | **26944** | **28976** |
| Total non-current liabilities | 8446 | 8787 |
| Total current liabilities | 7509 | 8146 |
| **Total liabilities** | **15954** | **16933** |
| Shareholders' equity | 10957 | 12006 |
| Non-controlling interests | 32 | 37 |
| **Group equity** | **10990** | **12043** |
| **Total liabilities and group equity** | **26944** | **28976** |

---

**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 | 1057 | 710 |
| Repayments long-term debt incl. leases | (609) | (763) |
| New borrowings (repayments) short-term debt | (24) | (30) |
| Forward contracts entered (matured) | 127 | (248) |
| Currency effects, consolidation changes and other | (241) | 114 |
| **Changes in debt** | **446** | **(50)** |

---

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

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

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

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

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

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

and EUR bonds maturing in 2026.

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

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

maturity of forward contracts related to the share buyback program and

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

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

maturing in 2032.

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

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

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

the end of 2024. For further information, please refer to [Debt](#i709b790389b445bdbcabcc2c3c292121_433).

42<br>

**Shareholders' equity**

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

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

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

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

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

offset by the net income attributable to shareholders of EUR 895

million.

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

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

attributable to shareholders of EUR 702 million and currency

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

appreciation of the US dollar against the euro in 2024.

**Share capital structure**

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

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

million shares in treasury to cover obligations under Long-Term

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

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

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

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

distribute the 2024 share portion of the dividend.

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

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

million shares in treasury to cover obligations under Long-Term

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

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

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

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

distribute the 2023 dividend. The company cancelled 4.4 million shares

in June 2024.

**Share repurchase methods for Long-Term Incentive** 

**plans and capital reduction purposes**

Historically, Philips uses different methods to repurchase shares in its

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

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

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

shares.

The open market transactions via an intermediary allow for buybacks

during both open and closed periods.

For more information on share repurchase transactions entered into

2023, 2024, and 2025, refer to [Equity](#i709b790389b445bdbcabcc2c3c292121_430).

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 | 962920 | 939939 | 913516 | 889315 | 883899 |
| Shares in treasury | 11631 | 14930 | 7113 | 7835 | 13717 |
| Shares outstanding | 951289 | 925009 | 906403 | 881481 | 870182 |
| Shares acquired | - | 13718 | 15964 | 5081 | 45486 |
| Shares cancelled | - | 4437 | 15134 | 8758 | 33500 |

---

43<br>

Philips Group

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

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Share repurchases <br>related to shares <br>acquired for capital <br>reduction<br>| Average price paid per <br>share in EUR<br>| Shares acquired for LTI's | Total number of shares <br>purchased<br>| Total number of shares <br>purchased as part of <br>publicly announced <br>plans or programs<sup>1 2 3</sup><br>| Approximate value of <br>shares that may yet be <br>purchased under the <br>plans or programs in <br>thousands of EUR <sup>5 6</sup><br>|
| January 2025 | - | - | - | - | - | 131518 |
| February 2025 | - | - | - | - | - | 131518 |
| March 2025 | - | - | - | - | - | 131518 |
| April 2025 | - | - | - | - | - | 131518 |
| May 2025 | - | - | - | - | - | 131518 |
| June 2025 | - | - | - | - | - | 244434 |
| July 2025 | - | - | - | - | - | 244434 |
| August 2025 | - | - | - | - | - | 244434 |
| September 2025 | - | - | - | - | - | 246621 |
| October 2025 | - | - | - | - | - | 246621 |
| November 2025 | - | - | - | - | - | 246621 |
| December 2025 | - | - | - | - | - | 246621 |
| **Total** | **-** | **-** | **-** | **-** | **-** | **246621** |
| Of which <sup>4</sup> |  |  |  |  |  |  |
| Purchased in the open market | - | - | - | - | - |  |
| Acquired through exercise of call options/<br>settlement of forward contracts<br>| - | - | - | - | - |  |
| To be acquired by settlement of forward <br>contracts after December 31, 2025<br>|  |  |  |  |  | 246621 |

---

<sup>1</sup>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](#i709b790389b445bdbcabcc2c3c292121_430).

<sup>2</sup>Philips did not cancel shares in 2025.

<sup>3</sup>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.

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

<sup>5</sup>All shares will be purchased through publicly announced plans or programs.

<sup>6</sup>Calculated considering the present value of the forward purchase contract obligations.

44<br>

**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** | **2401** | **1869** |
| Net cash flows from operating activities | 1172 | 1569 |
| 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** | **2794** | **2401** |

---

**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 | 2794 | 2401 |
| Listed equity investments at fair value ¹ | 2 | 4 |
| Committed revolving credit facility | 1000 | 1000 |
| **Liquidity** | **3796** | **3405** |
| Short-term debt | (1151) | (526) |
| Long-term debt | (6934) | (7113) |
| **Debt** | **(8084)** | **(7639)** |
| **Net available liquidity resources** | **(4289)** | **(4233)** |

---

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

companies in various industries. Refer to [Other financial assets](#i709b790389b445bdbcabcc2c3c292121_418) and [Fair value of](#i709b790389b445bdbcabcc2c3c292121_463)

[financial assets and liabilities](#i709b790389b445bdbcabcc2c3c292121_463).

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](#i709b790389b445bdbcabcc2c3c292121_736)

[information.](#i709b790389b445bdbcabcc2c3c292121_736)

45<br>

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](#i709b790389b445bdbcabcc2c3c292121_466)

[financial risks](#i709b790389b445bdbcabcc2c3c292121_466). Further, with respect to potential claims related to the

Respironics recall, please refer to [Contingencies](#i709b790389b445bdbcabcc2c3c292121_451). 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](#i709b790389b445bdbcabcc2c3c292121_433).

Philips Group

**Credit rating summary**

---

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

---

Philips pools cash from subsidiaries to the extent legally and

economically feasible. Cash not pooled remains available for local

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

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

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

notice for general use by the group.

Philips believes its current liquidity and direct access to capital markets

is sufficient to meet our present financing needs.

**Cash obligations**

Contractual cash obligations

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

contractual cash obligations and commitments as of December 31,

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

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

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

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

future periods may differ from those presented in the accompanying

table.

Philips Group

**Contractual cash obligations** <sup>1 2</sup> in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | 2025 | 2025 | 2025 | 2025 | 2025 |
|  | Payments due by period | Payments due by period | Payments due by period | Payments due by period | Payments due by period |
|  | Total | Less than <br>1 year<br>| 1-3 years | 3-5 years | After 5 <br>years<br>|
| Long-term debt | 7086 |  | 1630 | 1806 | 3650 |
| Short-term debt | 1174 | 1174 |  |  |  |
| Interest on debt | 1765 | 216 | 402 | 361 | 786 |
| Derivative liabilities | 36 | 35 | 1 | - | - |
| Purchase obligations ³ | 1189 | 293 | 390 | 306 | 200 |
| Trade and other payables | 1927 | 1927 |  |  |  |
| **Contractual cash** <br>**obligations**<br>| **13177** | **3645** | **2423** | **2473** | **4636** |

---

<sup>1</sup>Amounts in this table are undiscounted

<sup>2</sup>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.

<sup>3</sup>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.

46<br>

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](#i709b790389b445bdbcabcc2c3c292121_439)

[benefits](#i709b790389b445bdbcabcc2c3c292121_439).

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

result in cash outflows in 2026. Refer to [Provisions](#i709b790389b445bdbcabcc2c3c292121_436).

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](#i709b790389b445bdbcabcc2c3c292121_163) for information on the proposed dividend

distribution.

Please refer to [Equity](#i709b790389b445bdbcabcc2c3c292121_430) 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[\*](#i207c4d0936df4b9dba3dc3f8c14542eb_1439).

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 <br>date<br>| Record date | Distribution <br>from<br>|
| 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 |

---

<sup>1</sup>In cash or shares at the election of shareholder

<sup>2</sup>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](#i709b790389b445bdbcabcc2c3c292121_736)

[information.](#i709b790389b445bdbcabcc2c3c292121_736)

![esg_fullpage.jpg](phg-20251231_g41.jpg)

47<br>

**Governance**

48<br>

**Governance**

This section describes the governance framework that enables us to

operationalize our purpose by adopting a fully integrated approach to

doing business responsibly and sustainably.

**Corporate governance**

Management and oversight responsibilities and accountability within

our company are ultimately guided by the corporate governance of the

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

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

shares have been listed on the Amsterdam stock exchange (Euronext

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

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

York Stock Exchange since 1987.

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

Management and a Supervisory Board, each of which is accountable to

the General Meeting of Shareholders for the fulfillment of its

respective duties. The members of the Board of Management,

supported by the other members of the Executive Committee, drive the

company's management agenda and share responsibility for the

continuity of the Philips Group, focusing on sustainable long-term

value creation. The independent Supervisory Board supervises the

Board of Management and the Executive Committee and advises them

on general policies related to the activities of the company, including

setting and executing the strategy of the Philips Group. These

responsibilities include the oversight of the Environmental, Social and

Governance (ESG) dimensions and their integration into the company's

overarching strategy, which is a responsibility of the Supervisory Board

as a whole because of their significance.

Philips is governed by Dutch corporate and securities laws, its Articles of

Association, and the Rules of Procedure of the Board of Management

and the Executive Committee and of the Supervisory Board,

respectively. Our corporate governance framework is also based on the

Dutch Corporate Governance Code (dated March 20, 2025) and US laws

and regulations applicable to Foreign Private Issuers.

**Board of Management and Executive Committee**

**Introduction**

The Board of Management is entrusted with the management of the

company. Certain key officers have been appointed to support the

Board of Management in the fulfillment of its managerial duties. The

members of the Board of Management and these key officers together

constitute the Executive Committee, which consists of 14 members on

the date of this Corporate governance report. In this Corporate

governance report, wherever the Executive Committee is mentioned,

this also includes the members of the Board of Management, unless the

context requires otherwise. Please refer to [Members of the Board of](#i709b790389b445bdbcabcc2c3c292121_46)

[Management and Executive Committee](#i709b790389b445bdbcabcc2c3c292121_46) for an overview of the current

members.

Under the chairmanship of the President/Chief Executive Officer (CEO),

and supported by the other members of the Executive Committee, the

members of the Board of Management drive the company's

management agenda and share responsibility for the continuity of the

Philips Group. Please refer to the Rules of Procedure of the Board of

Management and the Executive Committee, which are published on

the Philips website, for a description of further responsibilities and

tasks, as well as procedures for meetings, resolutions, and minutes.

In fulfilling their duties, the members of the Board of Management and

Executive Committee are guided by the interests of Philips and the

affiliated enterprise, taking into account the interests of our

stakeholders. The Board of Management and the Executive Committee

have adopted a division of responsibilities based on the Functions,

Businesses and Regions, each of which is monitored and reviewed by

the individual members. The Board of Management is accountable for

the actions and decisions of the Executive Committee and has ultimate

responsibility for external reporting (including reporting to the

shareholders).

The Board of Management and the Executive Committee are

supervised by the Supervisory Board. Members of the Board of

Management and the Executive Committee will be present in the

meetings of the Supervisory Board, if so invited. In addition, the CEO

and other members of the Board of Management (and if needed, the

other members of the Executive Committee) meet on a regular basis

with the Chairman and other members of the Supervisory Board. The

Board of Management and the Executive Committee are required to

keep the Supervisory Board informed of all facts and developments

concerning Philips that the Supervisory Board may need to be aware of

in order to function as required and to properly carry out its duties.

Certain important decisions of the Board of Management require

Supervisory Board approval, including decisions concerning: the

operational and financial objectives and the strategy designed to

achieve these objectives; the issue, repurchase or cancellation of shares;

and major acquisitions or divestments.

**Appointment and composition**

Members of the Board of Management, including the CEO, are

appointed by the General Meeting of Shareholders upon a binding

recommendation drawn up by the Supervisory Board after consultation

with the CEO. This binding recommendation may be overruled by a

resolution of the General Meeting of Shareholders adopted by a simple

majority of the votes cast and representing at least one-third of the

issued share capital. If a simple majority of the votes cast is in favor of

the resolution to overrule the binding recommendation, but such

majority does not represent at least one-third of the issued share

capital, a new meeting may be convened, at which the resolution may

be passed by a simple majority of the votes cast, regardless of the

portion of the issued share capital represented by such majority. In the

event that a binding recommendation has been overruled, a new

binding recommendation shall be submitted to the General Meeting of

Shareholders. If such second binding recommendation has been

overruled, the General Meeting of Shareholders shall be free to

appoint a board member.

The CEO and the other members of the Board of Management are

appointed for a (maximum) term of four years, it being understood

that this term expires at the closing of the General Meeting of

Shareholders to be held in the fourth calendar year after the year of

their appointment or, if applicable, at a later retirement date or other

contractual termination date in the fourth year, unless the General

Meeting of Shareholders resolves otherwise. The same applies in the

case of re-appointment, which is possible for consecutive terms of (a

49<br>

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](#i709b790389b445bdbcabcc2c3c292121_316). Please also refer to

[Supervisory Board](#i709b790389b445bdbcabcc2c3c292121_310) 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](#i709b790389b445bdbcabcc2c3c292121_316)

[report](#i709b790389b445bdbcabcc2c3c292121_316). Typically, newly appointed members of the Supervisory Board

follow an induction program and interact with Executive Committee

members for deep-dives on matters such as strategy, finance and

investor relations, quality, governance, legal, sustainability and

digitization.

50<br>

Effective 2022, Dutch law provides a mandatory gender quota,

requiring that at least one-third of the Supervisory Board members are

women and at least one-third men (for calculation purposes, a total

number of board members that cannot be divided by three must be

rounded up to the next number that can be divided by three). The

quota is applicable to (i) the appointment of new Supervisory Board

members, and (ii) the re-appointment of acting board members after

eight years following their initial appointment. Except in certain

exceptional circumstances, any appointment or re-appointment

resulting in a Supervisory Board composition that does not meet (or no

longer meets) the quota, will be invalid (null and void).

As announced on August 14, 2023, Philips and Exor N.V. entered into a

Relationship Agreement on August 13, 2023, which has been published

on the Philips website. The relationship agreement includes Exor's

commitment to be a long-term minority investor in Philips and its right

to propose one member to the Supervisory Board. In this context, it is

noted that, for as long as Exor has such nomination right pursuant to

the relationship agreement, the independence exception of best

practice provision 2.1.7(iii) of the Dutch Corporate Governance Code is

deemed to apply to any Exor nominee that has been appointed upon

such nomination in accordance with the Relationship Agreement.

**Supervisory Board committees**

The Supervisory Board, while retaining overall responsibility, has

assigned certain tasks to four committees: the Corporate Governance

and Nomination & Selection Committee, the Remuneration Committee,

the Audit Committee, and the Quality & Regulatory Committee. Each

committee reports to the full Supervisory Board. Please refer to the

charters of the respective committees, which are published on the

Philips website as part of the Rules of Procedure of the Supervisory

Board, for a description of their responsibilities, composition, meetings

and working procedures.

The *Corporate Governance and Nomination & Selection Committee* is

responsible for preparing selection criteria and appointment

procedures for members of the Supervisory Board, the Board of

Management and the Executive Committee. The Committee makes

proposals to the Supervisory Board for the (re)appointment of such

members, and periodically assesses their functioning. The Committee

also periodically assesses the Executive Committee succession planning

and the Diversity Policy, and supervises the policy of the Executive

Committee on the selection criteria and appointment procedures for

Philips executives. At least once a year, the Committee reviews the

corporate governance principles applicable to Philips, and advises the

Supervisory Board on any changes to these principles that it deems

appropriate.

The *Remuneration Committee* is responsible for preparing decisions of

the Supervisory Board on the remuneration of individual members of

the Board of Management and the Executive Committee. The

Committee prepares an annual remuneration report, which is published

on the Philips website by the Supervisory Board ahead of the Annual

General Meeting of Shareholders. In performing its duties and

responsibilities, the Remuneration Committee is assisted by an external

consultant and an in-house remuneration expert.

The *Audit Committee* assists the Supervisory Board in fulfilling its

oversight responsibilities for: the integrity of the financial statements;

the financial and non-financial (ESG) reporting processes; the

effectiveness (also in respect of the reporting process) of the risk

management and internal control framework; the internal and

external audit process; the internal and external auditor's

qualifications, independence and performance; and the process for

monitoring compliance with laws and regulations and the General

Business Principles (including related manuals, training and tools). It

reviews the annual and interim financial statements, including non-

financial information, prior to publication and advises the Supervisory

Board on the adequacy and appropriateness of internal control policies

and internal audit programs and their findings. The Committee

furthermore supervises the Internal Audit Function, maintains contact

with and supervises the external auditor and prepares the nomination

of the external auditor for appointment by the General Meeting of

Shareholders.

The composition of the Audit Committee meets the relevant

requirements under Dutch law and the applicable US rules. All of the

members are considered to be independent and financially literate, and

the Audit Committee as a whole has competence relevant to the sector

in which the company is operating. In addition, Liz Doherty is

designated as an Audit Committee financial expert, as defined under

the regulations of the US Securities and Exchange Commission. The

Supervisory Board considers the expertise and experience available in

the Audit Committee, in conjunction with the possibility to take advice

from internal and external experts and advisors, to be sufficient for the

fulfillment of the tasks and responsibilities of the Audit Committee.

The *Quality & Regulatory Committee* has been established by the

Supervisory Board in view of the central importance of the quality and

(patient) safety of Philips' products, systems, services and software, as

well as the development, testing, manufacturing, marketing and

servicing thereof, and the regulatory requirements relating thereto.

The Quality & Regulatory Committee assists the Supervisory Board in

fulfilling its oversight responsibilities in this area, while recognizing

that the Audit Committee assists the Supervisory Board in its oversight

of other areas of regulatory, compliance and legal matters.

**Other Board-related matters**

**Remuneration and share ownership**

The remuneration of the individual members of the Board of

Management is determined by the Supervisory Board, taking into

account the remuneration policy adopted by the General Meeting of

Shareholders. The remuneration of the individual members of the

Supervisory Board is determined by the General Meeting of

Shareholders, also on the basis of a remuneration policy.

The current remuneration policies for the Board of Management and

the Supervisory Board, respectively, were adopted in 2024 and are

published on the Philips website. Pursuant to Dutch law, the

shareholders are entitled to vote on the adoption of the separate

remuneration policies for the Board of Management and the

Supervisory Board at the Annual General Meeting of Shareholders (at

least) every four years. The adoption of a remuneration policy will

require a special majority of three-quarters of the votes cast (as the

Articles of Association do not provide for a lower majority).

A description of the composition of the remuneration paid and owed

to the individual members of the Board of Management and the

Supervisory Board is included in the annual Remuneration Report (as

prepared by the Remuneration Committee, adopted by the Supervisory

51<br>

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](#i709b790389b445bdbcabcc2c3c292121_223). For more information on the profile and current

composition of the Supervisory Board refer to [Supervisory Board report](#i709b790389b445bdbcabcc2c3c292121_316).

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.

52<br>

**Outside directorships**

In compliance with the Dutch Corporate Governance Code, members of

the Board of Management require the approval of the Supervisory

Board before they can accept a position as a member of a supervisory

board or a position as a non-executive director on a one-tier board

(Non-Executive Directorship) at another company. The Supervisory

Board must be notified of other important positions (to be) held by a

member of the Board of Management.

Dutch law provides for certain limitations on the number of Non-

Executive Directorships a member of the Board of Management or

Supervisory Board may hold. No member of the Board of Management

shall hold more than two Non-Executive Directorships at 'large'

companies (*naamloze vennootschappen* or *besloten vennootschappen*)

or 'large' foundations (*stichtingen*), as defined under Dutch law, and

no member of the Board of Management shall hold the position of

chairman of another one-tier board or the position of chairman of

another supervisory board. No member of the Supervisory Board shall

hold more than five Non-Executive Directorships at such companies or

foundations, with a position as chairman counting for two. During the

financial year 2025 all members of the Board of Management and the

Supervisory Board complied with the limitations described in this

paragraph.

**General Meeting of Shareholders**

**Meetings**

The Annual General Meeting of Shareholders shall be held no later

than six months after the end of the financial year. The agenda for the

meeting typically includes: an advisory vote on the Remuneration

Report; discussion of the Annual Report; the adoption of the financial

statements; policy on additions to reserves and dividends; any proposed

dividends or other distributions; discharge of the members of the Board

of Management and the Supervisory Board; and any other matters

proposed by the Supervisory Board, the Board of Management or

shareholders in accordance with Dutch law and the Articles of

Association.

Shareholders' meetings are convened by public notice via the Philips

website, and registered shareholders are notified by letter or by

electronic means of communication at least 42 days prior to the day of

the relevant meeting. Shareholders who wish to exercise the rights

attached to their shares with respect to a shareholders' meeting are

required to register for such meeting. Shareholders may attend a

meeting in person, vote by proxy (via an independent third party) or

grant a power of attorney to a third party to attend the meeting and

vote on their behalf. Details on registration for meetings, attendance

and proxy voting will be included in the notice convening the relevant

meeting.

Pursuant to Dutch law, the record date for the exercise of voting rights

and rights relating to shareholders' meetings is set at the 28th day prior

to the day of the relevant meeting. Shareholders registered on such

date are entitled to attend the meeting and to exercise the other

shareholder rights (at the relevant meeting) notwithstanding any

subsequent sale of their shares after the record date.

In accordance with the Articles of Association and Dutch law, requests

from shareholders for items to be included on the agenda will

generally be honored, subject to the company's rights to refuse to

include the requested agenda item under Dutch law, provided that

such requests are made in writing at least 60 days before a General

Meeting of Shareholders to the Board of Management and the

Supervisory Board by shareholders representing at least 1% of the

company's outstanding capital or, according to the official price list of

Euronext Amsterdam, representing a value of at least EUR 50 million.

Written requests may be submitted electronically and shall comply with

the procedure stipulated by the Board of Management, which is posted

on the Philips website.

Pursuant to Dutch law, shareholders requesting an item to be included

on the agenda of a meeting have an obligation to disclose their full

economic interest (i.e., long position and short position). Philips has the

obligation to publish such disclosures on our website.

**Main powers of the General Meeting of Shareholders**

The powers are:

• to appoint, suspend and dismiss members of the Board of

Management and the Supervisory Board

• to adopt remuneration policies for the Board of Management and

the Supervisory Board, to determine the remuneration of the

individual members of the Supervisory Board and to approve long-

term incentive (equity-based) plans for the Board of Management

• to adopt the annual accounts, to declare dividends and to discharge

the Board of Management and the Supervisory Board from any

liability with respect to the performance of their respective duties for

the previous financial year

• to appoint the company's external auditor

• to adopt amendments to the Articles of Association and proposals to

dissolve or liquidate the company

• to issue shares or rights to shares

• to restrict or exclude pre-emptive rights of shareholders and to

repurchase or cancel outstanding shares

• in accordance with Dutch law, to approve decisions of the Board of

Management that are so far-reaching that they would greatly

change the identity or nature of the company or the business

We apply principle 4.1 of the Dutch Corporate Governance Code within

the framework of the Articles of Association and Dutch law and in the

manner described in this Corporate governance report. All issued and

outstanding shares carry voting rights and each share confers the right

to cast one vote in a shareholders' meeting. Pursuant to Dutch law, no

votes may be cast at a General Meeting of Shareholders with respect to

shares that are held by Philips. Furthermore, there are no special

statutory rights attached to the shares of the company, and no

restrictions on the voting rights of the company's shares exist. Subject

to certain exceptions provided by Dutch law and/or the Articles of

Association, resolutions of the General Meeting of Shareholders are

passed by an absolute majority of votes cast and do not require a

quorum.

**Share capital: issue and repurchase of (rights to) shares**

The authorized share capital of the company amounts to EUR 800

million, divided into 2 billion common shares with a nominal value of

20 eurocents each and 2 billion preference shares, also with a nominal

53<br>

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](#i709b790389b445bdbcabcc2c3c292121_55)

[focus](#i709b790389b445bdbcabcc2c3c292121_55).

**Structure and governance**

In order to meet the needs of patients, customers and consumers, our

empowered Business Units are supported by the Regions and Functions.

**Business Units, Businesses and segments** 

Our Business Units are in the lead, accountable for value creation

through their value streams. Our Business Unit leaders have full

accountability for meeting customer needs and their end-to-end P&L,

including patient safety and quality and supply chain performance.

Business Units are broken down into business categories, where

relevant.

The Businesses are lean, and their leaders ensure consistent alignment

among the Business Units' strategies and goals. They also execute

performance management toward the Business Units, including target

setting.

Our segment leaders ensure strategic execution and focus cross-

Business, and they are held accountable by the Board of Management

for the results of their underlying Businesses/Business Units. The three

segments are Diagnosis & Treatment, Connected Care, and Personal

Health, as also disclosed in our external reporting.

**Regions**

We are organized in three Regions: North America, Greater China and

International Region (the latter consisting of Europe and Growth

areas). The Regions' primary accountability is to manage customer

intimacy, build and maintain relationships, and cultivate understanding

of their needs, as well as carry out (strategic) account management,

service delivery, and indirect partner management. They are also

accountable for government relations and for providing the local

infrastructure needed to support Philips' presence in a country (license

to operate).

**Functions** 

Our Functions' core objective is to drive excellence (for reasons of skill,

scope and scale) across the organization. Functions deliver cost-

effective services, ensure legal and regulatory requirements are met,

and propose enterprise policies, standards, guidance and infrastructure,

as well as build and share capabilities and expertise.

**Performance management**

We set ambitious targets and closely manage performance through a

disciplined and focused operating cadence. Our performance

management system is based on an annual planning cycle, in which we

translate our vision and strategy into objectives and plans. The cycle

starts with strategic planning, where we define our long-term

ambitions, both financial and non-financial, and set our long-term

54<br>

priorities. Each year, Philips' strategic plan is translated into an annual

operating plan, underpinned with Business Unit, Regional and

Functional plans. Detailed plans to achieve the company's targets are

cascaded into the organization and, ultimately, people's personal

objectives, making clear what performance and behaviors are expected

from them.

**Policies, processes, systems and data**

Our framework of policies, processes, systems and data principles

applies throughout the organization. It allows our Business Units

flexibility to adapt to specific requirements in order to meet specific

Business Unit needs.

Enterprise-wide policies provide high-level mandatory rules that apply

to all Philips employees. All enterprise-wide policies are maintained

through a standard process and approved by the Board of

Management. Function leaders can set more specific policies and

standards within their mandate.

Philips' processes are captured in our process framework, where we

manage end-to-end connections and define the critical process

elements (including the 'what' and 'how', roles and responsibilities,

systems and data, and compliance requirements). The process

framework provides the foundation for our management systems,

including quality, environmental, and health and safety, to ensure a

compliant approach for processes, systems, data and competencies for a

specific management area.

**Patient safety, quality and regulatory and the** 

**Medical Office**

Enabling the delivery of patient-centric, safe, and high-quality care –

the essence of patient safety and quality – is foundational to Philips'

purpose. The Patient Safety and Quality organization brings together

the quality and regulatory affairs as one unified team in close

coordination with the Medical Office. This team is positioned to foster

the quality culture and implement the capabilities, processes, and tools

required for operating in the highly regulated healthcare technology

industry. This structured approach promotes non-conformance

management, high standards of product quality, and compliance. The

Chief Patient Safety and Quality Officer is a member of the Philips

Executive Committee and reports directly to the Chief Executive Officer.

Our processes are designed to address specific, potentially negative

impacts to patients, customers and consumers. They include:

• maintaining effective Quality Management Systems (QMSs)

• tracking Corrective and Preventive Action (CAPA) and complaint

management performance, and supporting those who are

accountable for the performance and reporting results (ultimately to

the Board of Management)

• performing external audits for compliance and standards

certification

• performing internal QMS audits

• having quarterly reviews by the Quality & Regulatory Committee of

the Supervisory Board

As part of our CAPA approach, a centralized system collects, manages,

addresses and stores complaints and other feedback from customers.

Teams in all Businesses, Regions, and Functions foster a quality culture

and mindset, where all employees are encouraged to speak up and

share ideas for improving the safety and efficacy of our products. In

September 2025, Philips launched the Blue Heart Series, which included

videos aimed at reinforcing our shared commitment to compliance,

promoting the SpeakUp program, and fostering patient safety and

quality as part of our overall culture. Employees reflected on how these

elements, in particular patient safety and quality, are a personal

commitment and obligation. We also continued to strengthen the

patient safety and quality performance review meetings with each

Business individually and in the aggregate. We set patient safety and

quality key performance indicators for the company in 2026, and

quality performance metrics are part of the remuneration of all Philips

executives. Additionally, every Philips employee has a patient safety

and quality goal as part of annual people performance management.

**Quality**

We strive to continuously raise our performance to deliver safe and

high-quality products, services, and solutions, which are compliant with

quality and safety standards and all applicable laws. We have

undertaken a top-to-bottom review and renewal of our systems and

processes in collaboration with global regulatory agencies, and these

efforts continue. In 2025, we continued to simplify how we work and

improve accountability and ownership, and further strengthened our

engineering capabilities for product development in areas such as

quality systems engineering, reliability and software design.

We further reduced the number of QMSs in which we operate and

continued our investment in systems, capabilities and training to

reduce complexity and improve execution effectiveness.

**FDA regulatory actions**

Our commitment to patient safety and quality remains our highest

priority and is embedded in our corporate strategy. This commitment

includes engagement with global regulatory bodies, including the US

Food and Drug Administration (FDA). In 2025, we hosted 10 FDA

inspections, and six resulted in zero observations. The remaining four

resulted in a total of 14 observations. We are addressing regulatory

enforcement actions, including one formal warning letter and ongoing

recalls of our medical devices. In 2025, we addressed two Class I and 38

Class II recalls.

Philips Group

**US FDA regulatory actions**

---

| | | | |
|:---|:---|:---|:---|
| Patient Safety and Quality | **2025** | 2024 | 2023 |
| Total Class I Recalls | 2 | 5 | 6 |
| Total Class II Recalls | 38 | 31 | 40 |
| Warning letters issued (FDA) | 1 | 2 | 0 |

---

55<br>

In early 2025, the FDA conducted intensive inspections of nine of our

facilities. Three of these inspections led to observations relating to

documentation, processes and procedures. These relate to Philips

Ultrasound facilities in the US, and a Philips site in the Netherlands that

manufactures two products for the Enterprise Informatics business. The

observations materialized in a warning letter. Philips submitted a

response to the agency in accordance with regulatory requirements,

and we are determined to resolve these issues to the full satisfaction of

the FDA with the needs of patients and clinicians central to our focus.

We are committed to continuously improving our documentation,

processes and procedures in close collaboration with all relevant global

regulators.

**Regulatory Affairs**

Regulatory Affairs, with representation on the leadership team of each

Business and Region, further strengthened internal governance and

requirements for engagements with national regulatory authorities,

such as the FDA, European Medicines Agency (EMA), China's National

Medical Products Administration, notified bodies, and national

competent authorities in the EU.

As Philips is a global business in a dynamic regulatory environment,

Regulatory Affairs bolsters our compliance with evolving regulations

related to innovations in areas such as AI, healthcare informatics, and

software design. Sought as strategic partners, the Regulatory Affairs

team participated in international consensus standards groups

alongside regulators and engaged with international regulators as

invited experts and speakers at the International Medical Device

Regulators Forum, Global Harmonization Working Party, and other

meetings. Regulatory Affairs is working with the National Institutes of

Health in the US to establish ethical applications of AI in medical

devices.

**Medical Office**

The Medical Office focuses on supporting our Businesses; navigating

the intricacies of addressing patients' and customers' unmet needs

across a variety of ecosystems; and helping teams develop solutions

that are safe, effective, and relevant for patients and healthcare

providers.

The Medical Office is a global team of medical and scientific experts

working within and across Businesses and is led by the Chief Medical

Officer, who reports directly to the Chief Executive Officer.

The team is responsible for the design, generation, and sharing of

clinical and economic evidence to show the value of our innovations in

terms of enhancing the patient and care provider experience,

improving patient outcomes, and increasing healthcare system

productivity. The team collaborates with healthcare providers, and

medical and scientific communities, as well as with private healthcare

payers, governments and policy makers to expand access to, and ensure

widespread use of, our innovations.

In 2025, we expanded the Philips Medical Office, further enhancing our

own expertise and adding clinical partnership and public-private

partnership expertise, to help accelerate innovation and business

growth. We continued with the Philips Safety Board as a cross-

functional forum, led by the Philips Medical Office, to provide

independent expert advice to guide and support the Businesses on pre-

and post-market product safety and risk evaluations.

The team continued advocacy and investment to combat non-

communicable diseases, including cardiovascular disease and stroke, as

well as to promote radiation safety, medical device testing, and

improved access to physician and staff training, among others. The

health economics team continued to contribute economic evidence to

support innovation and expand access to high-quality care.

**General Business Principles (GBP)**

While pursuing our business objectives, we aim to be a responsible

partner in society, acting with integrity towards our employees,

customers, patients, business partners and shareholders, as well as the

wider community in which we operate. To that end, our GBP – part of

the Philips operating model – and their underlying policies incorporate

and represent the fundamental principles by which all Philips

Businesses and employees around the globe must abide. They set the

minimum standard for our business conduct as a health technology

company, for our individual employees and for our subsidiaries, and

Philips rigorously enforces compliance. Our GBP also serve as a

reference for the business conduct we expect from all our business

partners. The GBP and underlying policies, including the Finance Code

of Ethics and Procurement Code of Ethics, are published on the

company website at www.philips.com/gbp.

The GBP (updated in 2024) include legal developments and input from

stakeholders, including internal Functions (e.g., Group Sustainability,

People, Legal). The Universal Declaration of Human Rights, the UN

Convention against Corruption and other standards served as a

reference. The GBP include principles of doing business with integrity

at work, integrity in the market, and professional integrity outside

work. They set our integrity standard on inside information, aiming to

prevent trading on or improper disclosure of non-public, price-sensitive

information related to Philips securities or securities of companies that

Philips is seeking to acquire. More specifically, Philips has adopted rules

of conduct, governing the purchase, sale and other dispositions of

Philips securities, that are designed to promote compliance with

applicable insider trading and other market abuse laws, rules and

regulations (in particular the EU Market Abuse Regulation) and

applicable listing standards. The rules of conduct which apply to all

employees, the members of the Board of Management and the

Supervisory Board of Royal Philips. The GBP also include principles on

conducting business with honesty and integrity, and they explicitly

prohibit corrupt practices, acts of bribery and facilitation payments.

More detailed guidance is included in the Anti-Bribery, Anti-Corruption

and Anti-Money Laundering Policy, which is explicitly referenced in and

forms an integral part of the GBP.

The GBP are referenced and included in labor contracts and business

partner agreements. Translations of the GBP are available in 30

languages, allowing almost every employee to read the GBP in their

native language. Detailed underlying policies, manuals, training, and

tools are in place to give employees practical guidance on how to apply

and uphold the GBP in their daily work environment. Each year,

employees reconfirm their commitment to the code of conduct after

completing their GBP e-learning, and there is an additional annual

signed commitment for executives. A similar signed commitment is in

place for finance and procurement staff for their respective codes of

conduct. In 2025, the Supervisory Board was also trained on the GBP

through the Blue Heart Series, focusing on patient safety, quality and

integrity.

56<br>

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](#i709b790389b445bdbcabcc2c3c292121_718). 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](#i709b790389b445bdbcabcc2c3c292121_265)

[and internal contro](#i709b790389b445bdbcabcc2c3c292121_265)[l](#i709b790389b445bdbcabcc2c3c292121_265). The Board of Management is responsible for the

design and management of Philips' cybersecurity, which is ultimately

overseen by the Supervisory Board (and specifically its Audit

Committee). Quarterly reports on cybersecurity risks and incidents are

prepared by the IT Audit & Risk Committee (consisting of

representatives from the Group Security and Group IT Functions and

Philips Internal Audit) and submitted to the Board of Management and

the Supervisory Board. This reporting includes the overall risk level,

relevant changes in the risk environment, challenges in reaching and/or

maintaining current risk levels, and actual risk responses in the form of

actions and owners.

The Group Security Function maintains a security management

framework, which includes processes, requirements and controls for the

57<br>

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](#i709b790389b445bdbcabcc2c3c292121_337).

**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.

![](phg-20251231_g3.gif)

<sup>1</sup>Compared to the 2015 baseline

58<br>

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](#i709b790389b445bdbcabcc2c3c292121_265)

[management and internal control](#i709b790389b445bdbcabcc2c3c292121_265).

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** |

---

<sup>1</sup>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](#i709b790389b445bdbcabcc2c3c292121_316) for the Supervisory Board members with specific

ESG and sustainability expertise, and the Supervisory Board's ESG-related

activities during the year. The Supervisory Board as a whole has sufficient

ESG and sustainability-related expertise relevant to the sector in which

Philips is operating, also considering the way we address impacts, risks and

opportunities with respect to the material topics identified through our

Double Materiality Assessment. Furthermore, both our Board of

Management and our Supervisory Board leverage all relevant expertise

through their direct access to the Group Sustainability team and (where

relevant) external experts.

**Our 2030 Impact Ambitions**

After our 2020-2025 Environmental Social Governance (ESG) program

ended in December 2025, we announced our 2030 Impact Ambitions as

an integral part of the next phase of Philips' strategy. These ambitions

announced in February 2026 mark a step-up from our previous

commitments, and they underpin the company's global strategy and

purpose to improve people's health and well-being through

meaningful innovation while acting responsibly towards society and

the planet.

To help drive long-term value creation the ambitions have been

embedded in Business strategies, performance management and

incentives, and include roadmaps per Business. They bring an increase

in focus, simplification, measurability and accountability. Importantly,

the ambitions are aligned with globally recognized, science-based

frameworks, where available.

Ambitions for lives improved and carbon emission reductions (as part of

its Science Based Targets) have been carried over from the previous ESG

program.

Through our 2030 Impact Ambitions, we aim to:

**Improve health and well-being**

• 2.5 billion lives improved, including 400 million in underserved

communities

• best place to work for our employees

• 1.5 million supply chain workers with improved working conditions

**Reduce absolute environmental impact**

• 90% reduction in Scope 1 and 2 CO2-e emissions and remain carbon

neutral in our own operations <sup>1</sup>

![](phg-20251231_g3.gif)

<sup>2</sup>Compared to the 2020 baseline

59<br>

• 42% reduction in Scope 3 CO2-e emissions <sup>2</sup>

• 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.

60<br>

**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](#i709b790389b445bdbcabcc2c3c292121_712). 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.

![risk-strategic_priorities.jpg](phg-20251231_g42.jpg)

61<br>

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Risk appetite** | **Averse** | **Prudent** | **Balanced** | **Considerable** | **Seeking** |
| **Strategic** <br>e.g., macro-economics, geopolitics, <br>informatics and AI, M&A, IP, ESG<br>|  |  | ![gradients_gradient-1-LR.jpg](phg-20251231_g43.jpg) |  | ![gradients_gradient-1-RL.jpg](phg-20251231_g44.jpg) |
| **Operational** <br>e.g., product safety and quality, <br>supply chain, (cyber)security, people<br>| ![gradients_gradient-2-LR.jpg](phg-20251231_g45.jpg) |  | ![gradients_gradient-2-RL.jpg](phg-20251231_g46.jpg) |  |  |
| **Financial and reporting** <br>e.g., treasury and financing, tax, <br>accounting<br>|  | ![gradients_gradient-2-LR.jpg](phg-20251231_g45.jpg) | ![gradients_gradient-2-RL.jpg](phg-20251231_g46.jpg) |  |  |
| **Compliance** <br>with our General Business Principles <br>and regulations<br>| ![gradients_gradient-2-LR.jpg](phg-20251231_g45.jpg) | ![gradients_gradient-2-RL.jpg](phg-20251231_g46.jpg) |  |  |  |

---

**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](#i709b790389b445bdbcabcc2c3c292121_712).

**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](#i709b790389b445bdbcabcc2c3c292121_712) 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.

62<br>

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.

![Risk management process_260218.jpg](phg-20251231_g47.jpg)

Our enterprise risk management process furthermore includes the

following elements:

• At least once a year, senior management from Businesses, Zones/

Regions and key Functions perform a risk assessment as part of their

strategic plan update. Risk workshops are facilitated by Internal

Audit with senior management across the company to further

support these risk assessments. Twelve such risk workshops were held

in 2025.

• At least quarterly, senior management discusses and monitors the

risk profile and risk response effectiveness in its performance reviews

and during Audit & Risk Committees, which cover all Businesses,

Zones/Regions and selected Functions.

• During the quarterly Audit and Risk update session, the Board of

Management discusses developments in the enterprise risk profile

and management's initiatives to improve risk responses.

• Each year the Executive Committee assesses the enterprise risk profile

as an integral part of its strategy review and the potential risk impact

versus risk appetite. The assessment also covers the effectiveness of

the enterprise risk management framework and potential

improvements thereto.

• Once a year, the updated risk profile and the enterprise risk

management framework, including the outcomes of the annual

Executive Committee risk workshop, are presented to the full

Supervisory Board. The underlying risks and response plans are

discussed at the end of the year with the Audit Committee of the

Supervisory Board.

We continuously seek to improve our RMIC framework. Measures taken

during 2025 to further strengthen it include:

• The enterprise policies and underlying policies and standards were

reviewed and updated.

• A working group was established to ensure readiness for the RMIC-

related best practices as introduced in the Dutch Corporate

Governance Code in 2025. Part of our preparations was a COSO-

based review of the PCF and an extension of its scope to support the

new statements.

• We improved the alignment of our risk and compliance dialogues

with business reviews.

• Further improvements were made in our governance and process,

system and data requirements in the Philips integrated operating

model.

• We strengthened our integrated Governance, Risk, and Compliance

(GRC) capabilities via upgrades to our integrated GRC tooling.

• Our regulatory landscape intelligence was further developed to

enhance foresight in, and internal communication on, upcoming

regulatory change.

• We improved our screening of business partner integrity and of

transactions to ensure Export Control compliance.

63<br>

• 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.

![supervisory-board.jpg](phg-20251231_g48.jpg)

64<br>

**Supervisory Board**

65<br>

**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](#i709b790389b445bdbcabcc2c3c292121_49)► and [Business](#i709b790389b445bdbcabcc2c3c292121_58) ►

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](#i709b790389b445bdbcabcc2c3c292121_109)►

As explained in more detail in the [Supervisory Board report](#i709b790389b445bdbcabcc2c3c292121_316), 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*

66<br>

**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](#i709b790389b445bdbcabcc2c3c292121_316) within the

company's Corporate governance report.

---

| |
|:---|
| ![feike-sijbesma.jpg](phg-20251231_g49.jpg) |
| **Feike Sijbesma**<sup>2 3</sup><br>Born 1959, Dutch<br>**Chairman of the Supervisory Board since May 2021**<br>**Chairman of the Corporate Governance and Nomination &** <br>**Selection Committee**<br>**Member of the Supervisory Board since 2020; second term** <br>**expires in 2028**<br>Former CEO of Koninklijke DSM N.V. (Honorary Chairman), non-<br>executive Director of Unilever N.V., member of the Supervisory Board <br>of Dutch Central Bank and of Utrecht University. Currently Co-Chair of <br>the Global Climate Adaptation Center and Member of the Board of <br>Trustees of the World Economic Forum.<br>|
| <sup>1</sup>Member of the Audit Committee<br><sup>2</sup>Member of the Remuneration Committee<br><sup>3</sup>Member of the Corporate Governance and Nomination & Selection Committee<br><sup>4</sup>Member of the Quality & Regulatory Committee<br>|

---

---

| |
|:---|
| ![chua_sock-koong.jpg](phg-20251231_g50.jpg) |
| **Chua Sock Koong**<sup>1</sup><br>Born 1957, Singaporean<br>**Member of the Supervisory Board since 2021; second term** <br>**expires in 2029**<br>Former Group CEO of Singapore Telecommunications Limited and <br>currently member of the Board of Directors of Prudential plc, Bharti <br>Airtel Limited, Bharti Telecom Limited and Ayala Corporation. <br>Member of the Council of Presidential Advisors of Singapore, the <br>Securities Industry Council and the Dubai Financial Services Authority, <br>Deputy Chairman of the Public Service Commission of Singapore.<br>|

---

---

| |
|:---|
| ![liz-doherty.jpg](phg-20251231_g51.jpg) |
| **Liz Doherty**<sup>1</sup><br>Born 1957, British/Irish<br>**Chairwoman of the Audit Committee** <br>**Member of the Supervisory Board since 2019; second term** <br>**expires in 2027**<br>Member of the Supervisory Board and Chairwoman of the audit <br>committee of Novartis AG and of Corbion N.V. Member of the <br>advisory committee of Freya Holdco S.à r.l. Fellow of the Chartered <br>Institute of Management Accountants. Former CFO and board <br>member of Reckitt Benckiser Group PLC, former CFO of Brambles Ltd, <br>former non-executive director and audit committee member at <br>Delhaize Group, Nokia Corp., SABMiller PLC and Dunelm Group PLC. <br>Former non-executive board member of the UK Ministry of Justice and <br>of Her Majesty's Courts and Tribunals Service (UK) and advisor to <br>GBfoods SA and Affinity Petcare SA (subsidiaries of Agrolimen SA). <br>|

---

---

| |
|:---|
| ![marc-harrison.jpg](phg-20251231_g52.jpg) |
| **Marc Harrison**<sup>4</sup><br>Born 1964, American<br>**Member of the Supervisory Board since 2018; second term** <br>**expires in 2026**<br>Former President and Chief Executive Officer of Intermountain <br>Healthcare, former Chief of International Business Development for <br>Cleveland Clinic, former Chief Executive Officer of Cleveland Clinic <br>Abu Dhabi, and co-Founder and former CEO of HATCo (Health <br>Assurance Transformation Company) at General Catalyst. Currently <br>Chair of TowerBrook Healthcare Institute, Senior Advisor of <br>TowerBrook Capital Partners and Strategic Advisor of General <br>Catalyst.<br>|

---

---

| |
|:---|
| ![peter-loescher.jpg](phg-20251231_g53.jpg) |
| **Peter Löscher**<sup>1 4</sup><br>Born 1957, Austrian<br>**Member of the Supervisory Board since 2020; second term** <br>**expires in 2028**<br>Former President and CEO of Siemens AG, President of Global Human <br>Health and Member of the Executive Board of Merck & Co., President <br>and CEO of GE Healthcare Bio-Sciences and member of GE's Corporate <br>Executive Council, CEO and Delegate of the Board of Directors of <br>Renova Management AG. Currently member of the Board of Directors <br>of Telefónica S.A. and CaixaBank S.A. and Chairman of the <br>Supervisory Board of Telefónica Deutschland Holding AG, Non-<br>Executive Director of Thyssen-Bornemisza Group AG.<br>|

---

67<br>

---

| |
|:---|
| ![indra-nooyi.jpg](phg-20251231_g54.jpg) |
| **Indra Nooyi**<sup>3</sup><br>Born 1955, American<br>**Member of the Supervisory Board since 2021; second term** <br>**expires in 2029**<br>Former CFO, President, Chairman and CEO of PepsiCo. Currently <br>member of the Board of Directors and Chair of the Audit Committee <br>of Amazon, Inc. and member of the Board of Directors of Honeywell <br>Inc. Member of the Board of Trustees of the Memorial Sloan Kettering <br>Hospital, trustee of the National Gallery of Art.<br>|

---

---

| |
|:---|
| ![sanjay-poonen.jpg](phg-20251231_g55.jpg) |
| **Sanjay Poonen**<sup>2</sup><br>Born 1969, American<br>**Member of the Supervisory Board since 2022; first term expires in** <br>**2026**<br>Former Chief Operating Officer at VMware and President at SAP. <br>Currently CEO and President of Cohesity and member of the Board of <br>Directors of Snyk.<br>|
| <sup>1</sup>Member of the Audit Committee<br><sup>2</sup>Member of the Remuneration Committee<br><sup>3</sup>Member of the Corporate Governance and Nomination & Selection Committee<br><sup>4</sup>Member of the Quality & Regulatory Committee<br>For a current overview of the Supervisory Board members, please refer to <br>our website.<br>|

---

---

| |
|:---|
| ![benoit-ribadeau_dumas.jpg](phg-20251231_g56.jpg) |
| **Benoît Ribadeau-Dumas**<sup>3</sup><br>Born 1972, French<br>**Member of the Supervisory Board since 2024; first term expires in** <br>**2028**<br>Former deputy CEO at SCOR, former Chief of Staff to the French Prime <br>Minister, former CEO of Aerosystems, member of the Management <br>Board of Zodiac Aerospace, former SEVP CGG Veritas and former CEO <br>of Thales Underwater Systems. Currently Chief Companies Officer at <br>Exor, member of the Board of Directors of Stellantis, Institut Merieux, <br>Merieux Nutrisciences, bioMerieux, TagEnergy and Welltec. Member <br>of the Board of Directors of Galileo Global Education.<br>|

---

---

| |
|:---|
| ![paul-stoffels.jpg](phg-20251231_g57.jpg) |
| **Paul Stoffels**<sup>3 4</sup><br>Born 1962, Belgian<br>**Vice-Chairman and Secretary**<br>**Chairman of the Quality & Regulatory Committee**<br>**Member of the Supervisory Board since 2018; second term** <br>**expires in 2026**<br>Former worldwide Chair of Pharmaceuticals at Johnson & Johnson and <br>Chief Scientific Officer & member of the Executive Committee at <br>Johnson & Johnson, CEO and Chairman of the Board of Directors of <br>Galapagos NV, CEO of Virco and Chairman of Tibotec.<br>|

---

---

| |
|:---|
| ![herna-verhagen.jpg](phg-20251231_g58.jpg) |
| **Herna Verhagen**<sup>1 2</sup><br>Born 1966, Dutch<br>**Chairwoman of the Remuneration Committee** <br>**Member of the Supervisory Board since 2022; first term expires in** <br>**2026**<br>Former CEO of PostNL, member of the Supervisory Board of Het <br>Concertgebouw N.V. and member of the Advisory Board of <br>Goldschmeding Foundation. Currently member of the Supervisory <br>Board of ING Groep N.V.<br>|

---

---

| |
|:---|
| ![bob-white.jpg](phg-20251231_g59.jpg) |
| **Bob White** <sup>4</sup><br>Born 1962, American<br>**Member of the Supervisory Board since 2025; first term expires in** <br>**2029**<br>Former Executive Vice President and President at Medtronic plc, <br>Senior Vice President at Chemdex Corporation, Accelrys Inc., <br>SourceOne Healthcare Technologies, Inc., GE Healthcare Technologies <br>Inc. (leading the Diagnostic Imaging business) and Covidien plc <br>(President for Emerging Markets and President for Respiratory and <br>Monitoring Solutions). He also formerly held board positions as non-<br>executive member of the public board of Smith & Nephew plc. <br>Currently Director, Representative Executive Officer, President and <br>Chief Executive Officer of Olympus Corporation.<br>|

---

![](phg-20251231_g3.gif)

<sup>\*</sup> Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to [Reconciliation of non-IFRS information](#i709b790389b445bdbcabcc2c3c292121_736).

68<br>

**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<sup>\*</sup>, Adjusted EBITA<sup>\*</sup> and free cash flow<sup>\*</sup>. The company

ended 2025 with strong order growth and sales, robust margin

expansion despite tariffs, solid cash generation, exiting the year with a

robust balance sheet. The Supervisory Board engaged with

management on the quarterly performance and outlook, particularly

on phasing and predictability, and acceleration of sales, the quality of

earnings, margin improvement, and risk management, including the

company's risk appetite.

**Value acceleration** – In 2025, the Supervisory Board reviewed and

tracked progress on the execution of the 2023-2025 strategy. The

company's strategic focus remains on organic growth and scalable

innovation with improved execution as key value driver, as well as the

main priorities for each of the segments, Regions and Functions.

In multiple deep-dive sessions, the Supervisory Board and management

dedicated substantial time to review the company's plan to drive

profitable growth to deliver sustainable value including the outlook for

2026-2028. The strategy emphasizes innovation, execution

improvement, expansion in the segments and regions, and leveraging

AI platforms. In this context, the financial ambitions were considered

together with the execution risks, market uncertainties, and the plans

to offset growth delays and tariff impacts. Seeking reassurance that the

company is capable of delivering on this plan, the Supervisory Board

met with several senior leaders in key roles essential to the 2026-2028

plan, also providing them with support and encouragement.

As an integral part of the next phase of Philips' strategy, the

Supervisory Board reviewed the 2030 Impact Ambitions, which mark an

evolution from the company's previous ESG commitments. The plan,

including our 2026-2028 outlook and the 2030 Impact Ambitions, was

announced at Capital Markets Day in February 2026.

The Supervisory Board's strategic oversight included the company's

agreement to acquire SpectraWAVE, as it expands the company's next-

generation coronary intravascular imaging and physiological

assessment capabilities with AI.

**Succession planning** – The Supervisory Board spent time in 2025

considering its composition, as well as the composition of the Board of

Management and the Executive Committee. Attracting candidates with

expertise in (consumer) healthtech and AI continues to be part of the

Supervisory Board's succession planning. This report includes

information on the composition of the Supervisory Board.

69<br>

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](#i709b790389b445bdbcabcc2c3c292121_319)

[Nomination & Selection Committee](#i709b790389b445bdbcabcc2c3c292121_319) 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](#i709b790389b445bdbcabcc2c3c292121_271))

• 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.

70<br>

**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](#i709b790389b445bdbcabcc2c3c292121_226) 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.

71<br>

**Supervisory Board composition**

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Feike Sijbesma  | Paul Stoffels | Chua Sock <br>Koong<br>| Liz Doherty | Marc Harrison | Peter Löscher | Indra Nooyi | Sanjay Poonen  | David Pyott | Herna Verhagen | Benoît <br>Ribadeau-Dumas<br>| 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 | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  |  | ●  |
| Committee memberships ¹ | RC & CGNSC | RC & CGNSC & <br>QRC\*<br>| AC | AC | QRC | AC & QRC | CGNSC | RC | QRC | AC & RC | CGNSC | QRC |
| Attendance at Supervisory Board <br>meetings<br>| 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 <br>meetings<br>| RC 3/3 CGNSC <br>3/3 (100%)<br>| RC 1/3\* <br>(33,33%) CGNSC <br>3/3 QRC 5/5 <br>(100%)<br>| AC 7/7 (100%) | AC 7/7 (100%) | QRC 5/5 (100%) | AC 7/7 (100%) <br>QRC 4/5 (80%)<br>| CGNSC 3/3 <br>(100%)<br>| RC 3/3 (100%) | QRC 2/5\*\* (40%) | RC 3/3 (100%) <br>AC 7/7 (100%)<br>| CGNSC (3/3) <br>(100%)<br>| QRC 5/5 (100%) |
| General management | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  |
| International business | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  |
| ESG and sustainability | ●  |  |  |  |  | ●  | ●  |  |  | ●  |  | ●  |
| (Consumer) health and medical <br>technology<br>| ●  | ●  |  | ●  | ●  | ●  |  |  | ●  |  |  | ●  |
| Patient safety, quality and <br>regulatory and product <br>development<br>|  | ●  |  |  | ●  | ●  |  |  | ●  |  |  | ●  |
| Finance and accounting | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  |
| Human resources | ●  | ●  | ●  |  | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  |
| Manufacturing and supply chain | ●  | ●  |  | ●  |  | ●  | ●  |  |  |  | ●  | ●  |
| Information technology and <br>digital<br>| ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  |  | ●  |  | ●  |
| Marketing | ●  | ●  |  |  |  | ●  | ●  | ●  | ●  | ●  |  | ●  |
| Governmental and public affairs | ●  | ●  | ●  | ●  | ●  | ●  | ●  | ●  |  | ●  | ●  | ●  |

---

<sup>1</sup>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.

72<br>

**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](#i709b790389b445bdbcabcc2c3c292121_262)

[governance](#i709b790389b445bdbcabcc2c3c292121_262).

**Financial statements and sustainability report 2025**

The financial statements of the company for 2025, as presented by the

Board of Management, have been audited by PricewaterhouseCoopers

Accountants N.V. (PwC), the independent external auditor appointed

by the General Meeting of Shareholders. The Supervisory Board has

approved these financial statements, and all individual members of the

Supervisory Board have signed these documents (as did the members of

the Board of Management). The Supervisory Board has also approved

the company's sustainability statement for 2025, on which assurance

was provided by PwC as well.

Finally, the members of the Supervisory Board would like to express

their thanks to the members of the Board of Management, the

Executive Committee and all other employees for their continued

contributions throughout 2025.

**Report of the Corporate Governance and** 

**Nomination & Selection Committee**

The Corporate Governance and Nomination & Selection Committee is

chaired by Feike Sijbesma. Its other members are Paul Stoffels, Indra

Nooyi and Benoît Ribadeau-Dumas. The Committee is responsible for

the review of the overall corporate governance, and the selection

criteria and appointment procedures for the Supervisory Board, Board

of Management, the Executive Committee, and certain other key

management positions. The Committee held three meetings in 2025.

The Committee devoted time to the appointment or reappointment of

candidates to fill current and future vacancies on the Supervisory

Board. Following those consultations, it prepared decisions and advised

the Supervisory Board, which resulted in the re-appointments of Indra

Nooyi and Chua Sock Koong and the appointment of Bob White as

members of the Supervisory Board at the 2025 Annual General Meeting

of Shareholders (AGM).

Under its responsibility for the selection criteria and appointment

procedures for Philips' senior management, the Committee reviewed

the functioning of the Board of Management and its individual

members, the Executive Committee succession plans, and emergency

candidates for key roles in the company. The review and evaluation

consist of periodic performance review meetings with the individual

members of the Board of Management and the Executive Committee,

and evaluation of the results of these meetings by the Committee. The

main findings and conclusions from these reviews were also shared

with the Supervisory Board and the Remuneration Committee and

were considered in the performance evaluation of the Board of

Management and Executive Committee members and the selection of

succession candidates. Reference is made to the 2025 Annual Incentive,

setting out the performance review of the Board of Management

members by the Remuneration Committee.

The Committee devoted time in 2025 to the selection and/or

appointment of candidates to fill other current and future vacancies on

the Board of Management and the Executive Committee. This resulted

in the re-appointment of Marnix van Ginneken as a member of the

Board of Management. The Committee's work furthermore resulted in

the appointment, effective January 1, 2025, of two new members of

the Executive Committee. Özlem Fidanci succeeded Edwin Paalvast as

Chief of International Region. Jie Xue was appointed Chief Business

Leader Precision Diagnosis, which had been under the extended

leadership of Bert van Meurs (Chief Business Leader Image Guided

Therapy). Bert and Jie became jointly responsible for the Diagnosis &

Treatment segment.

With respect to corporate governance matters, the Committee

discussed recent developments in the Netherlands, and ESG reporting

and due diligence developments in Europe. Finally, the Committee

reviewed the Charter of the Corporate Governance and Nomination &

Selection Committee and concluded it remains appropriate.

With respect to the productivity initiatives and other actions to improve

the company's performance (including the unfortunate but necessary

reduction of roles), the Committee was updated by management on

the impact on employees and the phased deployment approach, and

members reviewed the simplification of the organization.

Finally, the Committee reviewed and updated the Corporate

Governance and Nomination & Selection Committee Charter.

**Report of the Remuneration Committee**

The Remuneration Committee is chaired by Herna Verhagen, who

succeeded Paul Stoffels on June 1, 2025. Its other members are Feike

Sijbesma and Sanjay Poonen. The Committee is responsible for

preparing decisions of the Supervisory Board on the remuneration of

individual members of the Board of Management and the Executive

Committee, as well as the policies governing this remuneration. The

annual cycle of the Remuneration Committee enables it to have an

effective decision-making process supporting the determination, review

and implementation of the Remuneration Policy. The Committee met

three times in 2025.

In performing its duties and responsibilities, the Remuneration

Committee is assisted by an external consultant and in-house

remuneration experts. For a full overview of the responsibilities of the

Committee, please refer to the Charter of the Remuneration

Committee, as set forth in Chapter 3 of the Rules of Procedure of the

Supervisory Board (which are published on the company's website).

73<br>

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](#i709b790389b445bdbcabcc2c3c292121_337), in which the Supervisory

Board provides a comprehensive overview, as prepared by the

Remuneration Committee, of the remuneration paid and owed to the

individual members of the Board of Management and the Supervisory

Board in the year 2025.

Finally, the Committee reviewed and updated the Remuneration

Committee Charter.

**Report of the Audit Committee**

The Audit Committee is chaired by Liz Doherty. Its other members are

Peter Löscher, Chua Sock Koong and Herna Verhagen. The Committee

assists the Supervisory Board in fulfilling its supervisory responsibilities,

including ensuring the integrity of the company's financial statements,

reviewing the company's internal controls and overseeing the

enterprise risk management process.

In 2025, the Committee held five regular meetings and two

extraordinary meetings, which were also attended by the Chairman of

the Supervisory Board. The Board of Management, Head of Internal

Audit, Chief Accounting Officer and the external auditors of EY

Accountants B.V. (EY) and PricewaterhouseCoopers Accountants N.V.

(PwC) were also invited and attended all meetings. In accordance with

the resolution at the 2023 AGM, PwC succeeded EY as the auditor of

the company's financial statements. The Committee expresses its

gratitude for EY's longstanding service, and thanks both EY and PwC

for their cooperation in facilitating a seamless transition. The

Committee recommended and the Supervisory Board approved the

appointment of PwC as assurance provider with respect to the

company's sustainability statements for the years 2025-2028, in line

with PwC's appointment as auditor of the company's financial

statements.

The Committee met separately in private sessions with the CEO, CFO,

Head of Internal Audit and external auditor after the regular quarterly

meeting of the Committee. Prior to the Committee meetings, the Audit

Committee chair met one-on-one with the Group Treasurer as well as

with each member of management who regularly attends the Audit

Committee meetings, and with the external auditor.

The following overview highlights matters that were reviewed and/or

discussed during Committee meetings in the course of, or with respect

to, the financial year 2025:

• The company's 2025 annual and interim financial statements and

non-financial information (prior to publication), the restructuring

provision, the FCO provisions, the goodwill impairment tests, deferred

tax assets and legal matters. In each of the regular quarterly meetings

of the Committee, the Committee reviewed the draft of the press

release on the company's annual or interim financial statements.

• Matters relating to accounting policies, financial risks, reporting, and

compliance with accounting standards. Key accounting judgments

were discussed in-depth, and treatments were challenged, as were

quality of earnings. Compliance with statutory and legal

requirements and regulations, particularly in the financial domain,

was also reviewed. Furthermore, the Committee reviewed the

goodwill impairment tests performed in the fourth quarter, risk

management, tax matters, legal compliance, and developments in

(regulatory) investigations and legal proceedings and the related

provisions, if any. Important ﬁndings, Philips' top and emerging

areas of risk (including the internal auditor's reporting thereon, and

the Chief ESG & Legal Officer's review of litigation and other claims

as well as material investigations), and follow-up actions and

appropriate measures were examined thoroughly.

• The geopolitical tax changes, including the One Big Beautiful Bill Act,

Base Erosion Anti-Abuse Tax, tariffs, and Global Minimum Tax, as

well as the new public country-by-country reporting enhancing tax

transparency reporting.

• The company's policy on business controls, legal compliance and the

General Business Principles (including deployment). The Committee

reviewed, discussed and monitored closely the company's internal

control certification processes, and in particular, compliance with

section 404 of the US Sarbanes-Oxley Act and its requirements

regarding assessment, review and monitoring of internal controls. It

also discussed on a regular basis the developments in, and findings

relating to, conduct resulting from investigations into alleged

violations of the General Business Principles and, if required, any

measures taken. More generally, the Committee reviewed the

company's Risk Management and Internal Control (RMIC) framework

and the assessment of the Board of Management regarding the

74<br>

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](#i709b790389b445bdbcabcc2c3c292121_397)

[operations](#i709b790389b445bdbcabcc2c3c292121_397). The Committee reviewed the execution of the external

auditor transition plan.

• The company's structure and system for compliance with export

controls and international sanctions.

• A review of the quarterly reports on sustainability-related

developments, including the EU Corporate Sustainability Reporting

Directive and EU Sustainability Reporting Standards, the company's

progress on the implementation thereof, and the impact thereof on

reporting by the Philips Group. The Committee also discussed the

level of assurance to be provided in respect of the sustainability

statement by the external assurance provider.

• Philips' information security risk approach (including cybersecurity),

at an enterprise level as well as at product and service levels,

comprising an update on the mitigation of cybersecurity risks and

actions taken to comply with relevant laws and regulations,

including the Cybersecurity Risk Management, Strategy, Governance,

and Incident Disclosure requirements issued by the US Securities and

Exchange Commission (SEC).

In February 2026, the Committee reviewed, together with the other

members of the Supervisory Board, the draft of the Annual Report 2025,

as well as the key audit matters and the critical audit matters identified

by the external auditor in relation to the 2025 financial statements

included in the Annual Report 2025 and the Annual Report on Form

20-F, respectively. In February 2026, the Committee also reviewed the

draft of the company's 2025 Country Activity and Tax Report.

During each regular quarterly Audit Committee meeting, the

Committee reviewed the quarterly report from the external auditor, in

which the auditor set forth its ﬁndings and attention points during the

relevant period. The annual audit report was circulated to the full

Supervisory Board, and planned actions to address the items raised

were discussed with management in the subsequent Audit Committee

meetings as well as in private sessions with management.

Finally, the Committee reviewed and updated the Audit Committee

Charter.

**Report of the Quality & Regulatory Committee**

The Quality & Regulatory Committee was established in view of the

importance of patient safety and the quality of the company's

products, systems, services and solutions. The Committee provides

broad oversight of compliance with the regulatory requirements that

govern the development, manufacturing, marketing and servicing of

the company's products, systems, services and solutions. The Committee

assists the Supervisory Board in fulfilling its oversight responsibilities in

these areas. The Committee is chaired by Paul Stoffels, who replaced

David Pyott on May 8, 2025, after the AGM. Its members are Marc

Harrison, Peter Löscher and Bob White.

In 2025, the Committee held five meetings. Quality-related matters were

a regular item on the agenda of the Supervisory Board meeting. The

CEO, the Chief ESG & Legal Officer, the Chief Operations Officer, the

Chief Patient Safety & Quality Officer and the Chief Medical Officer

were present during these meetings. The following overview indicates

some of the matters that were discussed during meetings in the course

of 2025.

• Review of progress on the company's Quality & Regulatory strategy.

The Committee focused on the strategy to ensure the safety and

efficacy of the company's products and solutions for patients and

customers. In that context, the Committee reviewed the status and

progress of the company's Patient Safety and Quality program, which

includes enhancement of the engagement with regulators, ensuring

sustainability and predictable performance, and the Patient Safety &

Quality Culture Intervention. Specific attention was given to the

Quality Management System (QMS) transformation to drive process

simplification in a tailored manner, and Product Quality Reviews

(PQRs) to ensure the installed base meets patient safety and design

control standards, as well as compliance requirements. For more

information, please refer to [Patient safety, quality and regulatory](#i709b790389b445bdbcabcc2c3c292121_238)

[and the Medical Office](#i709b790389b445bdbcabcc2c3c292121_238).

• The Philips Respironics voluntary recall notification related to the

sound abatement foam in certain sleep and respiratory care products

(announced in June 2021) in the company's Sleep & Respiratory Care

Business. The Committee reviewed aspects of this issue, such as the

program governance to enable effective execution, ongoing

engagements with the FDA, among others, the investigation

initiated by the DOJ to which Philips Respironics is subject, and the

75<br>

execution of the agreed consent decree. The Committee reviewed

the engagements with other regulatory authorities globally.

Furthermore, the Committee reviewed and discussed with

management the engagement with and communication efforts to

patients, physicians, customers and durable medical equipment

providers; the testing program and its outcomes; and health hazard

evaluations. The Committee also discussed the level of related field

action provisions, as set out in more detail in the report of the Audit

Committee (see previous section).

• Review of other quality issues (other than the Philips Respironics

voluntary recall), including site inspections and warning letters, and

the progress made with resolving and closing such other issues.

• Review of progress in the transformation of the company's Patient

Safety & Quality Function, aimed at further strengthening expertise

and capabilities within the Function, including upscaling Patient

Safety & Quality talent at mid-level leadership positions.

• Review of the progress made with global initiatives around the

transformation, standardization and simplification of the company's

structure and organizational processes relating to QMSs (the

reduction of the current QMSs to one quarter versus the baseline),

management systems, regulated manufacturing sites (legal

manufacturers), Corrective and Preventive Action (CAPA) and

complaint management.

• Review of the implementation of a Patient Safety & Quality IT

roadmap and adoption of the IT and data enhancements.

• The status and outcome of quality- and regulatory-related

investigations and inspections by regulatory authorities and notified

bodies globally across the organization. Management also regularly

provided the Committee with an overview of upcoming scheduled

inspections across company sites by the FDA, as well as other

regulatory authorities and notified bodies, and the actions taken to

prepare for such inspections.

• Review of the product risk per Business based on a product

assessment approach and remediation across the company, including

findings resulting from internal audits.

• Review of the 2025 dashboard of quality and regulatory key

performance indicators, showing the trend of performance. The

Committee also reviewed the key performance indicators for 2026.

76<br>

**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*

77<br>

**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.

78<br>

**Main elements of the Remuneration Policy**

---

| | | | |
|:---|:---|:---|:---|
| Compensation element | Purpose and link to strategy | Operation | Policy level |
| **Total Direct** <br>**Compensation**<br>| To support the Remuneration Policy's objectives, the Total <br>Direct Compensation includes a significant variable part in <br>the form of an Annual Incentive (cash bonus) and Long-<br>Term Incentive in the form of performance shares. As a <br>result, a significant proportion of pay is 'at risk'.<br>| The Supervisory Board ensures that a competitive remuneration package for board-level executive talent is <br>maintained and benchmarked.<br>The positioning of Total Direct Compensation is reviewed against benchmark data on an annual basis and is <br>recalibrated if and when required. To establish this benchmark, research is carried out each year on the <br>compensation levels in the Quantum Peer Group.<br>| Total direct remuneration is aimed at or close to the <br>median of the Quantum Peer Group.<br>|
| **Annual Base** <br>**Compensation**<br>| Fixed cash payments intended to attract and retain <br>executives of the highest caliber and to reflect their <br>experience and scope of responsibilities.<br>| Annual Base Compensation levels and any adjustments made by the Supervisory Board are based on factors <br>including the median of Quantum Peer Group data and performance and experience of the individual <br>member.<br>The annual review date for the base salary is typically before April 1.<br>| The individual salary levels are shown in this <br>Remuneration Report.<br>|
| **Annual Incentive** | Variable cash incentive of which achievement is tied to <br>specific financial and non-financial targets derived from <br>the company's annual strategic plan.<br>| The payout in any year relates to the achievements of the preceding year. Metrics and their weighting are <br>disclosed ex-ante in the Remuneration Report and there will be no retroactive changes to the selection of <br>metrics used in any given year once approved by the Supervisory Board and disclosed.<br>| **Policy (maximum) level:**<br>**President & CEO** <br>On-target: 120% <br>Maximum: 240% of Annual Base Compensation.<br>**Other BoM members**<br>On-target: 100% <br>Maximum: 200% of Annual Base Compensation.<br>|
| **Long-Term Incentive** | Variable equity incentive of achievement is tied to targets <br>reflecting long-term stakeholder value creation and <br>delivered in the form of performance shares.<br>| The annual award size is set by reference to a multiple of base salary.<br>The actual number of performance shares to be awarded is determined by reference to the average closing <br>price of the Royal Philips share measured over the last month of the quarter preceding the actual grant of <br>performance shares (the day of publication of the relevant quarterly results).<br>Dependent upon the achievement of the performance conditions, cliff-vesting applies three years after the <br>date of grant.<br>During the vesting period, the value of dividends will be added to the performance shares in the form of <br>shares. These dividend-equivalent shares will only be delivered to the extent that the award actually vests.<br>| **President & CEO** <br>Annual grant size: 200% of Annual Base <br>Compensation.<br>**Other BoM members** <br>Annual grant size: 150% of Annual Base <br>Compensation. <br>Maximum vesting opportunity is 200% of the <br>number of performance shares granted.<br>|
| **Mandatory share** <br>**ownership and holding** <br>**requirement**<br>| To further align the interests of executives to those of <br>stakeholders and to motivate the achievement of sustained <br>performance.<br>| The guideline for members of the Board of Management is to hold at least a minimum shareholding in the <br>company.<br>Until this level has been reached the members of the Board of Management are required to retain all after-<br>tax shares derived from any Long-Term Incentive plan.<br>The shares granted under the Long-Term Incentive plan shall be retained for a period of at least five years or <br>until at least the end of their contract period if this period is shorter. <br>The guideline does not require members of the Board of Management to purchase shares in order to reach <br>the required share ownership level.<br>| The minimum shareholding requirement is 400% of <br>Annual Base Compensation for the CEO and 300% <br>for other members of the Board of Management.<br>|
| **Pension** | Participation in the Philips Flex ES pension plan in the <br>Netherlands (applicable for all executives) combined with a <br>fixed pension contribution intended to result in an <br>appropriate level at retirement.<br>| Defined Contribution plan with fixed contribution (applicable to all executives in the Netherlands – capped at <br>EUR 137,800).<br>Gross allowance of 25% of Annual Base Compensation exceeding EUR 137,800.<br>|  |

---

79<br>

---

| | | | |
|:---|:---|:---|:---|
| Compensation element | Purpose and link to strategy | Operation | Policy level |
| **Additional** <br>**arrangements**<br>| To aid retention and remain competitive within the <br>marketplace.<br>| Additional arrangements include expense and relocation allowances, medical insurance, accident insurance, <br>Philips product arrangements and company car arrangements.<br>The members of the Board of Management also benefit from coverage under the company's Directors & <br>Officers (D&O) liability insurance.<br>The company does not grant personal loans to members of the Board of Management.<br>| Cash value (grossed up) of the benefits received, <br>which are in line with other Philips executives in the <br>Netherlands.<br>|
| **Clawback** | Risk management and accountability mechanism. | Annual incentives and long-term incentives are subject to claw-back provisions, which allow the Supervisory <br>Board to recoup some or all of the relevant payments.<br>| Clawback provisions are further specified in the <br>Remuneration Policy.<br>|

---

**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 | 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 <br>Care<br>| Siemens <br>Healthineers<br>|  | 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.

80<br>

**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<sup>1</sup>, Adjusted EBITA<sup>1</sup> and

free cash flow<sup>1</sup>. 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 <br>Annual Incentive | Assessment of performance | Assessment of performance | Assessment of performance | Assessment of performance | Assessment of performance | Weighted pay-out as % of <br>target Annual Incentive |
| Financial performance metric | Weighting as % of target <br>Annual Incentive | Threshold performance | Target performance | Maximum performance | Realized performance | Resulting payout as % of <br>target<br>| Weighted pay-out as % of <br>target Annual Incentive |
| Comparable Sales Growth ¹ | 35% | 1.0% | 2.0% | 4.0% | 2.3% | 115.0% | 40.3% |
| Adjusted EBITA margin ¹ | 20% | 10.8% | 12.3% | 13.8% | 12.3% | 100.0% | 20.0% |
| Free Cash Flow ¹ | 15% | 100 | 400 | 700 | 512 | 137.4% | 20.6% |
| **Total** | **70%** |  |  |  |  |  | **80.9%** |

---

<sup>1</sup>Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to [Reconciliation of non-IFRS information](#i709b790389b445bdbcabcc2c3c292121_736).

81<br>

**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 <br>Management<br>| Performance category | Performance objective | Assessment of performance | Weighted pay-out as % of <br>target Annual Incentive<br>|
| **Roy Jakobs**  | Patient safety and quality | Drive patient safety and quality as highest priority in the <br>organization<br>| Overall improvement in processes, controls and culture reflecting commitment to patient safety and <br>quality. Significant progress made on addressing consent decree requirements. FDA inspection resulted in <br>a warning letter. It remains of crucial importance to further resolve the related causes.<br>| 34.5% |
| **Roy Jakobs**  | Customer | Improve market share and customer experience | Strong progress made on gaining Market share. | 34.5% |
| **Roy Jakobs**  | Customer | Improve supply chain reliability | On-time delivery of orders as per customer expectations further improved. | 34.5% |
| **Roy Jakobs**  | Strategy and execution | Drive focused strategy to win in the market | Accelerated growth in strategic growth businesses and launched several world-first innovations. | 34.5% |
| **Roy Jakobs**  | Strategy and execution | Establish simplified, more agile operating model | Strong progress on execution priorities with simplification of how work, improved operational <br>performance and rigorous cost management and productivity.<br>| 34.5% |
| **Roy Jakobs**  | ESG | Deliver on ESG commitments | ESG index realization ahead of target. Employee engagement in line with target. Talent building as per <br>plan.<br>| 34.5% |
| **Charlotte** <br>**Hanneman** | Patient safety and quality | Drive patient safety and quality as highest priority in the <br>organization<br>| Overall improvement in processes, controls and culture reflecting commitment to patient safety and <br>quality. Significant progress made on addressing consent decree requirements. FDA inspection resulted in <br>a warning letter. It remains of crucial importance to further resolve the related causes.<br>| 34.5% |
| **Charlotte** <br>**Hanneman** | Customer | Improve market share and customer experience | Strong progress made on gaining Market share.  | 34.5% |
| **Charlotte** <br>**Hanneman** | Customer | Improve financial forecasting | Improved predictability on Margin, while opportunity to further improve Sales predictability. | 34.5% |
| **Charlotte** <br>**Hanneman** | Strategy and execution | Drive focused strategy to win in the market | Accelerated growth in strategic growth businesses and launched several world-first innovations. | 34.5% |
| **Charlotte** <br>**Hanneman** | Strategy and execution | Establish simplified, more agile operating model | Strong progress on execution priorities with simplification of how work, improved operational <br>performance and rigorous cost management and productivity.<br>| 34.5% |
| **Charlotte** <br>**Hanneman** | ESG | Deliver on ESG commitments | ESG index realization ahead of target. Employee engagement in line with target. Talent building as per <br>plan.<br>| 34.5% |
| **Marnix van** <br>**Ginneken**  | Patient safety and quality | Drive patient safety and quality as highest priority in the <br>organization<br>| Overall improvement in processes, controls and culture reflecting commitment to patient safety and <br>quality. Significant progress made on addressing consent decree requirements. FDA inspection resulted in <br>a warning letter. It remains of crucial importance to further resolve the related causes.<br>| 33.0% |
| **Marnix van** <br>**Ginneken**  | Customer | Manage legal issues | In 2025 important milestones were achieved in resolving the Respironics recall related legal proceedings <br>including the resolution of the US personal injury and medical monitoring litigation.<br>| 33.0% |
| **Marnix van** <br>**Ginneken**  | Strategy and execution | Drive focused strategy to win in the market | Accelerated growth in strategic growth businesses and launched several world-first innovations. | 33.0% |
| **Marnix van** <br>**Ginneken**  | Strategy and execution | Establish simplified, more agile operating model | Strong progress on execution priorities with simplification of how work, improved operational <br>performance and rigorous cost management and productivity.<br>| 33.0% |
| **Marnix van** <br>**Ginneken**  | ESG | Deliver on ESG commitments | ESG index realization ahead of target. Employee engagement in line with target. Talent building as per <br>plan.<br>| 33.0% |

---

82<br>

Overall, this leads to the following total Annual Incentive realization:

**Annual Incentive realization 2025** 

in EUR unless otherwise stated

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Annual incentive opportunity | Annual incentive opportunity | Realized annual incentive | Realized annual incentive | Realized annual incentive | Realized annual incentive |
|  | Target as a % of base <br>compensation<br>| Target Annual Incentive | Financial performance (weighted <br>pay-out %)<br>| Individual performance (weighted <br>pay-out %)<br>| Payout as % of target Annual <br>Incentive ¹<br>| Realized annual incentive |
| Roy Jakobs | 100% | 1300000 | 80.9% | 34.5% | 115.4% | 1499680 |
| Charlotte Hanneman | 80% | 580000 | 80.9% | 34.5% | 115.4% | 669088 |
| Marnix van Ginneken | 80% | 580000 | 80.9% | 33.0% | 113.9% | 660388 |

---

<sup>1</sup>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](#i709b790389b445bdbcabcc2c3c292121_736).

83<br>

**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<sup>\*</sup>

• 20% weighting: Adjusted EBITA<sup>\*</sup> margin

• 15% weighting: Free Cash Flow<sup>\*</sup>

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 <br>as highest priority in the <br>organization<br>| All members of Board of <br>Management<br>| 7.50% | This objective measures delivery on our company-wide program to strengthen our patient safety and quality culture, <br>capabilities and performance.<br>|
| Customer | Improve market share and <br>customer experience<br>| Roy Jakobs | 7.50% | This objective is measured by the market share gain and delivery on prioritized innovations |
| Customer | Improve market share and <br>customer experience<br>| Charlotte Hanneman | 7.50% | This objective is measured by the market share gain and by a reliable forecast as per plan. |
| Customer | Manage legal issues | Marnix van Ginneken | 7.50% | 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 <br>the market and simplify the <br>operating model<br>| All members of Board of <br>Management<br>| 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 <br>Management<br>| 7.50% | This objective measures:<br>•performance on our Impact index (which includes various elements such as emission targets)<br>•our capacity to grow and retain talent and further improve employee engagement<br>|

---

\*Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to [Reconciliation of non-IFRS information.](#i709b790389b445bdbcabcc2c3c292121_736)

84<br>

**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** <br>**threshold**<br>| **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.

85<br>

Philips Group

**LTI Plan EPS realization** in millions of EUR unless otherwise stated

---

| | | |
|:---|:---|:---|
|  | Net income | EPS (euro) |
| Income from continuing operations attributable to <br>shareholders<br>| 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** | **1111** | **1.26** |

---

<sup>1</sup>Impact of variations of unhedged volatile currencies compared to the

performance period plan.

<sup>2</sup>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 | Realized performance |
| Ensure healthy lives and promote well-being for <br>all at all ages (SDG3) Lives improved<br>| Targeted # of lives improved in year 3 <sup>1</sup> | 1.92 – 2.14 billion | 2.0 billion | Within target range |
| Ensure sustainable consumption and production <br>patterns (SDG12) Circularity | Targeted circular revenue in year 3 ² | 22.5% – 25.0% | 27.9% | Better than target <br>range<br>|
| Ensure sustainable consumption and production <br>patterns (SDG12) Circularity | Targeted waste to landfill in year 3 ³ | 2.5% – 0.1% | <0.01% | Better than target <br>range<br>|
| Ensure sustainable consumption and production <br>patterns (SDG12) Circularity | 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 <br>its impacts (SDG13) Carbon footprint<br>| Targeted CO2 - equivalent (in kilotonnes) <br>in year 3<br>| 483 – 433 kilotonnes <br>CO2<br>| 372 kilotonnes CO2 | Better than target <br>range<br>|

---

<sup>1</sup>Lives improved by Philips products, solutions and services and care to those in

underserved markets

<sup>2</sup>Revenue from products, services and solutions contributing to circularity (e.g.,

optimizing and re-using materials)

<sup>3</sup>Avoiding production of waste materials

<sup>4</sup>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<sup>\*</sup> ('EPS')

• 20% weighting: ESG performance

86<br>

**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 <br>improved in year 3 <sup>1</sup><br>| Ensure healthy lives and <br>promote well-being for <br>all at all ages<br>(SDG3) Lives improved<br>| We have a lives <br>improved calculation <br>methodology, which <br>follows a three-step <br>approach. 1) We first <br>determine the installed <br>base of our health- and <br>well-being solutions, 2) <br>We determine the <br>number of touchpoints <br>per product per year, <br>and 3) To avoid double-<br>counting, we eliminate <br>all direct- and indirect <br>double-counts between <br>products and solutions.<br>|
| Inclusion and belonging <br>score<br>| Aim to be the best place <br>to work for our <br>employees<br>| Inclusion and belonging <br>score in the Philips <br>Engagement Survey<br>|
| Targeted full value chain <br>CO2-equivalent (in <br>kilotonnes) in year 3<br>| Take urgent action to <br>combat climate change <br>and its impacts <br>(SDG13) Carbon <br>footprint<br>| Total greenhouse gas <br>emissions caused by <br>Philips, expressed in <br>kilotonnes CO2-<br>equivalent, which is the <br>sum of our Scope 1, 2 <br>and material Scope 3 (at <br>least 95% coverage) <br>emissions according to <br>the Greenhouse Gas <br>Protocol.<br>|
| Virgin non-renewable <br>materials (in kilotonnes)<br>| Aim to use less virgin <br>non-renewable materials <br>and make more <br>materials available for <br>re-use (SDG12) Circularity<br>| Total weight (in <br>kilotonnes) of virgin <br>non-renewable materials <br>which is measured as <br>part of the Philips <br>materials balance<br>|

---

<sup>1</sup>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.

![](phg-20251231_g3.gif)

<sup>1</sup>Charlotte Hanneman joined on October 1, 2024

87<br>

Philips Group

**Remuneration Board of Management** <sup>1</sup> in EUR

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | Accounting costs in the year | Accounting costs in the year | Accounting costs in the year | Accounting costs in the year | Accounting costs in the year | Accounting costs in the year | Accounting costs in the year | Accounting costs in the year |
|  | reported year | annual base <br>compensation ²<br>| base compensation | realized annual <br>incentive<br>| performance shares ³ | pension allowances | pension scheme costs | other compensation ⁴ | total cost | Fixed-variable <br>remuneration ⁵<br>|
| Roy Jakobs | 2025 | 1300000 | 1287500 | 1499680 | 3772196 | 287425 | 26609 | 96386 | 6969796 | 24%-76% |
| Roy Jakobs | 2024 | 1250000 | 1237500 | 927750 | 1692087 | 274925 | 32218 | 83870 | 4248350 | 38%-62% |
| Charlotte Hanneman | 2025 | 725000 | 718750 | 669088 | 835637 | 145237 | 26609 | 108598 | 2503919 | 40%-60% |
|  | 2024 | 700000 | 175545 | 98372 | 104606 | 35247 | 7775 | 23089 | 444633 | 54%-46% |
| Marnix van Ginneken | 2025 | 725000 | 708750 | 660388 | 1531456 | 142737 | 26609 | 62090 | 3132030 | 30%-70% |
| Marnix van Ginneken | 2024 | 660000 | 652500 | 422374 | 740101 | 128675 | 32218 | 74227 | 2050095 | 43%-57% |
| **Total** | **2025** |  | **2715000** | **2829156** | **6139289** | **575399** | **79827** | **267074** | **12605745** | **29%-71%** |
| **Total** | **2024** |  | **2065545** | **1448496** | **2536794** | **438847** | **72211** | **181186** | **6743078** | **41%-59%** |

---

<sup>1</sup>Reference date for board membership is December 31, 2025.

<sup>2</sup>Annual Base Compensation as incurred in the year, base compensation increases are reflected proportionally.

<sup>3</sup>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.

<sup>4</sup>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.

<sup>5</sup>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**

![886](phg-20251231_g60.gif)

**2024**

![893](phg-20251231_g61.gif)

Charlotte Hanneman <sup>1</sup>

**2025**

![906](phg-20251231_g62.gif)

**2024**

![913](phg-20251231_g63.gif)

Marnix van Ginneken

**2025**

![925](phg-20251231_g64.gif)

**2024**

![932](phg-20251231_g65.gif)

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| ■ | Base compensation | ■ | Annual incentive | ■ | Performance shares | ■ | Pension | ■ | Other compensation |

---

88<br>

**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 | 6969796 | 4248350 | 4582347 | 5133659 | 5452299 | 6153067 |
| CFO Total Remuneration Costs | 2503919 | 3517514 | 3002907 | 1896081 | 2652864 | 3007990 |
| CLO Total Remuneration Costs | 3132030 | 2050095 | 2302397 | 1416837 | 2029054 | 2203160 |
| Average Employee (FTE) Total Remuneration Costs (B) ² | 99667 | 99091 | 99866 | 93373 | 86853 | 91455 |
| Ratio A versus B ⁴ | 70:1 | 43:1 | 46:1 | 55:1 | 63:1 | 67:1 |
| Median Employee Total Remuneration Costs (C) ³ | 83708 | 89103 |  |  |  |  |
| 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 | 1582 | (961) | 900 | 1635 |

---

\*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".

<sup>1</sup>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.

<sup>2</sup>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.

<sup>3</sup>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.

<sup>4</sup>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.

<sup>5</sup>Annual TSR was calculated in line with the method used for the LTI Plan (i.e., based on reinvested dividends and three-month averaging)

<sup>6</sup>Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to [Reconciliation of non-IFRS information](#i709b790389b445bdbcabcc2c3c292121_736).

89<br>

**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 <br>originally granted<br>| Value at grant date | Vesting date | End of holding <br>period<br>| Unvested opening <br>balance at Jan. 1, <br>2025<br>| Number of shares <br>awarded in 2025<br>| (Dividend) shares <br>awarded<br>| Number of shares <br>vested in 2025 ¹<br>| Value at vesting <br>date in 2025<br>| Unvested closing <br>balance at Dec. 31, <br>2025<br>|
| Roy Jakobs | 4/29/2022 | 37630 ² | 930000 | 4/29/2025 | 4/29/2025 | 42148 | - | - | 6322 | 139532  | - |
| Roy Jakobs | 10/28/2022 | 24279 | 314137 | 10/28/2025 | 10/28/2027 | 26233 | - | 1112 | 4102 | 101557 | - |
| Roy Jakobs | 4/28/2023 | 124538 | 2400000 | 4/28/2026 | 4/28/2028 | 134560 | - | 5702 | - | - | 140261 |
| Roy Jakobs | 7/5/2024 | 131443 | 2500000 | 5/7/2027 | 5/7/2029 | 135939 | - | 5760 | - | - | 141700 |
| Roy Jakobs | 6/5/2025 | 120686 | 2580000 | 6/5/2028 | 6/5/2030 | - | 120686 | 5114 | - | - | 125800 |
| Charlotte <br>Hanneman | 7/29/2024 | 25346 | 613934 | 7/29/2027 | 7/29/2029 | 25346 | - | 1074 | - | - | 26420 |
| Charlotte <br>Hanneman | 7/29/2024 | 37982 | 920000 | 7/29/2027 | 7/29/2029 | 37982 | - | 1609 | - | - | 39591 |
| Charlotte <br>Hanneman | 6/5/2025 | 50871 | 1087500 | 6/5/2028 | 6/5/2030 | - | 50871 | 2156 | - | - | 53027 |
| Marnix van <br>Ginneken | 4/29/2022 | 38237 | 945000 | 4/29/2025 | 4/29/2027 | 42828 | - | - | 6424 | 141783  | - |
| Marnix van <br>Ginneken | 4/28/2023 | 49037 | 945000 | 4/28/2026 | 4/28/2028 | 52983 | - | 2245 | - | - | 55228 |
| Marnix van <br>Ginneken | 5/7/2024 | 52051 | 990000 | 5/7/2027 | 5/7/2029 | 53832 | - | 2281 | - | - | 56113 |
| Marnix van <br>Ginneken | 6/5/2025 | 50871 | 1087500 | 6/5/2028 | 6/5/2030 | - | 50871 | 2156 | - | - | 53027 |

---

<sup>1</sup>The shares vested in 2025 are subject to a two-year holding period.

<sup>2</sup>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

90<br>

performance shares that have vested, but they are not required to

make additional share purchases.

Philips Group

**Share ownership Board of Management**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Minimum <br>shareholding <br>requirement ¹<br>| Annual Base <br>Compensation<br>| (Vested) <br>shares held<br>| Ownership <br>ratio ²<br>|
| Roy Jakobs | 4.0x  | 1300000 | 147397 | 2.7x |
| Charlotte <br>Hanneman<br>| 3.0x  | 725000 | - | 0x |
| Marnix van <br>Ginneken<br>| 3.0x  | 725000 | 147126 | 4.8x |

---

<sup>1</sup>As ratio of Annual Base Compensation

<sup>2</sup>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 <br>(amounts in <br>EUR)<br>| Chairman | Chairman | Vice Chair | Vice Chair | Member | Member |
|  | As of <br>2025<br>| 2024 | As of <br>2025<br>| 2024 | As of <br>2025<br>| 2024 |
| Supervisory <br>Board (annual <br>fee)<br>| 175000 | 166500 | 130000 | 123500 | 113000 | 107500 |
| Audit <br>Committee<br>| 30500 | 29000 | n.a. | n.a. | 20250 | 19250 |
| Remuneration <br>Committee<br>| 23750 | 22500 | n.a. | n.a. | 15750 | 15000 |
| Corporate <br>Governance <br>and <br>Nomination & <br>Selection <br>Committee<br>| 23750 | 22500 | n.a. | n.a. | 15750 | 15000 |
| Quality and <br>Regulatory <br>Committee<br>| 23750 | 22500 | n.a. | n.a. | 15750 | 15000 |

---

In accordance with the Dutch Corporate Governance Code, the

remuneration for the members of the Supervisory Board is not

dependent on the results of the company and does not include any

shares (or rights to shares). Nevertheless, members of the Supervisory

Board are encouraged to hold shares in the company for the purpose

of long-term investment to reflect their confidence in the future course

of the company. The company does not grant personal loans to

members of the Supervisory Board.

91<br>

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 | 2750 | 2750 |
| Attendance fee per intercontinental trip | 5500 | 5500 |
| Entitlement to Philips product arrangement | 2000 | 2000 |
| Annual fixed net expense allowance | 11345 | 2269 |
| Other travel expenses | As reasonably incurred | 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 <br>compensation ¹<br>| **total 2025** | **total 2024** |
| F. Sijbesma | 175000 | 39500 | 11345 | 225845 | 232945 |
| P.A. Stoffels | 130000 | 39500 | 16019 | 185519 | 174269 |
| S.K. Chua | 113000 | 20250 | 15088 | 148338 | 152857 |
| M.E. Doherty | 113000 | 30500 | 11718 | 155218 | 156789 |
| A.M. Harrison | 113000 | 15750 | 18769 | 147519 | 130269 |
| P. Löscher | 113000 | 36000 | 10519 | 159519 | 160519 |
| I. Nooyi | 113000 | 15750 | 15064 | 143814 | 142654 |
| S. Poonen | 113000 | 15750 | 20500 | 149250 | 143538 |
| D. Pyott | 39627 | 8329 | 13992 | 61948 | 155019 |
| B. Ribadeau-Dumas | 113000 | 15750 | 15270 | 144020 | 98198 |
| H. Verhagen | 113000 | 41195 | 2847 | 157042 | 149996 |
| R.J. White | 97521 | 13592 | 12958 | 124071 |  |
| **Total** | **1346148** | **291866** | **164089** | **1802103** | **1697054** |

---

<sup>1</sup>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.

92<br>

**Group financial statements**

---

| | |
|:---|:---|
| **[Consolidated statements of income](#i1ef61551b458434b89ec959c05e00433)** | **[98](#i1ef61551b458434b89ec959c05e00433)** |
| **[Consolidated statements of comprehensive income](#i4ff45ef3f6934a6fb5550867cdad32e5)** | **[98](#i4ff45ef3f6934a6fb5550867cdad32e5)** |
| **[Consolidated balance sheets](#ie53f7fc6cb0f4a8f8c6a1a8cb4cfd2f3)** | **[99](#ie53f7fc6cb0f4a8f8c6a1a8cb4cfd2f3)** |
| **[Consolidated statements of cash flows](#i2c7c6a977fec4a8aa45fd07d09daf603)** | **[100](#i2c7c6a977fec4a8aa45fd07d09daf603)** |
| **[Consolidated statements of changes in equity](#i2000d14a871944d5b394b7bd101d22bd)** | **[101](#i2000d14a871944d5b394b7bd101d22bd)** |

---

---

| | |
|:---|:---|
| **[Notes to the Consolidated financial statements](#i08ed4406d17e4b479620f012c04457a3)** | **[102](#i08ed4406d17e4b479620f012c04457a3)** |
| [1](#i3d2a532ac5874761a51ffa30e75de1cd)[General information to the Consolidated financial statements](#i3d2a532ac5874761a51ffa30e75de1cd) | [102](#i3d2a532ac5874761a51ffa30e75de1cd) |
| [2](#i3602c94eff0d486eab6ea2b4ae37797f)[Information by segment and main country](#i3602c94eff0d486eab6ea2b4ae37797f) | [104](#i3602c94eff0d486eab6ea2b4ae37797f) |
| [3](#i3367d2c58675485b82ec67ce19693726)[Discontinued operations and assets classified as held for sale](#i3367d2c58675485b82ec67ce19693726) | [107](#i3367d2c58675485b82ec67ce19693726) |
| [4](#if39403dd0fb342378aa93e4c9df63e54)[Acquisitions and divestments](#if39403dd0fb342378aa93e4c9df63e54) | [108](#if39403dd0fb342378aa93e4c9df63e54) |
| [5](#ia8e39fde4c6a4b3d97a8aea533977997)[Interests in entities](#ia8e39fde4c6a4b3d97a8aea533977997) | [108](#ia8e39fde4c6a4b3d97a8aea533977997) |
| [6](#i587e0348edbe4a34be76b337e12f3724)[Income from operations](#i587e0348edbe4a34be76b337e12f3724) | [110](#i587e0348edbe4a34be76b337e12f3724) |
| [7](#i9b4e9bf57a72467b9346ae3efb73318a)[Financial income and expenses](#i9b4e9bf57a72467b9346ae3efb73318a) | [115](#i9b4e9bf57a72467b9346ae3efb73318a) |
| [8](#i68f8183d4cc1421980ea16a8a3e8b6b2)[Income taxes](#i68f8183d4cc1421980ea16a8a3e8b6b2) | [115](#i68f8183d4cc1421980ea16a8a3e8b6b2) |
| [9](#i28cd1ea082cc4228a17dc24d75046e32)[Earnings per share](#i28cd1ea082cc4228a17dc24d75046e32) | [120](#i28cd1ea082cc4228a17dc24d75046e32) |
| [10](#i6f643882e164452193f8e448007df535)[Property, plant and equipment](#i6f643882e164452193f8e448007df535) | [120](#i6f643882e164452193f8e448007df535) |
| [11](#i2f628f7a04454f919bc561c687db5c0b)[Goodwill](#i2f628f7a04454f919bc561c687db5c0b) | [124](#i2f628f7a04454f919bc561c687db5c0b) |
| [12](#i19afe2d1100d4e978504901431a0dfb5)[Intangible assets excluding goodwill](#i19afe2d1100d4e978504901431a0dfb5) | [126](#i19afe2d1100d4e978504901431a0dfb5) |
| [13](#i5e35bb8eb19e4df983da4f6d73b6781a)[Other financial assets](#i5e35bb8eb19e4df983da4f6d73b6781a) | [128](#i5e35bb8eb19e4df983da4f6d73b6781a) |
| [14](#i4035238898f4451d820e952eace9d10e)[Other assets](#i4035238898f4451d820e952eace9d10e) | [129](#i4035238898f4451d820e952eace9d10e) |
| [15](#i01c7ae662e2e4e1a9922d885d7dcfc90)[Inventories](#i01c7ae662e2e4e1a9922d885d7dcfc90) | [129](#i01c7ae662e2e4e1a9922d885d7dcfc90) |
| [16](#i6744a7f9916c4dbe83ef223b0d4ae051)[Receivables](#i6744a7f9916c4dbe83ef223b0d4ae051) | [130](#i6744a7f9916c4dbe83ef223b0d4ae051) |
| [17](#id26ba8c8a17b45c2b0b505d91816da54)[Equity](#id26ba8c8a17b45c2b0b505d91816da54) | [131](#id26ba8c8a17b45c2b0b505d91816da54) |
| [18](#idca671d75f494a679af01ff3aaf5e8f9)[Debt](#idca671d75f494a679af01ff3aaf5e8f9) | [135](#idca671d75f494a679af01ff3aaf5e8f9) |
| [19](#idd39ce674ed0417d9d81deef46ea5d10)[Provisions](#idd39ce674ed0417d9d81deef46ea5d10) | [138](#idd39ce674ed0417d9d81deef46ea5d10) |
| [20](#ie740a3a651714672bc5df4230f5aa2e2)[Post-employment benefits](#ie740a3a651714672bc5df4230f5aa2e2) | [141](#ie740a3a651714672bc5df4230f5aa2e2) |
| [21](#iade2601fbd684307a0eef7cc25966727)[Accrued liabilities](#iade2601fbd684307a0eef7cc25966727) | [145](#iade2601fbd684307a0eef7cc25966727) |
| [22](#i15ab105e8fb74e1bb45289be0492e833)[Other liabilities](#i15ab105e8fb74e1bb45289be0492e833) | [145](#i15ab105e8fb74e1bb45289be0492e833) |
| [23](#ib382419da4fe43dc93b3cad448738b22)[Cash flow statement supplementary information](#ib382419da4fe43dc93b3cad448738b22) | [146](#ib382419da4fe43dc93b3cad448738b22) |
| [24](#i7fa33bf6db25449590eb8393b373905e)[Contingencies](#i7fa33bf6db25449590eb8393b373905e) | [147](#i7fa33bf6db25449590eb8393b373905e) |
| [25](#i246ea30628ea48f6961e4fe79c515029)[Related-party transactions](#i246ea30628ea48f6961e4fe79c515029) | [149](#i246ea30628ea48f6961e4fe79c515029) |
| [26](#i107a2e9ef172467a85fc0f04df0c75bb)[Share-based compensation](#i107a2e9ef172467a85fc0f04df0c75bb) | [150](#i107a2e9ef172467a85fc0f04df0c75bb) |
| [27](#i7ab20d3cb4e54b499c91b53252217a58)[Information on remuneration](#i7ab20d3cb4e54b499c91b53252217a58) | [153](#i7ab20d3cb4e54b499c91b53252217a58) |
| [28](#ia68fc9cba3d943b78fadc948b2ea8b40)[Fair value of financial assets and liabilities](#ia68fc9cba3d943b78fadc948b2ea8b40) | [154](#ia68fc9cba3d943b78fadc948b2ea8b40) |
| [29](#i9c3b5364de76449b81ca13ebafa6bccb)[Details of treasury and other financial risks](#i9c3b5364de76449b81ca13ebafa6bccb) | [158](#i9c3b5364de76449b81ca13ebafa6bccb) |
| [30](#iefe4e9ae7ade41219b60c11f41c193e4)[Subsequent events](#iefe4e9ae7ade41219b60c11f41c193e4) | [163](#iefe4e9ae7ade41219b60c11f41c193e4) |

---

93<br>

**Controls and Procedures**

**Disclosures controls and procedures**

The Company's Chief Executive Officer and Chief Financial Officer have

evaluated the effectiveness of the design and operation of the

company's disclosure controls and procedures (as defined in Rules

13a15(e) and 15d15(e) under the Securities Exchange Act of 1934) as of

the end of the period covered by the Annual Report. Based on that

evaluation, the Chief Executive Officer and Chief Financial Officer have

concluded that these disclosure controls and procedures are effective as

of December 31, 2025.

**Management's annual report on internal control** 

**over financial reporting**

The Board of Management of Koninklijke Philips N.V. (Royal Philips) is

responsible for establishing and maintaining an adequate system of

internal control over financial reporting (as such term is defined in Rule

13a-15 (f) under the US Securities Exchange Act). Internal control over

financial reporting is a process to provide reasonable assurance

regarding the reliability of our financial reporting for external purposes

in accordance with IFRS Accounting Standards as issued by the IASB.

Internal control over financial reporting includes maintaining records

that, in reasonable detail, accurately and fairly reflect our transactions;

providing reasonable assurance that transactions are recorded as

necessary for preparation of our financial statements; providing

reasonable assurance that receipts and expenditures of company assets

are made in accordance with management authorization; and

providing reasonable assurance that unauthorized acquisition, use or

disposition of company assets that could have a material effect on our

financial statements would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial

reporting may not prevent or detect all misstatements. Also,

projections of any evaluation of the effectiveness of internal control to

future periods are subject to the risk that controls may become

inadequate because of changes in conditions, or that the degree of

compliance with the policies or procedures may deteriorate.

The Board of Management conducted an assessment of Royal Philips'

internal control over financial reporting based on the "Internal Control

Integrated Framework (2013)" established by the Committee of

Sponsoring Organizations of the Treadway Commission (COSO).

Based on the Board of Management's assessment of the effectiveness

of Royal Philips' internal control over financial reporting as of

December 31, 2025, it has concluded that, as of December 31, 2025,

Royal Philips' internal control over Group financial reporting is

effective.

**Attestation report of the registered public** 

**accounting firm**

The effectiveness of the Royal Philips' internal control over financial

reporting as of December 31, 2025, as included in this section Group

financial statements, has been audited by PricewaterhouseCoopers

Accountants N.V. (PCAOB ID: 1395), an independent registered public

accounting firm, as stated in their report included herein.

**Changes in internal control over financial reporting**

There were no changes in our internal control over financial reporting

during 2025 that have materially affected, or are reasonably likely to

materially affect, our internal control over financial reporting.

94<br>

**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<br>

**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 <br>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 <br>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. <br>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 <br>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 <br>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 <br>reliably estimate the financial impact, if any.<br>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 <br>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 <br>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 <br>involved in the use of professionals with specialized skills and knowledge.<br>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 <br>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 <br>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 <br>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) <br>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 <br>contingent liability disclosure related to the Respironics Recall.<br>|

---

96<br>

---

| |
|:---|
| 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. <br>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 <br>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 <br>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 <br>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 <br>income from operations excluding amortization and impairment of acquired intangible assets and impairment of goodwill.<br>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 <br>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 <br>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.<br>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 <br>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 <br>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-<br>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 <br>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 <br>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 <br>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 <br>sales growth rates, EBITA in the terminal value, and the rates used for discounting the projected cash flows.<br>|

---

/s/PricewaterhouseCoopers Accountants N.V.

Amsterdam, The Netherlands

February 19, 2026

We have served as the Company's auditor since 2024.

97<br>

**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<br>

**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** | 17834 | 18021 | 18169 |
| Cost of sales |  | (9776) | (10248) | (10721) |
| **Gross margin** |  | **8058** | **7773** | **7448** |
| Selling expenses |  | (4342) | (4486) | (4524) |
| General and administrative expenses |  | (628) | (582) | (608) |
| Research and development expenses |  | (1700) | (1747) | (1890) |
| Other business income | **6** | 87 | 590 | 112 |
| Other business expenses | **6** | (51) | (1019) | (652) |
| **Income from operations** | **6** | **1424** | **529** | **(115)** |
| Financial income | **7** | 113 | 105 | 63 |
| Financial expenses | **7** | (346) | (387) | (376) |
| Results of associates |  | (9) | (124) | (98) |
| **Income before taxes** |  | **1182** | **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 |  | (1641) | 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** |  | **(1638)** | **748** | **(597)** |
| **Other comprehensive income** |  | **(1653)** | **731** | **(637)** |
| **Total comprehensive income** |  | **(757)** | **33** | **(1100)** |
| Total comprehensive income attributable to: |  |  |  |  |
| Shareholders of Koninklijke Philips N.V. |  | (754) | 27 | (1101) |
| Non-controlling interests |  | (2) | 6 | 1 |

---

Amounts may not add up due to rounding.

99<br>

**Consolidated balance sheets**

Philips Group

**Consolidated balance sheets** in millions of EUR

as of December 31,

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Note** | **Note** | **2025** | 2024 |
| **Non-current assets** |  |  |  |  |
| Property, plant and equipment | **2** | **10** | 2217 | 2452 |
| Goodwill | **2** | **11** | 9271 | 10383 |
| Intangible assets excluding goodwill | **2** | **12** | 2569 | 2982 |
| Non-current receivables |  | **16** | 210 | 208 |
| Investments in associates |  | **5** | 148 | 257 |
| Other non-current financial assets |  | **13** | 704 | 631 |
| Deferred tax assets |  | **8** | 1773 | 1916 |
| Other non-current assets |  | **14** | 119 | 127 |
| **Total non-current assets** |  |  | **17012** | **18955** |
| **Current assets** |  |  |  |  |
| Inventories |  | **15** | 2870 | 3198 |
| Other current assets |  | **14** | 529 | 588 |
| Current derivative financial assets |  | **28** | 81 | 69 |
| Income tax receivable |  |  | 60 | 94 |
| Current receivables |  | **16** | 3530 | 3672 |
| Assets classified as held for sale |  | **3** | 67 | - |
| Cash and cash equivalents |  | **29** | 2794 | 2401 |
| **Total current assets** |  |  | **9932** | **10022** |
| **Total assets** |  |  | **26944** | **28976** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Note** | **2025** | 2024 |
| **Equity** |  |  |  |
| Shareholders' equity | **17** | 10957 | 12006 |
| Non-controlling interests | **17** | 32 | 37 |
| **Group equity** |  | **10990** | **12043** |
| **Non-current liabilities** |  |  |  |
| Long-term debt  | **18** | 6934 | 7113 |
| 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** |  | **8446** | **8787** |
| **Current liabilities** |  |  |  |
| Short-term debt | **18** | 1151 | 526 |
| Current derivative financial liabilities | **28** | 34 | 59 |
| Income tax liabilities | **8** | 174 | 71 |
| Accounts payable |  | 1927 | 1830 |
| Accrued liabilities | **21** | 1616 | 1630 |
| Current contract liabilities | **22** | 1490 | 1699 |
| Short-term provisions | **19** | 712 | 1977 |
| Liabilities directly associated with assets held for sale | **3** | 9 | - |
| Other current liabilities | **22** | 395 | 354 |
| **Total current liabilities** |  | **7509** | **8146** |
| **Total liabilities** |  | **15954** | **16933** |
| **Total liabilities and group equity** |  | **26944** | **28976** |

---

Amounts may not add up due to rounding.

100<br>

**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) <br>operating activities:<br>|  |  |  |  |
| Depreciation, amortization, and impairment of assets |  | 1125 | 1390 | 1261 |
| 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* <br>*liabilities*<br>|  | *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** | (1215) | 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** |  | **1172** | **1569** | **2136** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Note** | **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 <br>assets<br>|  | **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** | 1057 | 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** <br>**operations**<br>|  |  | **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 |  |  | 2401 | 1869 | 1172 |
| **Cash and cash equivalents at the end of the period** |  |  | **2794** | **2401** | **1869** |

---

Amounts may not add up due to rounding.

101<br>

**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 <br>of par value<br>| Cash flow <br>hedges<br>| Currency <br>translation <br>differences<br>| Treasury shares | Share-based <br>compensation<br>| Fair value <br>through OCI<br>| Retained <br>earnings<br>| Total <br>shareholders' <br>equity<br>| Non-controlling <br>interests<br>| Group equity |
|  |  |  | Reserves | Reserves | Reserves | Reserves | Reserves | Reserves |  |  |  |
| **Balance as of January 1, 2023** | **178** | **5253** | **(2)** | **1866** | **(275)** | **(228)** | **(376)** | **6832** | **13249** | **34** | **13283** |
| 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)** | **(1101)** | **1** | **(1100)** |
| 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** | **5994** | **6** | **1263** | **(262)** | **(166)** | **(390)** | **5402** | **12028** | **33** | **12061** |
| 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** | **6755** | **1** | **2014** | **(411)** | **(102)** | **(90)** | **3650** | **12006** | **37** | **12043** |
| Net income | - | - | - | - | - | - | - | 895 | 895 | 1 | 897 |
| Other comprehensive income (loss) | - | - | 32 | (1667) | - | - | (19) | 4 | (1649) | (4) | (1653) |
| **Total comprehensive income (loss)** | **-** | **-** | **32** | **(1667)** | **-** | **-** | **(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** | **7212** | **33** | **347** | **(298)** | **(17)** | **(89)** | **3575** | **10957** | **32** | **10990** |

---

102<br>

**Notes to the Consolidated financial** 

**statements**

**1General information to the Consolidated financial statements**

**Reporting entity and its operations**

Koninklijke Philips N.V. ('Royal Philips'), incorporated and domiciled in the Netherlands, is a public limited

liability company organized under Dutch Law (registration number 17001910). Philips is headquartered at

Prinses Irenestraat 59, 1077 WV Amsterdam, the Netherlands and has its registered address at High Tech

Campus 52, 5656 AG Eindhoven, the Netherlands. The consolidated financial statements of Royal Philips as of

December 31, 2025, comprise Royal Philips and its subsidiaries (together referred to as the 'company' or 'Philips'

or the 'Group'). Philips is a leading health technology company primarily involved in diagnostic imaging, image-

guided therapy, patient monitoring and health informatics, as well as in consumer health and home care.

**Basis of preparation**

The Consolidated financial statements are:

• prepared in accordance with International Financial Reporting Standards (IFRS) Accounting Standards as

adopted by the European Union (EU) and comply with the statutory provisions of Part 9, Book 2 of the

Dutch Civil Code. All standards and interpretations issued by the International Accounting Standards Board

(IASB) and the IFRS Interpretations Committee effective in 2025 have been endorsed by the EU. As a result,

Philips' accounting policies also fully comply with IFRS Accounting Standards as issued by the IASB. These

accounting policies have been applied by group entities

• authorized for issue by the Board of Management of Royal Philips on February 19, 2026

• prepared under the historical cost convention, unless otherwise indicated

• prepared on a going concern basis

• presented in euro, which is the presentation currency

• rounded to the nearest million euro unless stated otherwise

• subject to rounding, whereby amounts may not add up precisely to the totals provided

**Accounting estimates and judgments**

The preparation of these financial statements requires management to make a number of estimates and

judgments that affect the application of accounting policies and the reported amounts of assets and liabilities,

revenues and expenses, and the disclosure of contingent assets and liabilities. Amounts recognized are based

on factors that are by default associated with uncertainty. Actual results may therefore differ from estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to estimates are recognized

prospectively. Where applicable, the estimates and judgments of specific financial statement items are

described in the respective note to the consolidated financial statements.

The areas involving a higher degree of judgment and complexity in applying accounting principles and for

which changes in the assumptions and estimates could result in significantly different results than those

recorded in the consolidated financial statements are the following:

• judgment applied in determining reportable segments involves evaluating the information reviewed by the

Chief Operating Decision-Maker (the Board of Management) to assess performance and allocate resources

([Information by segment and main country](#i709b790389b445bdbcabcc2c3c292121_385))

• assessment of control (below paragraph Basis of consolidation and [Interests in entities](#i709b790389b445bdbcabcc2c3c292121_394))

• revenue recognition ([Income from operations](#i709b790389b445bdbcabcc2c3c292121_397))

• for acquisitions, the identification and valuation of acquired assets and liabilities including contingent

considerations provisions ([Acquisitions and divestments](#i709b790389b445bdbcabcc2c3c292121_391), [Provisions](#i709b790389b445bdbcabcc2c3c292121_436))

• determination of deferred tax assets for losses carried forward and uncertain tax positions ([Income taxes](#i709b790389b445bdbcabcc2c3c292121_403))

• assumptions used for impairment testing ([Goodwill](#i709b790389b445bdbcabcc2c3c292121_412), [Intangible assets excluding goodwill](#i709b790389b445bdbcabcc2c3c292121_415))

• assessments of exposure to credit risk of financial instruments ([Other financial assets](#i709b790389b445bdbcabcc2c3c292121_418), [Receivables](#i709b790389b445bdbcabcc2c3c292121_427), [Debt](#i709b790389b445bdbcabcc2c3c292121_433), [Fair](#i709b790389b445bdbcabcc2c3c292121_463)

[value of financial assets and liabilities](#i709b790389b445bdbcabcc2c3c292121_463), [Details of treasury and other financial risks](#i709b790389b445bdbcabcc2c3c292121_466))

• assumptions used to determine the net realizable value of inventories ([Inventories](#i709b790389b445bdbcabcc2c3c292121_424))

• actuarial assumptions of future events that are used in calculating post-employment benefit expenses and

liabilities ([Post-employment benefits](#i709b790389b445bdbcabcc2c3c292121_439))

• 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](#i709b790389b445bdbcabcc2c3c292121_436), [Contingencies](#i709b790389b445bdbcabcc2c3c292121_451))

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<br>

**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<br>

IFRS 18 is effective for reporting periods beginning on or after January 1, 2027. Retrospective application is

required; therefore, upon adoption, comparative information will be restated in accordance with IFRS 18. The

company is currently assessing the implications of applying the new standard.

**Changes in presentation from the prior year**

Accounting policies have been applied consistently for all periods presented in these consolidated financial

statements. Certain prior-year amounts have been reclassified to conform to the current year presentation

due to combining insignificant balances and immaterial organizational changes. In 2025, uncertain tax

liabilities were reclassified from non-current tax liabilities to current income tax liabilities, and non-current

derivative financial assets were combined into other non-current financial assets.

**2Information by segment and main country**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting policies**

Segment accounting policies are the same as the accounting policies applied by the company. Operating

segments are components of the company's business activities for which separate financial information is

available that is evaluated regularly by the Chief Operating Decision-Maker (the Board of Management of the

company). The Board of Management decides how to allocate resources and assesses performance.

Reportable segments comprise the operating segments Diagnosis & Treatment, Connected Care and Personal

Health. Besides these reportable segments, segment Other comprises Philips' central Innovation & Design, IP

royalty activities, corporate central costs, and other minor items not allocated to the operating segments.

**Accounting estimates and judgments**

Determining reportable segments requires significant judgment and involves evaluating the information that

is reviewed by the Chief Operating Decision-Maker (the Board of Management) to assess performance and

allocate resources, in accordance with IFRS 8 'Operating Segments'.

The Philips reportable segments are Diagnosis & Treatment, Connected Care and Personal Health, each being

responsible for the management of its Businesses worldwide.

Philips focuses on improving people's lives through meaningful innovation. The Diagnosis & Treatment

segment unites the Businesses related to the goal of precision diagnosis and disease pathway selection, and

the Businesses related to image-guided, minimally invasive treatment. The Connected Care segment focuses

on patient care solutions, advanced informatics and analytics, and patient and workflow optimization inside

and outside the hospital, and aims to unlock synergies from integrating and optimizing patient care

pathways, and leveraging provider-payer-patient business models. The Personal Health segment focuses on

healthy living and preventative care.

Transactions between the segments are mainly related to components and parts included in the product

portfolio of the other segments. The pricing of such transactions was at cost or determined on an arm's length

basis. Philips has no single external customer that represents 10% or more of sales. Sales by country is

presented based on the country of seller.

Philips Group

**Information on income statements** in millions of EUR

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Sales | Sales including <br>intercompany<br>| Depreciation <br>and <br>amortization ¹<br>| Adjusted EBITA |
| **2025** |  |  |  |  |
| Diagnosis & Treatment | 8531 | 8986 | (265) | 998 |
| Connected Care | 5076 | 5100 | (404) | 544 |
| Personal Health | 3673 | 3765 | (112) | 662 |
| *Other* | *554* | *703* | *(344)* | *(9)* |
| Inter-segment eliminations |  | (720) |  |  |
| **Philips Group** | **17834** | **17834** | **(1125)** | **2195** |
| **2024** |  |  |  |  |
| Diagnosis & Treatment | 8790 | 9269 | (464) | 1018 |
| Connected Care | 5134 | 5163 | (403) | 494 |
| Personal Health | 3486 | 3566 | (117) | 584 |
| *Other* | *611* | *750* | *(406)* | *(18)* |
| Inter-segment eliminations |  | (726) |  |  |
| **Philips Group** | **18021** | **18021** | **(1390)** | **2077** |
| **2023** |  |  |  |  |
| Diagnosis & Treatment | 8825 | 9269 | (306) | 1028 |
| Connected Care | 5138 | 5149 | (445) | 369 |
| Personal Health | 3602 | 3685 | (115) | 597 |
| *Other* | *604* | *413* | *(394)* | *(73)* |
| Inter-segment eliminations |  | (346) |  |  |
| **Philips Group** | **18169** | **18169** | **(1261)** | **1921** |

---

<sup>1</sup>Includes impairments (excluding goodwill impairment); for impairment values please refer to [Property, plant and equipment](#i709b790389b445bdbcabcc2c3c292121_409)

and [Intangible assets excluding goodwill](#i709b790389b445bdbcabcc2c3c292121_415)

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<br>

impairment of goodwill (EBITA) and excluding gains or losses from restructuring costs, acquisition-related

charges and other items.

Adjusted EBITA\* is not a recognized measure of financial performance under IFRS. Reconciliations of Adjusted

EBITA\* to the most directly comparable IFRS measure, Net income, for the years indicated are presented in the

accompanying tables. Net income is not allocated to segments as certain income and expense line items are

monitored on a centralized basis, resulting in them being shown on a Philips Group level only.

Philips Group

**Reconciliation from net income to Adjusted EBITA** in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Philips Group | Diagnosis & <br>Treatment<br>| Connected Care | Personal Health | Other |
| **2025** |  |  |  |  |  |
| **Net Income** | 897 |  |  |  |  |
| Discontinued operations, net of <br>income taxes<br>| 4 |  |  |  |  |
| Income tax expense (benefit) | 282 |  |  |  |  |
| **Income before taxes** | **1182** |  |  |  |  |
| Results of associates | 9 |  |  |  |  |
| Financial expenses | 346 |  |  |  |  |
| Financial income | (113) |  |  |  |  |
| **Income from operations** | **1424** | **804** | **89** | **631** | ***(100)*** |
| Amortization and impairment of <br>acquired intangible assets<br>| 240 | 73 | 141 | 14 | *12* |
| **EBITA** | **1665** | **877** | **230** | **645** | ***(88)*** |
| Restructuring and acquisition-<br>related charges<br>| 260 | 43 | 126 | 17 | *74* |
| Other items: | 270 | 77 | 188 | - | *5* |
| *Respironics field-action running* <br>*costs*<br>| *112* | *-* | *112* | *-* | *-* |
| *Respironics consent decree* <br>*charges*<br>| *97* | *-* | *97* | *-* | *-* |
| *Quality actions* | *89* | *77* | *12* | *-* | *-* |
| *Contract settlement gain* | *(27)* | *-* | *(27)* | *-* | *-* |
| *Remaining items* | *(1)* | *-* | *(6)* | *-* | *5* |
| **Adjusted EBITA \*** | **2195** | **998** | **544** | **662** | ***(9)*** |

---

Philips Group

**Reconciliation from net income to Adjusted EBITA** in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Philips Group | Diagnosis & <br>Treatment<br>| Connected Care | Personal Health | Other |
| **2024** |  |  |  |  |  |
| **Net Income** | (698) |  |  |  |  |
| Discontinued operations, net of <br>income taxes<br>| (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 <br>acquired intangible assets<br>| 392 | 225 | 141 | 15 | *12* |
| **EBITA** | **921** | **817** | **(324)** | **559** | ***(130)*** |
| Restructuring and acquisition-<br>related charges<br>| 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* <br>*costs*<br>| *133* | *-* | *133* | *-* | *-* |
| *Respironics consent decree* <br>*charges*<br>| *113* | *-* | *113* | *-* | *-* |
| *Quality actions* | *123* | *45* | *78* | *-* | *-* |
| *Remaining items* | *16* | *-* | *(4)* | *-* | *20* |
| **Adjusted EBITA \*** | **2077** | **1018** | **494** | **584** | ***(18)*** |

---

106<br>

Philips Group

**Reconciliation from net income to Adjusted EBITA** in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Philips Group | Diagnosis & <br>Treatment<br>| Connected Care | Personal Health | Other |
| **2023** |  |  |  |  |  |
| **Net Income** | (463) |  |  |  |  |
| Discontinued operations, net of <br>income taxes<br>| 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** | **(1199)** | **552** | ***(190)*** |
| Amortization and impairment of <br>acquired intangible assets<br>| 290 | 89 | 178 | 14 | *9* |
| Impairment of goodwill | 8 | 8 | - |  |  |
| **EBITA** | **183** | **818** | **(1020)** | **567** | ***(181)*** |
| Restructuring and acquisition-<br>related charges<br>| 381 | 118 | 115 | 9 | *140* |
| Other items: | 1358 | 92 | 1275 | 22 | *(32)* |
| *Respironics litigation provision* | *575* | *-* | *575* | *-* | *-* |
| *Respironics field-action* <br>*connected to the proposed* <br>*consent decree*<br>| *363* | *-* | *363* | *-* | *-* |
| *Respironics field-action running* <br>*costs*<br>| *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 \*** | **1921** | **1028** | **369** | **597** | ***(73)*** |

---

Philips Group

**Main countries** in millions of EUR

---

| | | |
|:---|:---|:---|
|  | Sales | Tangible and <br>intangible assets ¹<br>|
| **2025** |  |  |
| Netherlands | 2546 | 1592 |
| United States | 7130 | 10102 |
| China | 1202 | 224 |
| Japan | 883 | 359 |
| Germany | 652 | 447 |
| Other countries | 5421 | 1333 |
| **Total main countries** | **17834** | **14057** |
| **2024** |  |  |
| Netherlands | 2506 | 1662 |
| United States | 7227 | 11607 |
| China | 1153 | 250 |
| Japan | 886 | 396 |
| Germany | 653 | 392 |
| Other countries | 5596 | 1509 |
| **Total main countries** | **18021** | **15816** |
| **2023** |  |  |
| Netherlands | 2390 | 1624 |
| United States | 7178 | 11410 |
| China | 1408 | 234 |
| Japan | 941 | 407 |
| Germany | 573 | 348 |
| Other countries | 5679 | 1527 |
| **Total main countries** | **18169** | **15550** |

---

<sup>1</sup>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.](#i709b790389b445bdbcabcc2c3c292121_736)

107<br>

**3Discontinued operations and assets classified as held for sale**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

108<br>

**4Acquisitions and divestments**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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](#i709b790389b445bdbcabcc2c3c292121_388).

**Accounting estimates and judgments**

Intangible assets acquired in a business acquisition and the financial liability related to non-controlling

interest are measured at fair value at the date of the acquisition.

To determine the fair value of intangible assets at the acquisition date, estimates and assumptions are

required. The valuation of the identifiable intangible assets involves estimates of expected sales, earnings and/

or future cash flows and require use of key assumptions, such as discount rate, royalty rate and growth rates.

Estimates are also applied when determining the fair value of legal cases and tax positions in the acquired entity.

The fair value is based on estimates of the likelihood, the expected timing and the amount of the potential cash

outflow. Contingent liabilities relating to legal cases and non-income tax positions of the acquired entity are

recognized at fair value at the acquisition date in accordance with IFRS 3, irrespective of whether an outflow will

be required to settle the obligation. After initial recognition and until the liability is settled, cancelled or expired,

the liability is measured at the higher of the amount that would be recognized in accordance with IAS 37

'Provisions, contingent liabilities and contingent assets' and the initial liability amount. For income tax positions,

the company applies IAS 12 'Income taxes', which requires recognition of provisions only when the likelihood of

cash outflow is considered probable.

**2025**

**Acquisitions**

Philips did not complete any acquisitions during 2025.

**Divestments**

During 2025, Philips completed two divestments, generating total net consideration of EUR 77 million. The

combined result of these divestments was a loss of EUR (26) million, recognized within Other business

expenses in the Consolidated statement of income. The most notable transaction was the divestment of the

Emergency Care business. On December 31, 2025, Philips completed the sale to Bridgefield Capital, a US-based

investment firm, and the parties entered into an exclusive brand license agreement as well as a transition

service and manufacturing agreement. The divestments were not material in the context of the Group's

financial position, performance or cash flows and did not meet the quantitative or qualitative thresholds for

separate disclosure under IFRS.

**2024**

**Acquisitions**

Philips did not make any acquisitions in 2024.

**Divestments**

During 2024 Philips completed four divestments, generating net cash consideration of EUR 118 million. These

transactions resulted in EUR 8 million gain, which has been recognized within Other business income in the

Consolidated statements of income. The divestments were individually and collectively not material to the

Group.

**5Interests in entities**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting policies**

Associates are all entities over which the company has significant influence, meaning the power to participate

in the financial and operating policy decisions of the investee without the power to control or jointly control

those procedures. Significant influence is presumed for entities in which the company holds between 20% and

50% of the voting power. This presumption may be rebutted if evidence demonstrates that significant

influence does not exist, or conversely, that it exists despite voting rights of less than 20%. These assessments

involve significant judgment and may require consideration of qualitative factors in addition to quantitative

thresholds. Changes in these factors could lead to reassessment of significant influence and impact the

classification and measurement of the investment.

Investments in associates are accounted for using the equity method of accounting and are initially

recognized at cost. The carrying amount of an investment in an associate includes the carrying amount of

109<br>

goodwill identified on acquisition. An impairment loss on such investment is allocated to the investment as a

whole.

The company's share of the net income of these associates is included in Results of associates, in the Consolidated

statements of income, after adjustments to align the accounting policies with those of the company. In addition,

gains or losses from changes in ownership (dilution), impairments, and disposals of associates are recognized

within the same line item. When the company's share of losses exceeds its interest in an associate, the carrying

amount of that interest is reduced to zero and recognition of further losses is discontinued except to the extent

that the company has an obligation or made payments on behalf of the associate.

The nature of the company's interests in its consolidated entities and associates, and the effects of those

interests on the company's financial position and financial performance are discussed in the subsequent

paragraphs.

**Group companies**

In the accompanying table is a list of subsidiaries that, as of December 31, 2025, individually exceed 5% of

either the consolidated group Sales, Income from operations or Income from continuing operations (before

any intra-group eliminations) of Group legal entities. All of the entities are fully consolidated in the Group

financial statements.

Philips Group

**Interests in group companies** in alphabetical order by country

December 31, 2025

---

| | |
|:---|:---|
| Legal entity name | Principal country of business |
| Philips (China) Investment Company, Ltd. | China |
| Philips Medizin Systeme Böblingen GmbH | Germany ¹ |
| Philips Consumer Lifestyle B.V. | Netherlands |
| ATL International LLC | United States |
| Braemar Manufacturing, LLC | United States |
| Philips Medical Systems (Cleveland), Inc. | United States |
| Philips North America LLC | United States |
| Philips RS North America LLC | United States |

---

<sup>1</sup>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.

110<br>

The company concluded that it does not control, and therefore should not consolidate, the PMC entities. In

the US, PMC operates as a subsidiary of De Lage Landen Financial Services, Inc. The same structure and

treatment is applied to the PMC entities in the other countries, with other majority shareholders. Operating

agreements are in place for all PMC entities, whereby acceptance of sales and financing transactions resides

with the respective majority shareholder. After acceptance of a transaction by PMC, Philips transfers control

and does not retain any obligations towards PMC or its customers, from the sales contracts.

As of December 31, 2025, Philips' shareholding in Philips Medical Capital, LLC had a carrying value of EUR 26

million (December 31, 2024: EUR 31 million).

The company does not have any material exposures to losses from interests in unconsolidated structured

entities other than the invested amounts.

**6Income from operations**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting policies**

**Revenue recognition**

Goods include consumer-type products in the Personal Health segment, equipment in the Diagnosis &

Treatment and Connected Care segments, and software-related offerings treated as goods. Services include

preventative and corrective maintenance services, as well as related parts and labor, extended warranties,

training, and other service-type offerings (including software). The company recognizes a contract with a

customer when a legally enforceable agreement exists, the rights of both parties are established, the contract

has commercial substance, and the consideration is probable to be collected. Revenue is recognized in the

period when the performance obligation is satisfied and the customer obtains control of the underlying

goods or services, allowing the customer the ability to direct the use of, and obtain substantially all of, the

remaining benefits of such product or service. The revenue reflects the consideration (i.e., transaction price) to

which the company expects to be entitled in exchange for the good or service. The consideration expected by

the company may include fixed and/or variable amounts which can be impacted by sales returns, trade

discounts, volume rebates, credits or Group Purchasing Organization (GPO) fees. The company adjusts the

consideration for the time value of money if the period between the transfer of the promised goods or

services to the customer and payment by the customer exceeds six months. Revenue is either recognized at a

point in time or over time.

Revenues from transactions relating to distinct goods or services are accounted for separately based on their

relative stand-alone selling prices. The stand-alone selling price is the price that would be charged for the

goods or service in a separate transaction under similar conditions to similar customers. The transaction price

is determined (considering variable considerations) and allocated to performance obligations based on their

relative stand-alone selling prices. These transactions mainly occur in the segments Diagnosis & Treatment and

Connected Care and include arrangements that require delivery of goods with subsequent installation and

training activities or future goods and services. Depending on the terms of the contract sale, the installation

and training activities could be considered part of the equipment sales. Revenue is recognized when the

performance obligation is satisfied, i.e., when the installation has been completed and the equipment is ready

to be used by the customer in the way contractually agreed.

Variable consideration is included in the transaction price to the extent that it is highly probable that a

significant reversal in the amount of cumulative revenue recognized will not occur once associated

uncertainties are resolved. Such assessment is performed on each reporting date to check whether it is

constrained. For products for which a right of return exists during a defined period, revenue recognition is

determined based on the historical pattern of actual returns, or in cases where such information is not

available, revenue recognition is postponed until the return period has lapsed. Return policies are typically

based on customary return arrangements in local markets. A provision is recognized for assurance-type

product warranty at the time of revenue recognition and reflects the estimated costs of replacement and free-

of-charge services that will be incurred by the company with respect to the products sold. For certain products,

the customer has the option to purchase the warranty separately, which is considered a separate performance

obligation on top of the assurance-type product warranty. For such warranties which provide distinct service,

revenue recognition occurs on a straight-line basis over the extended warranty contract period. Occasionally,

the company may offer a full or partial refund of consideration previously paid. A provision is recognized for

the amounts expected to be refunded to customers, and remeasured at each reporting date to reflect changes

in the estimated refunds, with a corresponding adjustment to revenue.

In the case of loss under a sales agreement, the loss is recognized immediately. Expenses incurred for sales

commissions that are considered incremental to the contracts are recognized immediately in the consolidated

statements of income as selling expenses as a practical expedient under IFRS 15 Revenue from Contracts with

Customers.

The company receives payments from customers based on a billing schedule or credit period, as established in

our contracts. Credit periods are determined based on standard terms, which vary according to local market

conditions. Amounts posted in deferred revenue for which the goods or services have not yet been

transferred to the customer and amounts that have either been received or are due, are presented as Contract

liabilities in the Consolidated balance sheets. Payment terms typically do not exceed 90 days after invoice.

**Revenue from sale of goods**

Revenues are recognized at either point in time or over time when control of the goods passes to the buyer,

based on the allocation of the transaction price to the performance obligation.

**Revenue from services**

Revenues are recognized over time as the company transfers control of the services to the customer, which is

demonstrated by the customer simultaneously receiving and consuming the benefits provided by the company.

111<br>

The amount of revenues is measured by reference to the progress made toward complete satisfaction of the

performance obligation, which in general is evenly over time. Service revenue related to repair and

maintenance activities for goods sold is recognized ratably over the service period or as services are rendered.

**Sales from other sources**

Revenue includes consideration received from customers under lease arrangements in which the company acts

as lessor. Lease contracts are classified as either finance leases or operating leases.

Finance leases: When substantially all risks and rewards incidental to ownership of the underlying asset are

transferred to the lessee, the lease is classified as a finance lease. For such leases, revenue is recognized at a

point in time.

Operating leases: When the company retains substantially all risks and rewards incidental to ownership, the

lease is classified as an operating lease. Revenue from operating leases is recognized on a straight-line basis

over the lease term.

**Income from royalties**

Royalty income from brand license arrangements and from intellectual property rights, such as technology

licenses or patents, is recognized on an accrual basis in accordance with the substance of the relevant

agreement and can be over time or point in time.

**Employee benefits expense**

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the

related service is provided. The company recognizes a liability and an expense for bonuses and incentives

based on a formula that takes into consideration the profit attributable to the company's shareholders after

certain adjustments.

**Shipping and handling**

Expenses incurred for shipping and handling are mainly recorded as cost of sales. When shipping and

handling are part of a project and billed to the customer, then the related expenses are recorded as cost of

sales. Shipping and handling related to sales to third parties are partly recorded as selling expenses. When

shipping and handling billed to customers are considered a distinct and separate performance obligation, the

fees are recognized as revenue and costs included in cost of sales.

**Other business income (expenses)**

Other business income (expenses) includes gains and losses on the sale of property, plant and equipment,

gains and losses on the sale of businesses, and other gains and losses not related to the company's operating

activities.

**Government grants**

Grants from governments are recognized at their fair value when there is a reasonable assurance that the

grant will be received and the company will comply with the conditions. Grants related to costs are deferred

in the consolidated balance sheet and recognized in the consolidated statement of income as a reduction of

the related costs that they are intended to compensate. Grants related to assets are deducted from the cost of

the asset and presented net in the consolidated balance sheets.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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 | 17834 | 18021 | 18169 |
| Costs of materials used | (4120) | (4213) | (4626) |
| Employee benefit expenses | (6681) | (6641) | (6903) |
| Depreciation and amortization ¹ | (1125) | (1390) | (1261) |
| Shipping and handling | (585) | (623) | (668) |
| Advertising and promotion | (794) | (791) | (700) |
| Lease expenses | (43) | (54) | (51) |
| Other operational costs | (3097) | (3351) | (3535) |
| Other business income (expenses) | 36 | (429) | (540) |
| **Income from operations** | **1424** | **529** | **(115)** |

---

<sup>1</sup>Includes impairments. For impairment values please refer to [Property, plant and equipment](#i709b790389b445bdbcabcc2c3c292121_409) and [Intangible assets excluding](#i709b790389b445bdbcabcc2c3c292121_415)

[goodwill](#i709b790389b445bdbcabcc2c3c292121_415).

112<br>

**Sales composition and disaggregation**

For information related to sales on a segment and geographical basis, refer to [Information by segment and](#i709b790389b445bdbcabcc2c3c292121_385)

[main country](#i709b790389b445bdbcabcc2c3c292121_385).

Philips Group

**Sales composition** in millions of EUR

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Goods | 12089 | 12198 | 12419 |
| Services | 4938 | 5003 | 4926 |
| Royalties | 434 | 466 | 434 |
| **Total sales from contracts with customers** | **17461** | **17667** | **17779** |
| Sales from other sources | 373 | 354 | 390 |
| **Total sales** | **17834** | **18021** | **18169** |

---

Philips Group

**Disaggregation of sales per segment** in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Sales at a point <br>in time<br>| Sales over time | Total sales from <br>contracts with <br>customers<br>| Sales from other <br>sources<br>| Total sales |
| **2025** |  |  |  |  |  |
| Diagnosis & Treatment | 5286 | 3157 | 8443 | 88 | 8531 |
| Connected Care | 3042 | 1749 | 4792 | 284 | 5076 |
| Personal Health | 3659 | 13 | 3672 | 1 | 3673 |
| *Other* | *232* | *322* | *554* | *-* | *554* |
| **Philips Group** | **12219** | **5241** | **17461** | **373** | **17834** |
| **2024** |  |  |  |  |  |
| Diagnosis & Treatment | 5655 | 3070 | 8725 | 65 | 8790 |
| Connected Care | 2959 | 1886 | 4845 | 289 | 5134 |
| Personal Health | 3471 | 15 | 3486 | - | 3486 |
| *Other* | *300* | *311* | *611* | *-* | *611* |
| **Philips Group** | **12385** | **5282** | **17667** | **354** | **18021** |
| **2023** |  |  |  |  |  |
| Diagnosis & Treatment | 5768 | 2980 | 8749 | 76 | 8825 |
| Connected Care | 2970 | 1854 | 4824 | 314 | 5138 |
| Personal Health | 3586 | 16 | 3602 | - | 3602 |
| *Other* | *245* | *360* | *604* | *-* | *604* |
| **Philips Group** | **12569** | **5210** | **17779** | **390** | **18169** |

---

Philips Group

**Disaggregation of sales per geographic area** in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Sales at a point <br>in time<br>| Sales over time | Total sales from <br>contracts with <br>customers<br>| Sales from other <br>sources<br>| Total sales |
| **2025** |  |  |  |  |  |
| Western Europe | 2606 | 1291 | 3897 | 24 | 3921 |
| North America | 4945 | 2478 | 7423 | 119 | 7542 |
| Other mature geographies | 798 | 425 | 1223 | 229 | 1452 |
| **Mature geographies** | **8349** | **4194** | **12543** | **372** | **12915** |
| Growth geographies | 3870 | 1047 | 4917 | 1 | 4919 |
| **Sales** | **12219** | **5241** | **17461** | **373** | **17834** |
| **2024** |  |  |  |  |  |
| Western Europe | 2698 | 1254 | 3951 | 28 | 3978 |
| North America | 4958 | 2602 | 7560 | 93 | 7655 |
| Other mature geographies | 893 | 401 | 1294 | 231 | 1526 |
| **Mature geographies** | **8549** | **4256** | **12805** | **353** | **13159** |
| Growth geographies | 3836 | 1026 | 4861 | 1 | 4863 |
| **Sales** | **12385** | **5282** | **17667** | **354** | **18021** |
| **2023** |  |  |  |  |  |
| Western Europe | 2552 | 1221 | 3770 | 49 | 3819 |
| North America | 4859 | 2608 | 7470 | 92 | 7562 |
| Other mature geographies | 980 | 398 | 1378 | 248 | 1626 |
| **Mature geographies** | **8392** | **4227** | **12618** | **389** | **13007** |
| Growth geographies | 4177 | 984 | 5161 | 1 | 5162 |
| **Sales** | **12569** | **5210** | **17779** | **390** | **18169** |

---

Total sales from other sources mainly relates to operating leases of EUR 215 million (2024: EUR 222 million;

2023: EUR 234 million). Sales represent revenue from external customers.

As of December 31, 2025, the aggregate amount of the transaction price allocated to remaining performance

obligations from sales of goods and services was EUR 14,924 million (2024:15,632 million). The company

expects to recognize approximately 45% of the remaining performance obligations within 1 year. Revenue

expected to be recognized beyond 1 year is mostly related to longer term customer service and software

contracts.

113<br>

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 | 5369 | 5356 | 5635 |
| 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** | **6681** | **6641** | **6903** |

---

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](#i709b790389b445bdbcabcc2c3c292121_439).

For details on the remuneration of the members of the Board of Management and the Supervisory Board,

refer to [Information on remuneration](#i709b790389b445bdbcabcc2c3c292121_460).

**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 | 28167 | 27478 | 28640 |
| Research & development | 10248 | 10843 | 12035 |
| Other | 26402 | 27795 | 26818 |
| **Philips Employees** | **64817** | **66116** | **67493** |
| Third-party workers | 1585 | 1708 | 2163 |
| **Total** | **66401** | **67823** | **69656** |

---

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 | 8342 | 8844 | 9794 |
| Other countries | 58691 | 60113 | 62471 |
| **Total** | **67033** | **68956** | **72264** |

---

**Depreciation and amortization**

Depreciation of property, plant and equipment and amortization of intangible assets, including impairments,

are:

Philips Group

**Depreciation and amortization** <sup>1</sup> 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** | **1125** | **1390** | **1261** |

---

<sup>1</sup>Includes impairments. For impairment values please refer to [Property, plant and equipment](#i709b790389b445bdbcabcc2c3c292121_409) and [Intangible assets excluding](#i709b790389b445bdbcabcc2c3c292121_415)

[goodwill](#i709b790389b445bdbcabcc2c3c292121_415).

114<br>

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](#i709b790389b445bdbcabcc2c3c292121_364)

[of income](#i709b790389b445bdbcabcc2c3c292121_364).

**Advertising and promotion**

Advertising and promotion costs are included in selling expenses in the [Consolidated statements of income](#i709b790389b445bdbcabcc2c3c292121_364).

**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** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | PwC NL ¹ | PwC <br>Network<br>| Total | EY NL ² | EY <br>Network<br>| 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** |

---

<sup>1</sup>PricewaterhouseCoopers Accountants N.V.

<sup>2</sup>EY Accountants B.V.

<sup>3</sup>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) | (1005) | (643) |
| Impairment of goodwill | - | - | (8) |
| **Other business income (expenses)** | **36** | **(429)** | **(540)** |
| Total other business income | 87 | 590 | 112 |
| Total other business expenses | (51) | (1019) | (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](#i709b790389b445bdbcabcc2c3c292121_391).

115<br>

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](#i709b790389b445bdbcabcc2c3c292121_436).

**Impairment of goodwill**

There were no goodwill impairment charges in 2025 and in 2024. For further information refer to [Goodwill](#i709b790389b445bdbcabcc2c3c292121_412).

**7Financial income and expenses**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting policies**

Financial income and expenses are recognized on the accrual basis in the Consolidated statements of income.

Interest income and expense are measured using the effective interest method. Dividend income is recognized

in the consolidated statements of income on the date that the company's right to receive payment is

established, which in the case of quoted securities is normally the ex-dividend date.

Philips Group

**Financial income and expenses** in millions of EUR

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Interest income | 83 | 79 | 46 |
| *Interest income from loans and receivables* | *15* | *12* | *13* |
| *Interest income from cash and cash equivalents* | *68* | *67* | *33* |
| Dividend income from financial assets | 3 | 3 | 2 |
| Net gains from disposal of financial assets | 1 | 2 | - |
| Net change in fair value of derivatives | 12 | - | - |
| Other financial income | 14 | 21 | 15 |
| **Financial income** | **113** | **105** | **63** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Interest expense | (288) | (288) | (277) |
| *Interest expense on debt and borrowings* | *(233)* | *(231)* | *(229)* |
| *Finance charges under lease contract* | *(38)* | *(37)* | *(27)* |
| *Interest expense on pensions* | *(17)* | *(20)* | *(21)* |
| Provision-related accretion expenses | (6) | (49) | (29) |
| Net foreign exchange gains (losses) | (6) | (7) | (23) |
| Net change in fair value of financial assets through profit or loss | (27) | (18) | (26) |
| Net change in fair value of derivatives | - | (5) | - |
| Other financial expenses | (19) | (20) | (21) |
| **Financial expenses** | **(346)** | **(387)** | **(376)** |
| **Financial income and expenses, net** | **(233)** | **(282)** | **(314)** |

---

In 2025, financial income and expenses net decreased by EUR 49 million year-on-year, mainly due to lower

provision-related accretion costs in 2025 compared to 2024. Net interest expense in 2025 was EUR 4 million

lower than in 2024, driven by a slight increase in interest income, as well as lower interest expense on

pensions. This was partially offset by an increase in interest expense on debt and borrowings as a result of

debt refinancing in 2025.

In 2024, financial income and expenses net decreased by EUR 32 million year-on-year, mainly due to higher

interest income on cash and cash equivalents and net foreign exchange losses in 2023, partly offset by higher

interest expenses and provision-related accretion costs. Net interest expense in 2024 was EUR 22 million lower

than in 2023, mainly due to an increased cash position, which was invested in short-term interest-bearing

assets, partly offset by higher interest expenses. Interest expenses increased as a result of debt refinancing in

2024 and higher finance charges on lease contracts.

**8Income taxes**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting policies**

Income taxes comprise current, non-current and deferred tax. Income tax is recognized in the Consolidated

statements of income except to the extent that it relates to items recognized directly within equity or in other

comprehensive income. Current tax is the expected taxes payable on the taxable income for the year, using

tax rates enacted or substantively enacted by the reporting date, and any adjustment to tax payable in respect

of previous years.

In cases where it is concluded it is not probable that tax authorities will accept a tax treatment, the effect of

the uncertainty is reflected in the recognition and measurement of tax assets and liabilities or, alternatively, a

116<br>

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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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** | **1182** | **123** | **(526)** |
| Results of associates | (9) | (124) | (98) |
| **Income before taxes excluding results of associates** | **1191** | **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).

117<br>

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 <br>carryforwards<br>| 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 <br>tax credits<br>| 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 <br>carryforwards<br>| (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.

118<br>

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](#i709b790389b445bdbcabcc2c3c292121_412)). 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 <br>of January <br>1, 2025<br>| Recognized <br>in income <br>statement<br>| Other ¹ | Balance as <br>of <br>December <br>31, 2025<br>| 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 <br>benefits<br>| 152 | 29 | (9) | 172 | 180 | (7) |
| Other liabilities | 319 | (29) | (16) | 274 | 312 | (38) |
| Deferred tax assets on tax loss <br>carryforwards<br>| 541 | 61 | (88) | 513 | 513 | - |
| Set-off deferred tax positions | - | - | - | - | (250) | 250 |
| **Net deferred tax assets** | **1835** | **24** | **(178)** | **1681** | **1773** | **(93)** |

---

<sup>1</sup>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).

119<br>

Philips Group

**Deferred tax assets and liabilities** in millions of EUR

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Balance as <br>of January <br>1, 2024<br>| Recognized <br>in income <br>statement<br>| Other ¹ | Balance as <br>of <br>December <br>31, 2024<br>| 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 <br>carryforwards<br>| 730 | (222) | 33 | 541 | 541 | - |
| Set-off deferred tax positions | - | - | - | - | (317) | 317 |
| **Net deferred tax assets** | **2556** | **(823)** | **102** | **1835** | **1916** | **(81)** |

---

<sup>1</sup>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** <br>**December 31, 2025**<br>| **Unrecognized balance** <br>**as of December 31, 2025**<br>| Total balance as of <br>December 31, 2024<br>| Unrecognized balance <br>as of December 31, 2024<br>|
| 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 | 4711 | 2978 | 3342 | 1695 |
| **Total** | **5628** | **3794** | **4342** | **2564** |

---

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)** |

---

<sup>¹</sup>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.

120<br>

**Tax risks due to disentanglements and acquisitions**

When a subsidiary of Philips is disentangled, or a new company is acquired, tax risks may arise. Philips creates

merger and acquisition (M&A) teams for these disentanglements or acquisitions. In addition to representatives

from the involved business, these teams consist of specialists from various group Functions and are formed,

among other things, to identify tax risks and to reduce potential tax claims.

**Tax risks due to permanent establishments**

A permanent establishment may arise when a Philips entity has activities in another country; tax claims could

arise in both countries on the same income.

**9Earnings per share**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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 <sup>1</sup>

---

| | | | |
|:---|:---|:---|:---|
|  | **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 <br>interests<br>| 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 <br>deduction of treasury shares) during the period<br>| 948239009 | 933370814 | 948300672 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Plus incremental shares from assumed conversions of: |  |  |  |
| Share options | 238577 | 232965 | - |
| Performance shares | 9322536 | 4958144 | 2623097 |
| Restricted shares | 4179423 | 3898844 | 2574738 |
| Forward contracts to repurchase shares | 523617 | 1835048 | 15511844 |
| **Dilutive potential common shares ²** | **14264153** | **10925002** | **20709680** |
| **Diluted weighted average number of shares outstanding (after** <br>**deduction of treasury shares) during the period**<br>| **962503162** | **933370814** | **948300672** |
| **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 |

---

<sup>1</sup>Shareholders refers to shareholders of Koninklijke Philips N.V.

<sup>2</sup>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.

**10Property, plant and equipment**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting policies**

**Owned assets**

The cost of property, plant and equipment comprise all directly attributable costs (including the cost of

material and direct labor).

Depreciation is generally calculated using the straight-line method over the useful life of the asset. Land and

assets under construction are not depreciated. When assets under construction are ready for their intended

121<br>

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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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 | 1465 | 1565 |
| Right-of-use assets | 752 | 886 |
| **Total** | **2217** | **2452** |

---

**Leasing activities**

The company leases equipment to customers under operating lease arrangements. These leases primarily

relate to the Diagnosis & Treatment and Connected Care segments. At December 31, 2025, the net book value

122<br>

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](#i709b790389b445bdbcabcc2c3c292121_397), [Financial income and expenses](#i709b790389b445bdbcabcc2c3c292121_400),

[Cash flow statement supplementary information](#i709b790389b445bdbcabcc2c3c292121_448) and [Debt](#i709b790389b445bdbcabcc2c3c292121_433). For disclosures for lease receivables refer to

[Receivables](#i709b790389b445bdbcabcc2c3c292121_427).

123<br>

Philips Group

**Property, plant and equipment** in millions of EUR

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Owned assets | Owned assets | Owned assets | Owned assets | Owned assets | Right-of-use assets | Right-of-use assets | Right-of-use assets | Property, plant and equipment |
|  | Land and <br>buildings<br>| Machinery and <br>installations<br>| Other equipment | Assets under <br>construction<br>| **Total** | Land and <br>buildings<br>| Other equipment | **Total** | **Total** |
| **Balance as of January 1, 2024** |  |  |  |  |  |  |  |  |  |
| Cost | 1114 | 1731 | 1404 | 274 | 4521 | 1425 | 216 | 1641 | 6162 |
| Accumulated depreciation | (638) | (1278) | (1041) | - | (2957) | (619) | (104) | (722) | (3679) |
| **Book value** | **476** | **453** | **363** | **274** | **1565** | **806** | **113** | **919** | **2483** |
| 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 | 1151 | 1790 | 1527 | 271 | 4738 | 1462 | 241 | 1702 | 6441 |
| Accumulated depreciation | (697) | (1350) | (1126) | - | (3173) | (712) | (104) | (816) | (3989) |
| **Book value** | **454** | **440** | **401** | **271** | **1565** | **749** | **137** | **886** | **2452** |
| 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 | 1105 | 1550 | 1411 | 274 | 4340 | 1328 | 255 | 1583 | 5923 |
| Accumulated depreciation | (677) | (1142) | (1055) | - | (2875) | (721) | (110) | (831) | (3706) |
| **Book value** | **428** | **408** | **355** | **274** | **1465** | **607** | **145** | **752** | **2217** |

---

124<br>

**11Goodwill**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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 | 12777 | 12133 |
| Impairments | (2394) | (2256) |
| **Book value** | **10383** | **9876** |
| Divestments and transfers to assets classified as held for sale | (53) | (22) |
| Translation differences and other | (1058) | 528 |
| **Total change** | **(1112)** | **507** |
| **Balance as of December 31** |  |  |
| Cost | 11367 | 12777 |
| Impairments | (2096) | (2394) |
| **Book value** | **9271** | **10383** |

---

In 2025, goodwill decreased by EUR 1,112 million, primarily as a result of translation differences.

**Goodwill impairment testing**

During 2025, there were no goodwill impairments recorded.

Goodwill allocated to the Businesses (groups of cash-generating units) as of December 31, 2025, is presented

in the accompanying table:

Philips Group

**Goodwill by business** in millions of EUR

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Monitoring | 3,752 | 4,194 |
| Image-Guided Therapy | 2,888 | 3,216 |
| Precision Diagnosis | 1,289 | 1,440 |
| Sleep & Respiratory Care | 625 | 694 |
| Personal Health | 469 | 509 |
| Enterprise Informatics | 248 | 331 |
| **Book value** | **9,271** | **10,383** |

---

125<br>

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 | Compound sales growth rate | Compound sales growth rate |  |
|  | Initial forecast <br>period<br>| Extrapolation <br>period<br>| Used to calculate <br>terminal value<br>| Pre-tax discount <br>rates<br>|
| 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 | compound sales growth rate | compound sales growth rate |  |
|  | initial forecast <br>period<br>| extrapolation <br>period<br>| used to calculate <br>terminal value<br>| pre-tax discount <br>rates<br>|
| 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](#i709b790389b445bdbcabcc2c3c292121_385)

[main country](#i709b790389b445bdbcabcc2c3c292121_385)

126<br>

**12Intangible assets excluding goodwill**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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](#i709b790389b445bdbcabcc2c3c292121_397).

127<br>

The most notable intangible assets as of December 31, 2025, relate to the BioTelemetry customer relationships

and technology with a carrying value of EUR 253 million and EUR 76 million and a remaining amortization

period of 11 years and 7 years, respectively, and Spectranetics customer relationships and technology with a

carrying value of EUR 210 million and EUR 126 million and a remaining amortization period of 12 years and 7

years, respectively. The most notable intangible assets as of December 31, 2024, relate to the BioTelemetry

customer relationships and technology with value of EUR 316 million and EUR 108 million and a remaining

amortization period of 12 years and 8 years, respectively, and Spectranetics customer relationships and

technology with a carrying value of EUR 256 million and EUR 164 million and a remaining amortization period

of 13 years and 8 years, respectively.

Philips Group

**Intangible assets excluding goodwill** in millions of EUR

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Brand names | Customer <br>relationships<br>| Technology | Product <br>development<br>| Product <br>development in <br>progress<br>| Software | Other | Total |
| **Balance as of January 1, 2024** |  |  |  |  |  |  |  |  |
| Cost | 629 | 2593 | 2908 | 2432 | 635 | 929 | 139 | 10265 |
| Amortization / impairments | (511) | (1718) | (1895) | (2096) | (91) | (662) | (101) | (7075) |
| **Book value** | **118** | **875** | **1013** | **336** | **544** | **267** | **38** | **3190** |
| 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 | 2722 | 2900 | 2659 | 624 | 984 | - | 10559 |
| Amortization / impairments | (573) | (1899) | (2044) | (2241) | (101) | (719) | - | (7578) |
| **Book value** | **98** | **823** | **855** | **418** | **523** | **265** | **-** | **2982** |
| 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 | 2423 | 2590 | 2705 | 510 | 995 | - | 9752 |
| Amortization / impairments | (457) | (1764) | (1906) | (2204) | (108) | (745) | - | (7183) |
| **Book Value** | **73** | **659** | **684** | **500** | **403** | **250** | **-** | **2569** |

---

128<br>

**13Other financial assets**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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](#i709b790389b445bdbcabcc2c3c292121_463).

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 <br>financial assets at <br>FVTPL<br>| Non-current <br>financial assets at <br>FVTOCI<br>| Non-current <br>financial assets at <br>Amortized cost<br>| **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<br>

Philips Group

**Other non-current financial assets** in millions of EUR

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Non-current <br>financial assets at <br>FVTPL<br>| Non-current <br>financial assets at <br>FVTOCI<br>| Non-current <br>financial assets at <br>Amortized cost<br>| **Total** |
| **Balance as of January 1, 2024** | 284 | 258 | 77 | 619 |
| Changes: |  |  |  |  |
| Acquisitions/additions | 76 | 6 | 65 | 147 |
| Sales/redemptions/reductions | (31) | (14) | (11) | (56) |
| Value adjustment through OCI | - | (23) | - | (23) |
| Value adjustment through P&L | (25) | - | 1 | (23) |
| Translation differences and other | 8 | 12 | (4) | 16 |
| Reclassifications | (25) | 4 | (27) | (47) |
| **Balance as of December 31, 2024** | **288** | **242** | **102** | **631** |

---

As of December 31, 2025, equity investments of EUR 213 million (2024: EUR 222 million) are accounted under

the FVTOCI category based on the company's election at initial recognition mainly because such investments

are neither held for trading purposes nor primarily for their increase in value and the elected presentation is

considered to reflect the nature and purpose of the investment.

**14Other assets**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting policies**

The company recognizes contract assets for revenue earned from installation services because the receipt of

consideration is conditional on successful completion of the installation. Upon completion of the installation

and acceptance by the customer, the amount recognized as contract assets is reclassified to trade receivables.

Other assets are measured at amortized cost minus any impairment losses.

**Other non-current assets**

Other non-current assets as of December 31, 2025, were EUR 119 million (2024: EUR 127 million), mainly

include prepaid expenses.

**Other current assets**

Other current assets as of December 31, 2025, totaled EUR 529 million (2024: EUR 588 million), primarily

contract assets of EUR 354 million (2024: EUR 349 million) and prepaid expenses of EUR 180 million (2024: EUR

238 million) mainly related to Other, Diagnosis & Treatment and Connected Care segments.

**15Inventories**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

130<br>

**16Receivables**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting estimates**

Receivables are subject to impairment assessment, which involves estimating expected credit losses. Refer to

[Other financial assets](#i709b790389b445bdbcabcc2c3c292121_418) 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<br>

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** |

---

<sup>1</sup>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).

**17Equity**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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<br>

**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](#i709b790389b445bdbcabcc2c3c292121_457)).

**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** | 925009074 | 906403156 | 881480527 |
| Dividend distributed | 22980748 | 30860582 | 39334938 |
| Purchase of treasury shares | - | (13718391) | (15964445) |
| Delivery of treasury shares | 3299111 | 1463727 | 1552136 |
| **Balance as of December 31** | **951288934** | **925009074** | **906403156** |

---

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 | - | 9281227 | 3000000 |
| Average market price | N/A | EUR 21.88 | EUR 41.59 |
| Amount paid | N/A | EUR 203 million | EUR 125 million |
| Shares delivered | 3299111 | 1463727 | 1552136 |
| 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 | 11631198 | 14930310 | 7112810 |
| 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 | - | 4437164 | 12964445 |
| 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) | - | 4437164 | 15134054 |
| Cancellation of treasury shares (EUR) | N/A | EUR 167 million | EUR 566 million |
| Total shares in treasury at year-end | - | - | - |
| Total cost | - | - | - |

---

133<br>

Share purchase transactions related to employee options involved a cash inflow of EUR 13 million in 2025. In

2025, we settled withholding tax liability for an amount of EUR 33 million relating to the dividend distribution

in 2024.

**Share repurchase methods for share-based remuneration plans and capital reduction purposes**

Philips uses different methods to repurchase shares in its own capital: (i) share buyback repurchases in the

open market via an intermediary; and (ii) repurchase of shares via forward contracts for future delivery of

shares. During 2025, Philips did not repurchase any shares.

**Forward contracts to repurchase shares and open market repurchases of shares**

**For share-based compensation plans**

On June 3, 2025, Philips announced that it would repurchase up to 6 million shares to cover certain of its

obligations arising from its Long-Term Incentive plans. To this end, Philips entered into a number of forward

transactions for an amount of EUR 127 million to acquire 6 million shares with settlement dates in February

2027, November 2027 and December 2027 and a weighted forward price of EUR 21.17. This resulted in a EUR

121 million increase in retained earnings against treasury shares.

On September 15, 2025, Philips extended the settlement of two forward contracts for 2 million Long-Term

Incentive plans shares, each as part of the share repurchase program earlier announced on June 14, 2023. The

forward contract amounted to EUR 86 million with settlement date of October 2026 and November 2026 and

a weighted forward price of EUR 21.59. This resulted in a EUR 3 million increase in retained earnings against

treasury shares.

On August 5, 2024, Philips announced that it would repurchase shares for an amount of up to EUR 125 million

to cover certain of its obligations arising from its Long-Term Incentive plans. The repurchases were executed

through a combination of open market purchases by an intermediary (in August 2024 acquiring 2.2 million

shares which resulted in a EUR 60 million increase in retained earnings against treasury shares) and one

forward contract for an amount of EUR 65 million to acquire 2.5 million shares with a settlement date in

November 2026 and a weighted average forward price of EUR 26.40.

In March, April, November and December 2024, Philips settled EUR 316 million of forward contracts. This resulted

in a EUR 316 million decrease in retained earnings.

As of December 31, 2025, the remaining forward contracts to cover obligations under share-based

compensation plans related to 12.5 million shares (December 31, 2024: 6.5 million shares) and amounted to

EUR 283 million (December 31, 2024: EUR 142 million).

**Share cancellations**

There were no share cancellations in 2025.

**Dividend distribution**

**2025**

In May 2025, Philips distributed a dividend of EUR 0.85 per common share, representing a total value of EUR

789 million (including costs). Of the total dividend distribution to all shareholders, a maximum of 50% will be

available for payment in cash. If shareholders in total elect to receive an aggregate amount of cash dividend

that exceeds 50% of the total dividend amount, those shareholders who elected to receive their dividend in

cash will receive their cash dividend on a pro-rata basis, the remainder being distributed in shares. The

aggregate cash election result was 41.4%, which is below the 50% maximum as adopted in the General

Meeting of Shareholders and therefore shareholders will receive the dividend in accordance with their

election. Approximately 59% of the shareholders elected for a share dividend, resulting in the issuance of

22,980,748 new common shares.

A proposal will be submitted to the 2026 Annual General Meeting of Shareholders to pay a dividend of EUR

0.85 per common share, in shares or cash at the option of the shareholder, against retained earnings for 2025.

**2024**

In May 2024, Philips distributed a dividend of EUR 0.85 per common share, representing a total value of EUR

768 million (including costs). The dividend was distributed in the form of shares only, resulting in the issuance

of 30,860,582 new common shares.

**2023**

In May 2023, Philips distributed a dividend of EUR 0.85 per common share, representing a total value of EUR

749 million (including costs). The dividend was distributed in the form of shares only, resulting in the issuance

of 39,334,938 new common shares.

**Limitations in the distribution of shareholders' equity**

As of December 31, 2025, pursuant to Dutch law, certain limitations exist relating to the distribution of

shareholders' equity of EUR 1,545 million. Such limitations relate to common shares of EUR 193 million, as well

as to legal reserves required by Dutch law included under retained earnings of EUR 1,005 million and

unrealized currency translation differences of EUR 347 million. The unrealized gain related to cash flow

hedges of EUR 33 million and unrealized loss related to fair value through OCI financial assets of EUR 89

million qualify as revaluation reserves and reduce the distributable amount due to the fact that these reserves

are negative.

The legal reserves required by Dutch law of EUR 1,005 million included under retained earnings relates to any

legal or economic restrictions on the ability of affiliated companies to transfer funds to the parent company in

the form of dividends.

As of December 31, 2024, these limitations in distributable amounts were EUR 3,254 million and related to

common shares of EUR 188 million, as well as to legal reserves required by Dutch law included under retained

134<br>

earnings of EUR 1,052 million and unrealized currency translation differences of EUR 2,014 million. The

unrealized losses related to fair value through OCI financial assets of EUR 90 million and unrealized gain

related to cash flow hedges of EUR 1 million qualify as a revaluation reserve and reduce the distributable

amount due to the fact that this reserve is negative.

**Non-controlling interests**

Non-controlling interests relate to minority stakes held by third parties in consolidated group companies.

**Capital management**

Philips manages capital based upon the IFRS measures, net cash provided by operating activities and net cash

used for investing activities as well as the non-IFRS measure net debt.

Net debt is defined as the sum of long and short-term debt minus cash and cash equivalents. Group equity is

defined as the sum of shareholders' equity and non-controlling interests. This measure is used by Philips

Treasury management and investment analysts to evaluate financial strength and funding requirements. The

Philips net debt position is managed with the intention of retaining the current strong investment grade

credit rating. Furthermore, Philips' dividend policy is aimed at dividend stability and a pay-out ratio of 40% to

50% of Adjusted income from continuing operations attributable to shareholders (reconciliation to the most

directly comparable IFRS measure, Net income, is provided at the end of this note).

Philips Group

**Composition of net debt and group equity** in millions of EUR unless otherwise stated

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Long-term debt | 6934 | 7113 | 7035 |
| Short-term debt | 1151 | 526 | 654 |
| **Total debt** | **8084** | **7639** | **7689** |
| Cash and cash equivalents | 2794 | 2401 | 1869 |
| **Net debt** | **5290** | **5238** | **5820** |
| Shareholders' equity | 10957 | 12006 | 12028 |
| Non-controlling interests | 32 | 37 | 33 |
| **Group equity** | **10990** | **12043** | **12061** |
| **Net debt : group equity ratio** | **32:68** | **30:70** | **33:67** |

---

135<br>

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** <sup>1</sup> 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-<br>controlling interests<br>| (1) | (3) | (2) |
| **Income from continuing operations attributable to** <br>**shareholders ¹**<br>| **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 | 1358 |
| *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** <br>**to shareholders** <sup>1</sup><br>| **1506** | **1300** | **1148** |

---

<sup>1</sup>Shareholders in this table refers to shareholders of Koninklijke Philips N.V.

<sup>2</sup>Includes deferred tax assets derecognized in the line below

**18Debt**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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<br>

their principal amount together with interest accrued. Philips' outstanding long-term debt does not contain

financial covenants.

As of December 31, 2025, debt includes forward contracts of EUR 260 million (nominal value) relating to the

repurchase of shares to cover long-term incentive and employee stock purchase plans (2024: EUR 142 million),

with maturity dates in the fourth quarter of 2026 (EUR 141 million) and in 2027 (EUR 119 million).

**Long-term debt**

The accompanying tables present information about the long-term debt outstanding, its maturity and

average interest rates in 2025 and 2024.

Philips Group

**Long-term debt** in millions of EUR unless otherwise stated

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | Amount outstanding | Current portion | Non-current portion | Between 1 and 5 years | Amount due after 5 years | Average remaining term <br>(in years)<br>| Average rate of interest |
| USD bonds | 1135 | 108 | 1027 | - | 1027 | 12.6 | 6.2% |
| EUR bonds | 5659 | 632 | 5027 | 2747 | 2280 | 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** | **8032** | **1098** | **6934** | **3349** | **3584** | **5.4** | **3.2%** |

---

Philips Group

**Long-term debt** in millions of EUR unless otherwise stated

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  | Amount outstanding | Current portion | Non-current portion | Between 1 and 5 years | Amount due after 5 years | Average remaining term <br>(in years)<br>| Average rate of interest |
| USD bonds | 1408 | 131 | 1276 | 122 | 1154 | 12.3 | 6.3% |
| EUR bonds | 4917 |  | 4917 | 2639 | 2278 | 4.7 | 2.3% |
| Forward contracts | 148 | 82 | 66 | 66 | - | 1.3 | 1.2% |
| Lease liabilities | 1073 | 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** | **7546** | **434** | **7113** | **3333** | **3779** | **5.9** | **3.2%** |

---

137<br>

**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** |  | **6794** | **6324** |

---

<sup>1</sup>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** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | Future <br>minimum <br>lease <br>payments<br>| Interest | Present <br>value of <br>minimum <br>lease <br>payments<br>| Future <br>minimum <br>lease <br>payments<br>| Interest | Present <br>value of <br>minimum <br>lease <br>payments<br>|
| 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** | **1101** | **137** | **963** | **1232** | **159** | **1073** |

---

**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<br>

**19Provisions**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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-<br>related<br>| Legal | Other | Post-employment <br>benefits<br>| Contingent <br>consideration<br>| Total |
| Current | 624 | 22 | 102 | 477 | 181 | - | 57 | 1463 |
| Non-current | 67 | 80 | 14 | 10 | 248 | 558 | 58 | 1035 |
| **Balance as of December 31, 2023** | **692** | **102** | **116** | **487** | **429** | **558** | **115** | **2498** |
| Additions | 439 | 9 | 131 | 1015 | 185 | 81 | 5 | 1865 |
| Utilizations | (507) | (15) | (127) | (477) | (124) | (76) | (9) | (1336) |
| 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<br>

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Product warranty | Environmental | Restructuring-<br>related<br>| Legal | Other | Post-employment <br>benefits<br>| Contingent <br>consideration<br>| Total |
| Current | 522 | 20 | 77 | 1066 | 229 | - | 61 | 1977 |
| Non-current | 63 | 76 | 16 | 13 | 216 | 560 | 52 | 996 |
| **Balance as of December 31, 2024** | **585** | **96** | **94** | **1079** | **446** | **560** | **113** | **2972** |
| Additions | 328 | 7 | 169 | 15 | 116 | 66 | 4 | 706 |
| Utilizations | (385) | (14) | (124) | (1047) | (166) | (85) | (1) | (1821) |
| 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)** | **(1048)** | **(109)** | **(40)** | **(3)** | **(1345)** |
| 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** | **1627** |

---

**Post-employment benefits**

For details of post-employment benefits refer to [Post-employment benefits](#i709b790389b445bdbcabcc2c3c292121_439).

**Product warranty provisions**

Product warranty provisions include costs of replacements and repair services that will be incurred by the

company in relation to products sold, to execute quality remediation and related field actions, as well as the

field action provision in connection with the Respironics voluntary recall notification, which is explained

separately in the next section. The company expects the provisions to be utilized mainly within 2026.

Additions in 2025 include EUR 149 million for replacement and repair services related to products sold under

warranty, as well as EUR 138 million and EUR 40 million for quality remediation and related field actions in

the Diagnosis & Treatment and Connected Care segments, respectively.

**Respironics field-action provision**

On June 14, 2021, Philips subsidiary Philips Respironics initiated a voluntary recall notification in the US and

field safety notice outside the US for certain sleep and respiratory care products related to the polyester-based

polyurethane (PE-PUR) sound abatement foam in these devices. The remediation continues to progress

globally. As of December 31, 2025, the total number of units remaining that are expected to be remediated is

approximately 65,000 devices worldwide.

Philips has recognized a provision based on Philips' best estimate of the costs to repair, replace or refund

devices, subject to the Respironics field action. The provision is related to the cost to repair, replace or provide

financial compensation for affected devices and includes, among others, the costs for the remaining

production, the cost of intensified communication with physicians and patients, material costs, labor cost and

logistics, as well as costs relating to financial compensation provided to customers under the field action. The

provision does not include any product liability costs or other claims.

Philips Group

**Respironics field-action provision** in millions of EUR

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Balance as of January 1 | 130 | 334 |
| Additions | 15 | 30 |
| Utilizations | (92) | (220) |
| Translation differences and other | (17) | (14) |
| **Balance as of December 31** | **36** | **130** |

---

Utilizations for the year reflect the costs incurred in executing the remediation during the year.

The completion of the field action continues to be subject to uncertainty, which requires management to

make estimates and assumptions about items such as quantities and the portion to be replaced, repaired and

subject to financial compensation.

Further to the above, field-action running remediation costs during the year of EUR 112 million (2024: EUR

133 million, 2023: EUR 224 million), such as testing, external advisory and regulatory response and additional

right-of-return and warranty provisions, have been incurred.

140<br>

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](#i709b790389b445bdbcabcc2c3c292121_451).

**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](#i709b790389b445bdbcabcc2c3c292121_451).

**Restructuring-related provisions**

Philips Group

**Restructuring-related provisions** in millions of EUR

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| December 31, <br>2024<br>|
| 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](#i709b790389b445bdbcabcc2c3c292121_451).

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<br>

**20Post-employment benefits**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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](#i709b790389b445bdbcabcc2c3c292121_436) in the Other provisions

section.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting estimates and judgments**

To make the actuarial calculations for the valuation of defined benefit obligations, assumptions are needed

for discount rates, healthcare cost increases, future salary increases, future pension increases, life expectancy

and employee turnover rates. The actuarial calculations are made by external actuaries based on inputs from

observable market data, such as corporate bond yield curves to determine the discount rates, mortality tables

to determine life expectancy and inflation rates to determine future salary increases and future pension

increases.

Post-employment benefit plans have been established in many countries in accordance with the legal

requirements, customs and the local practice in the countries involved. The larger part of post-employment

benefits are company pension plans, of which some are funded and some are unfunded. All funded post-

employment benefit plans are considered to be related parties.

Most employees who take part in a company pension plan are covered by defined contribution (DC) pension

plans. The main DC plans are in the Netherlands and the US. The company also sponsors a number of defined

benefit (DB) pension plans. The benefits provided by these plans are based on employees' years of service and

compensation levels.

The company also sponsors a limited number of retiree medical plans. The benefits provided by these plans

typically cover a part of the healthcare costs after retirement. None of these plans are individually significant

to the company and are therefore not further separately disclosed.

The larger funded DB and DC plans are governed by independent trustees who have a legal obligation to

protect the interests of all plan members and operate under the local regulatory framework.

142<br>

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 | Germany | United States | United States | Other countries | Other countries | Total | Total |
|  | **2025** | 2024 | **2025** | 2024 | **2025** | 2024 | **2025** | 2024 |
| Present value of funded DBO | (499) | (531) |  | (416) | (209) | (205) | (708) | (1152) |
| Present value of unfunded DBO | (224) | (242) | (117) | (131) | (131) | (134) | (472) | (507) |
| **Total present value of DBO** | **(723)** | **(773)** | **(117)** | **(547)** | **(340)** | **(339)** | **(1180)** | **(1659)** |
| Fair value of plan assets | 472 | 496 |  | 465 | 190 | 189 | 662 | 1150 |
| 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 | Germany | United States | United States | Other countries | Other countries | Total | 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<br>

**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** | **1659** | **1605** |
| 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** | **1180** | **1659** |

---

Philips Group

**Plan assets** in millions of EUR

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **Asset ceiling** <br>**2025**<br>| 2024 | Asset ceiling <br>2024<br>|
| **Balance as of January 1** | **1150** | **(1)** | **1089** | **-** |
| 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)** | **1150** | **(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 <sup>1</sup> | 180 | 431 |
| Assets not quoted in active markets |  |  |
| - Debt securities | 1 | - |
| - Equity securities | - | - |
| - Other ¹ | 253 | 247 |
| **Total assets** | **662** | **1150** |

---

<sup>1</sup>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<br>

**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 | Germany | United States | United States | Other countries | Other countries | Total | Total |
|  | **2025** | 2024 | **2025** | 2024 | **2025** | 2024 | **2025** | 2024 |
| Discount rate | 3.9% | 3.3% | 5.0% | 5.1% | 4.4% | 4.2% | 4.1% | 4.0% |
| Inflation rate | 2.0% | 2.0% | 2.3% | 2.3% | 2.1% | 2.2% | 2.0% | 2.1% |
| Salary increase | 2.8% | 2.8% | 0.0% | 0.0% | 4.5% | 4.4% | 3.1% | 3.1% |

---

**Sensitivity analysis**

The following table illustrates the approximate impact on the DBO from movements in key assumptions. The

DBO was recalculated using a change in the assumptions of 1% which overall is considered a reasonably

possible change. The impact on the DBO because of changes in discount rate is normally accompanied by

partly offsetting movements in plan assets.

The average duration in years of the DBO of the DB plans is 9 (Germany: 10, US: 7, and other countries: 9) as

of December 31, 2025 (2024: 10).

Philips Group

**Sensitivity of key assumptions** in millions of EUR

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| **Increase** |  |  |
| Discount rate (1% movement) | (80) | (123) |
| Pension increase (1% movement) | 54 | 60 |
| Salary increase (1% movement) | 12 | 14 |
| Longevity ¹ | 26 | 34 |
| **Decrease** |  |  |
| Discount rate (1% movement) | 98 | 150 |
| Pension increase (1% movement) | (47) | (52) |
| Salary increase (1% movement) | (11) | (12) |
| Longevity ¹ | (21) | (24) |

---

<sup>1</sup>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<br>

**21Accrued liabilities**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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** | **1616** | **1630** |

---

**22Other liabilities**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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<br>

**23Cash flow statement supplementary information**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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 <br>December 31, <br>2024<br>| Cash flow | Currency effects <br>and <br>consolidation <br>changes<br>| Other ¹ | **Balance as of** <br>**December 31,** <br>**2025**<br>|
| **Long term debt ²** | **7546** | **448** | **(230)** | **267** | **8032** |
| EUR bonds | 4917 | 738 | - | 4 | 5659 |
| USD bonds | 1408 | (120) | (154) | 1 | 1135 |
| Leases | 1073 | (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 <br>borrowings<br>| 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** |  |  |  |

---

<sup>1</sup>Besides non-cash, other includes interest paid on leases, which is part of cash flows from operating activities.

<sup>2</sup>In this table, current portion of long-term debt is included in long-term debt (and excluded from short-term debt).

<sup>3</sup>The forward contracts are related to the share buyback program and LTI plans.

147<br>

Philips Group

**Reconciliation of liabilities arising from financing activities** in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Balance as of <br>December 31, <br>2023<br>| Cash flow | Currency effects <br>and <br>consolidation <br>changes<br>| Other ¹ | Balance as of <br>December 31, <br>2024<br>|
| **Long term debt ²** | **7567** | **(53)** | **107** | **(74)** | **7546** |
| EUR bonds | 4569 | 340 |  | 8 | 4917 |
| USD bonds | 1325 |  | 83 | - | 1408 |
| Leases | 1074 | (192) | 24 | 167 | 1073 |
| 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 <br>borrowings<br>| 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)** |  |  |  |

---

<sup>1</sup>Besides non-cash, other includes interest paid on finance leases, which is part of cash flows from operating activities.

<sup>2</sup>In this table, current portion of long-term debt is included in long-term debt (and excluded from short-term debt).

<sup>3</sup>The forward contracts are related to the share buyback program and LTI plans.

<sup>4</sup>Cash flow in 2024 includes withholding tax for share buyback amounting to EUR 41 million.

**24Contingencies**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

148<br>

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

149<br>

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](#i709b790389b445bdbcabcc2c3c292121_466)

[financial risks](#i709b790389b445bdbcabcc2c3c292121_466).

**25Related-party transactions**

In the normal course of business, Philips purchases and sells goods and services from/to various related parties in

which Philips typically holds between 20% and 50% equity interest and has significant influence. These

transactions are generally conducted with terms comparable to transactions with third parties.

Philips Group

**Related-party transactions** in millions of EUR

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Sales of goods and services | 146 | 89 | 106 |
| Purchases of goods and services | 50 | 50 | 42 |
| Receivables from related parties | 19 | 25 | 18 |
| Payables to related parties | - | 2 | 2 |

---

Philips founded three Philips Medical Capital (PMC) entities, in the US, France and Germany, in which Philips

holds a minority interest. Philips Medical Capital, LLC in the US is the most significant entity. The above table

includes sales transactions between Philips and PMC of EUR 146 million in 2025 (2024: EUR 88 million; 2023:

EUR 87 million), under which PMC has leased the equipment to the ultimate customer. In addition, as part of

its S&RC operations in the US, PMC funded durable medical equipment (DMEs) providers, through loans and

leases. PMC-funded transactions these DMEs entered into with Philips amount to EUR 70 million in 2025 (2024:

EUR 75 million; 2023: EUR 117 million). The associated costs of these funding transactions are borne by the

ultimate customer and settled directly with PMC.

On August 14, 2023, it was announced that Exor N.V. acquired a 15% minority stake in Philips shares and

entered into a relationship agreement with the company. Pursuant to the relationship agreement with the

company, Exor N.V. proposed one member to the Supervisory Board, who was confirmed at the Annual

150<br>

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](#i709b790389b445bdbcabcc2c3c292121_460)

[on remuneration](#i709b790389b445bdbcabcc2c3c292121_460). 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](#i709b790389b445bdbcabcc2c3c292121_460).

For post-employment benefit plans see [Post-employment benefits](#i709b790389b445bdbcabcc2c3c292121_439).

**26Share-based compensation**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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

151<br>

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<sup>\*\*</sup> 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** | **2025** | 2024 | 2024 |
|  | Number of shares | Weighted <br>average grant-<br>date fair value<br>| Number of shares | Weighted <br>average grant-<br>date fair value<br>|
| **EUR-denominated** |  |  |  |  |
| **Outstanding as of January 1** | 6466838 | 24.41 | 5392035 | 27.22 |
| Granted | 1994246 | 21.94 | 2265462 | 28.94 |
| Notional dividends ¹ | 269210 | 24.63 | 218782 | 24.35 |
| Vested/Issued | (333321) | 20.73 | (169524) | 50.30 |
| Forfeited | (336681) | 24.93 | (451052) | 25.07 |
| Adjusted quantity ² | (1801626) | 20.52 | (788865) | 50.65 |
| **Outstanding as of December 31** | **6258667** | **24.92** | **6466838** | **24.41** |
| **USD-denominated** |  |  |  |  |
| **Outstanding as of January 1** | 4190628 | 26.89 | 3261048 | 29.73 |
| Granted | 1522255 | 24.81 | 1733891 | 31.07 |
| Notional dividends ¹ | 187657 | 27.25 | 142892 | 26.85 |
| Vested/Issued | (166326) | 21.98 | (80151) | 61.37 |
| Forfeited | (525643) | 27.08 | (489195) | 28.35 |
| Adjusted quantity ² | (942807) | 21.98 | (377857) | 61.37 |
| **Outstanding as of December 31** | **4265764** | **27.42** | **4190628** | **26.89** |

---

<sup>1</sup>Dividend declared in 2025 on outstanding shares.

<sup>2</sup>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 (as of December 31, 2024, EUR 128 million; as of December 31, 2023, EUR 102 million).

These costs are expected to be recognized over a weighted-average period of 1.8 years.

152<br>

**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** | **2025** | 2024 | 2024 |
|  | Number of shares | Weighted <br>average grant-<br>date fair value<br>| Number of shares | Weighted <br>average grant-<br>date fair value<br>|
| **EUR-denominated** |  |  |  |  |
| **Outstanding as of January 1** | 3523906 | 21.17 | 2995252 | 23.39 |
| Granted | 1146201 | 19.38 | 1367380 | 22.64 |
| Notional dividends ¹ | 145617 | 21.43 | 52481 | 22.57 |
| Vested/Issued | (1147752) | 21.70 | (627855) | 35.10 |
| Forfeited | (244654) | 20.65 | (263352) | 21.06 |
| **Outstanding as of December 31** | **3423318** | **20.44** | **3523906** | **21.17** |
| **USD-denominated** |  |  |  |  |
| **Outstanding as of January 1** | 3327230 | 23.04 | 2654193 | 26.04 |
| Granted | 1118263 | 22.18 | 1460620 | 24.59 |
| Notional dividends ¹ | 136697 | 22.66 | 48774 | 24.33 |
| Vested/Issued | (1070835) | 23.24 | (582404) | 40.51 |
| Forfeited | (341996) | 22.97 | (253953) | 23.43 |
| **Outstanding as of December 31** | **3169359** | **22.66** | **3327230** | **23.04** |

---

<sup>1</sup>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** | **2025** | 2024 | 2024 |
|  | Number of <br>options<br>| Weighted average <br>exercise price<br>| Number of <br>options<br>| Weighted average <br>exercise price<br>|
| **Outstanding as of January 1** | 3396539 | 22.16 | 3660000 | 22.16 |
| Exercised | (378515) | 22.16 | (3793) | 22.16 |
| Forfeited | (11548) | 22.16 | (259668) | 22.16 |
| Expired | (39983) | 22.16 | - | - |
| **Outstanding as of December 31** | **2966493** | **22.16** | **3396539** | **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).

153<br>

Philips Group

**Options on USD-denominated listed share**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 | 2024 |
|  | Number of <br>options<br>| Weighted average <br>exercise price<br>| Number of <br>options<br>| Weighted average <br>exercise price<br>|
| **Outstanding as of January 1** | 1637764 | 24.42 | 1929000 | 24.42 |
| Exercised | (201873) | 24.42 | - | - |
| Forfeited | (54248) | 24.42 | (291236) | 24.42 |
| **Outstanding as of December 31** | **1381643** | **24.42** | **1637764** | **24.42** |

---

The total intrinsic value of USD-denominated options exercised during 2025 was USD 0.5 million (2024: USD

nil). Cash received during 2025 from exercises under the company's options plans amounted to EUR 4.4 million

(2024: EUR nil). The actual tax deductions realized as a result of USD option exercises totaled approximately

EUR 1.0 million in 2025 (2024: nil). As of December 31, 2025, there were 1,381,643 options outstanding and

exercisable (as of December 31, 2024, 1,637,764 options outstanding and nil exercisable) with a weighted

average remaining contractual term of 5.8 years (as of December 31, 2024, 8.0 years for outstanding options

and 0 years for exercisable options) and total intrinsic value of USD 3.7 million (as of December 31, 2024, USD

1.5 million for outstanding options and USD nil for exercisable options).

Philips Group

**Outstanding options** in millions of EUR unless otherwise stated

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | Number of <br>options<br>| Intrinsic <br>value<br>| Weighted <br>average <br>remaining <br>contractual <br>term in years<br>| Number of <br>options<br>| Intrinsic <br>value<br>| Weighted <br>average <br>remaining <br>contractual <br>term in years<br>|
| **EUR-denominated** |  |  |  |  |  |  |
| 20-25 | 2966493 | 3 | 6.7 | 3396539 | 8 | 8.1 |
| **Outstanding options** | **2966493** | **3** | **6.7** | **3396539** | **8** | **8.1** |
| **USD-denominated** |  |  |  |  |  |  |
| 20-25 | 1381643 | 4 | 5.8 | 1637764 | 1 | 8.0 |
| **Outstanding options** | **1381643** | **4** | **5.8** | **1637764** | **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](#i709b790389b445bdbcabcc2c3c292121_430).

**27Information on remuneration**

**Remuneration of the Executive Committee**

In 2025, the total remuneration costs relating to the Executive Committee (consisting of 14 members

throughout the year, including the members of the Board of Management) amounted to EUR 42 million

(2024: EUR 32 million; 2023: EUR 33 million) and consisted of the elements in the following table.

Philips Group

**Remuneration costs of the Executive Committee** <sup>1</sup> in EUR

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Base salary/Base compensation | 9734874 | 9362765 | 8729458 |
| Annual incentive ² | 8639381 | 5292388 | 11405130 |
| Performance shares ³ | 21180588 | 12673614 | 7272815 |
| Stock options | 42805 | 90503 | 13358 |
| Restricted share rights ³ | 266414 | 999374 | 1907511 |
| Pension allowances ⁴ | 1246863 | 1197695 | 1346937 |
| Pension scheme costs | 226177 | 269092 | 260554 |
| Other compensation ⁵ | 1050399 | 2136668 | 1900224 |
| **Total** | **42387499** | **32022099** | **32835987** |

---

<sup>1</sup>The Executive Committee consisted of 14 members as per December 31, 2025 (2024: 13 members; 2023: 13 members)

<sup>2</sup>The annual incentives are related to the performance in the year reported which are paid out in the subsequent year.

<sup>3</sup>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

<sup>4</sup>Pension allowances are gross taxable allowances paid to the Executive Committee members in the Netherlands. These

allowances are part of the pension arrangement

<sup>5</sup>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

154<br>

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** <sup>1 2</sup> in number of shares

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | December 31, 2024 |
| R.W.O. Jakobs | 147397 | 134298 |
| M.J. van Ginneken | 147126 | 137753 |
| P.A. Stoffels | 19143 | 18366 |
| S.J. Poonen | 11899 | 3240 |
| I.K. Nooyi | 3489 | 3348 |
| D. Pyott | Retired | 20526 |
| S.K. Chua | 2251 | 2160 |
| F. Sijbesma | 25854 | 25854 |
| A.M. Harrison | 1688 | 1620 |
| P. Löscher | 23345 | 22398 |

---

<sup>1</sup>Reference date for board membership is December 31, 2025

<sup>2</sup>The total shares held by the members of the Board of Management is less than 1% of the company's issued share capital.

**28Fair value of financial assets and liabilities**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting estimates and judgments**

Determining the fair value of financial instruments requires the use of estimates according to the method

applied for each type of financial asset of liability. The estimated fair value of financial instruments has been

determined by the company using available market information and appropriate valuation methods. The

estimates presented are not necessarily indicative of the amounts that will ultimately be realized by the

company upon maturity or disposal. The use of different market assumptions and/or estimation methods may

have a material effect on the estimated fair value amounts.

155<br>

Specific valuation techniques used to value financial instruments include:

**Level 1**

Instruments included in level 1 are composed primarily of listed equity investments classified as financial assets

carried at fair value through profit or loss or carried at fair value through other comprehensive income (OCI).

The fair value of financial instruments traded in active markets is based on quoted market prices at the

balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an

exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent

actual and regularly occurring market transactions on an arm's length basis.

**Level 2**

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter

derivatives or convertible bond instruments) is determined by using valuation techniques. These valuation

techniques maximize the use of observable market data where it is available and rely as little as possible on

entity-specific estimates. If all significant inputs required to fair value an instrument are based on observable

market data, the instrument is included in level 2. The fair value of derivatives is calculated as the present

value of the estimated future cash flows based on observable interest yield curves, basis spread and foreign

exchange rates. The valuation of convertible bond instruments uses observable market quoted data for the

options and present value calculations using observable yield curves for the fair value of the bonds.

The fair value of debt is estimated on the basis of the quoted market prices for certain issuances, or on the

basis of discounted cash flow analysis using market rates plus Philips' spread for the particular tenors of the

borrowing arrangement. Accrued interest is not included within the carrying amount or estimated fair value

of debt.

**Level 3**

If one or more of the significant inputs are not based on observable market data, such as third-party pricing

information without adjustments, the instrument is included in level 3.

For financial instruments measured at Level 3, where quoted market prices are not available, Philips applies

valuation techniques such as discounted cash flow (DCF) models and market multiple approaches. These

valuation techniques reflect current market conditions at the reporting date and incorporate the best

available data. Significant unobservable inputs used in these valuations may include assumptions regarding

revenue growth, discount rates, credit risk adjustments, capture rates, forward prices, earnings multiples, and

liquidity discounts.

Contingent consideration represents the fair value of expected payments to former shareholders of an

acquired company, conditional upon the occurrence of specified future events or the fulfillment of certain

conditions – such as achieving regulatory or commercial milestones. The terms of each acquisition agreement

define these milestones, which may trigger additional payments if met. The fair value of contingent

consideration is generally determined using a probability-weighted and risk-adjusted approach to estimate

the likelihood of achieving future milestones. For commercial milestones, the discount rates applied in the

risk-adjusted approach reflect the inherent risks associated with their achievement, while both regulatory and

commercial milestones are discounted for the time value of money at risk-free rates. Contingent consideration

can fluctuate significantly, driven by changes in the estimated probability of milestone achievement and

adjustments to discount rates. Changes in the fair value of the contingent consideration liability are

recognized in other business income (expenses). The measurement of fair value is based on management's

estimates and assumptions, and accordingly classified as Level 3 in the fair value hierarchy.

The accompanying table shows the carrying amounts and fair values of financial assets and financial liabilities,

including their levels in the fair value hierarchy. Fair value information for financial assets and financial

liabilities not carried at fair value is not included if the carrying amount is a reasonable approximation of fair

value. For cash and cash equivalents, loans and receivables, accounts payable, interest accrual and debt

(excluding bonds and leases), the carrying amounts approximate fair value because of the nature of these

instruments (including maturity and interest conditions) and therefore estimated fair value information is not

included.

156<br>

Philips Group

**Fair value of financial assets and liabilities** in millions of EUR

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| as of December 31, | **2025** | **2025** | **2025** | **2025** | **2025** | 2024 | 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 | 2794 |  |  |  |  | 2401 |  |
| Loans and receivables: |  |  |  |  |  |  |  |
| Other non-current loans and receivables | 103 |  |  |  |  | 102 |  |
| Receivables - current | 3517 |  |  |  |  | 3672 |  |
| Receivables - non-current | 193 |  |  |  |  | 208 |  |
| **Financial assets carried at (amortized) cost** | **6607** |  |  |  |  | **6382** |  |
| **Total financial assets** | **7338** |  |  |  |  | **6992** |  |
| **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 | (1927) |  |  |  |  | (1830) |  |
| Interest accrual | (95) |  |  |  |  | (83) |  |
| Debt (Corporate bonds and leases) | (7757) | (7818) | (6854) | (963) |  | (7397) | (7363) |
| Debt (excluding corporate bonds and leases) | (327) |  |  |  |  | (241) |  |
| **Financial liabilities carried at (amortized) cost** | **(10107)** |  |  |  |  | **(9551)** |  |
| **Total financial liabilities** | **(10257)** |  |  |  |  | **(9728)** |  |

---

157<br>

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** | **2025** | 2024 | 2024 |
|  | Financial<br> assets<br>| Financial<br> liabilities<br>| Financial<br> assets<br>| Financial<br> liabilities<br>|
| **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** |

---

<sup>1</sup>Refer to [Financial income and expenses](#i709b790389b445bdbcabcc2c3c292121_400) for details.

<sup>2</sup>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)** |

---

158<br>

**29Details of treasury and other financial risks**

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**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.

![Icon_Accounting policies-01.jpg](phg-20251231_g66.jpg)<br>

**Accounting estimates and judgments**

Financial assets are subject to impairment assessment, which involves estimating expected credit losses. Refer

to [Other financial assets](#i709b790389b445bdbcabcc2c3c292121_418) 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](#i709b790389b445bdbcabcc2c3c292121_463).

**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<br>

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](#i709b790389b445bdbcabcc2c3c292121_433).

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** <sup>1 2</sup> in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | **2025** |
|  |  | Payments due by period | Payments due by period | Payments due by period | Payments due by period |
|  | Total | Less than 1 year | 1-3 years | 3-5 years | After 5 years |
| Long-term debt | 7086 |  | 1630 | 1806 | 3650 |
| Short-term debt | 1174 | 1174 |  |  |  |
| Interest on debt | 1765 | 216 | 402 | 361 | 786 |
| Derivative liabilities | 36 | 35 | 1 | - | - |
| Purchase obligations ³ | 1189 | 293 | 390 | 306 | 200 |
| Trade and other payables | 1927 | 1927 |  |  |  |
| **Contractual cash** <br>**obligations**<br>| **13177** | **3645** | **2423** | **2473** | **4636** |

---

Philips Group

**Contractual cash obligations** <sup>1 2</sup> in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 | 2024 |
|  |  | Payments due by period | Payments due by period | Payments due by period | Payments due by period |
|  | Total | Less than 1 year | 1-3 years | 3-5 years | After 5 years |
| Long-term debt | 7168 |  | 2006 | 1338 | 3824 |
| Short-term debt | 525 | 525 |  |  |  |
| Interest on debt | 1792 | 197 | 368 | 325 | 902 |
| Derivative liabilities | 72 | 64 | 8 | - | - |
| Purchase obligations ³ | 1161 | 300 | 307 | 210 | 344 |
| Trade and other payables | 1830 | 1830 |  |  |  |
| **Contractual cash** <br>**obligations**<br>| **12548** | **2916** | **2689** | **1873** | **5070** |

---

<sup>1</sup>Amounts in this table are undiscounted

<sup>2</sup>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.

<sup>3</sup>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** <sup>1</sup> in millions of EUR

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Presented in accounts payables: | 117 | 97 |
| - of which suppliers have received payment from finance provider | 99 | 85 |

---

160<br>

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 |

---

<sup>1</sup>There were no material business combinations or foreign exchange differences during the year.

With respect to the Respironics field action, please refer to [Contingencies](#i709b790389b445bdbcabcc2c3c292121_451). 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 | Sales/Receivables | Purchases/Payable | Purchases/Payable |
|  | Exposure | Hedges | Exposure | Hedges |
| **Balance as of December 31, 2025** |  |  |  |  |
| **Exposure currency** |  |  |  |  |
| USD | 1814 | (1526) | (1127) | 1023 |
| 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** | **4104** | **(3100)** | **(1777)** | **1562** |
| **Total 2024** | **4420** | **(3188)** | **(1743)** | **1543** |

---

Philips uses foreign exchange spot and forward contracts, as well as zero cost collars in hedging the exposure.

The derivatives related to transactions are, for hedge accounting purposes, split into hedges of on-balance-

sheet accounts receivable/payable and forecasted sales and purchases. Changes in the value of on-balance-

sheet foreign-currency accounts receivable/payable, as well as the changes in the fair value of the hedges

related to these exposures, are reported in the income statement under costs of sales. Hedges related to

forecasted transactions, where hedge accounting is applied, are accounted for as cash flow hedges. The

results from such hedges are deferred in other comprehensive income within equity to the extent that the

hedge is effective.

161<br>

As of December 31, 2025, a gain of EUR 33 million was deferred in equity as a result of these hedges (2024:

EUR 1 million gain). The result deferred in equity will be released to earnings mostly during 2026 at the time

when the related hedged transactions affect the income statement. During 2025, EUR 0.5 million (2024: nil)

was recorded in the consolidated statement of income as a result of ineffectiveness on certain anticipated

cash flow hedges. Ineffectiveness arises when anticipated exposures are no longer expected to be highly

probable. During 2025, a gain of EUR 29 million (2024: EUR 29 million gain) included in the cash flow hedges

reserve in equity pertaining to changes in fair value of foreign exchange forward and option contracts was

released to the income statement.

The total net fair value of hedges related to transaction exposure as of December 31, 2025, was an unrealized

gain of EUR 47 million. The estimated impact of a 10% increase of value of the EUR is estimated to be EUR

104 million. The accompanying table contains an overview of the instantaneous 10% increase in the value of

EUR against major currencies.

Philips Group

**Estimated impact of 10% increase of value of the EUR on the fair value of hedges** in millions of EUR

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| USD | 59 | 63 |
| JPY | 19 | 13 |
| GBP | 10 | 13 |
| CHF | 10 | 7 |

---

The EUR 104 million increase includes a gain of EUR 48 million that would impact the income statement,

which would largely offset the opposite revaluation effect on the underlying accounts receivable and payable,

and the remaining gain of EUR 55 million would be recognized in equity to the extent that the cash flow

hedges were effective.

Foreign exchange exposure also arises as a result of inter-company loans and deposits. Where the company

enters into such arrangements, the financing is generally provided in the functional currency of the subsidiary

entity. The currency of the company's external funding and liquid assets is matched with the required

financing of subsidiaries, either directly through external foreign currency loans and deposits, or synthetically

by using foreign exchange derivatives, including cross currency interest rate swaps and foreign exchange

forward contracts. In certain cases where group companies may also have external foreign currency debt or

liquid assets, these exposures are also hedged through the use of foreign exchange derivatives. Changes in

the fair value of hedges related to this exposure are recognized within financial income and expenses in the

statements of income. When such loans would be considered part of the net investment in the subsidiary, net

investment hedging would be applied.

Translation exposure of foreign-currency equity invested in consolidated entities is generally not hedged. If a

hedge is entered into, it is accounted for as a net investment hedge. Net current-period change, before tax, of

the currency translation reserve of negative EUR 1,641 million mainly relates to the development of the USD

versus the EUR. As of December 31, 2025, a weakening of USD by 10% versus the EUR would result in a

decrease in the currency translation reserve in equity of approximately EUR 1,012 million, while a

strengthening of USD by 10% versus the EUR would result in an increase in the currency translation reserve in

equity of approximately EUR 1,236 million. Refer to the country risk section for countries with significant

foreign currency denominated equity invested.

As of December 31, 2025, external bond funding for a book value of USD 1,331 million (EUR 1,135 million)

was designated as a net investment hedge of financing investments in foreign operations for an equal

amount (2024: USD 1,466 million (EUR 1,408 million)). During 2025, a gain of EUR 151 million was recognized

in currency translation differences within the consolidated statements of comprehensive income (2024: loss of

EUR 82 million). During 2025, no ineffectiveness was recognized in the income statement on net investment

hedges arising from counterparty and own credit risk (2024: no ineffectiveness).

As of December 31, 2025, an instantaneous 10% increase in the value of the EUR against all currencies would

lead to an decrease of EUR 26 million in the value of the derivatives, including a EUR 1 million increase related

to the US dollar (2024: EUR 106 million, including a EUR 50 million decrease related to the US dollar).

Generally Philips does not hedge the foreign exchange exposure arising from equity interests in non-

functional-currency investments in associates and other non-current financial assets.

**Interest rate risk**

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in market interest rates. As of December 31, 2025, Philips had outstanding debt of EUR

8,084 million (2024: EUR 7,639 million), which constitutes an inherent interest rate risk with potential negative

impact on financial results. As of December 31, 2025, Philips held EUR 2,794 million in cash and cash

equivalents (2024: EUR 2,401 million), and had total long-term debt of EUR 6,934 million (2024: EUR 7,113

million) and total short-term debt of EUR 1,151 million (2024: EUR 526 million). As of December 31, 2025,

Philips had a ratio of fixed-rate long-term debt to total outstanding debt of approximately 86% compared to

93% one year earlier. Philips debt has a long maturity profile with an average tenor of long-term debt of 5.4

years with maturities up to 2042.

Philips targets an efficient balance between cost and debt and volatility in interest expenses through the

fixed/floating ratio. In optimizing the fixed/floating ratio, interest-rate swaps may be used to hedge (part of)

Philips' fixed-rate debt.

162<br>

As of December 31, 2025, Philips had interest rate swaps for a total notional amount of EUR 250 million

(2024: EUR 0 million) whereby Philips receives a fixed rate of 3.25% and pays EURIBOR 6M plus a weighted-

average spread of 1.04%. The swaps are maturing on May 23, 2030 and are used to hedge the exposure to

changes in the fair value of part of Philips' fixed-rate debt. The fixed-rate debt and swaps have been

designated in fair value hedge relationships. There is an economic relationship between the hedged item and

the hedging instruments as the terms of the swaps match the terms of the debt. Philips has established a

hedge ratio of 1:1 for the hedging relationships as the underlying risk of the interest rate swaps is identical to

the hedged risk component. Hedge effectiveness is tested qualitatively and ineffectiveness is measured and

booked every reporting period.

The impact of the hedged item (included in long-term debt) and the hedging instruments (included in other

non-current liabilities) on the consolidated balance sheet is:

Philips Group

**Carrying amount and fair value adjustments of fair value hedge relationships** in millions of EUR

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** |
|  | Carrying amount/ Notional <br>amount<br>| Accumulated fair value <br>adjustments/Carrying amount<br>| Change in fair value used for <br>measuring ineffectiveness for <br>the period<br>|
| 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 |

---

<sup>1</sup>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.

163<br>

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](#i709b790389b445bdbcabcc2c3c292121_463).

**Country risk**

Country risk is the risk that political, legal, or economic developments in a single country could adversely

impact performance. The country risk per country is defined as the sum of the equity of all subsidiaries and

associated companies in country cross-border transactions, such as intercompany loans, accounts receivable

from third parties and intercompany accounts receivable. The country risk is monitored on a regular basis.

As of December 31, 2025, the company had country risk exposure of EUR 12 billion in the US, EUR 1.6 billion in

the Netherlands, EUR 769 million in China (including Hong Kong). Other countries higher than EUR 500

million are the United Kingdom at EUR 732 million, Germany at EUR 627 million, France at EUR 537 million

and Japan at EUR 532 million. Other countries with significant exposure are: Singapore at EUR 204 million and

India at EUR 238 million. The degree of risk of a country is taken into account when new investments are

considered. The company does not, however, use financial derivative instruments to hedge country risk.

The impact of hyperinflation is also routinely assessed and was not material for the periods presented.

**Other insurable risks**

Philips is insured for a broad range of losses by global insurance policies in the areas of property damage/

business interruption, general and product liability, transport, directors' and officers' liability, employment

practice liability, crime and cybersecurity. The counterparty risk related to the insurance companies

participating in the above-mentioned global insurance policies is actively managed. As a rule, Philips only

selects insurance companies with a financial strength of at least A-. Throughout the year the counterparty risk

is monitored on a regular basis.

To lower exposures and to avoid potential losses, Philips has a global Risk Engineering program in place. The

main focus of this program is on property damage and business interruption risks including company

interdependencies. Regular on-site assessments take place at Philips locations and business-critical suppliers by

risk engineers of the insurer in order to provide an accurate assessment of the potential loss and its impact.

The results of these assessments are shared across the company's stakeholders. On-site assessments are carried

out against the predefined Risk Engineering standards, which are agreed between Philips and the insurers.

Recommendations are made in a Risk Improvement report and are monitored centrally. This is the basis for

decision-making by the local management of the business as to which recommendations will be implemented.

For all policies, deductibles are in place, which vary from EUR 0.01 million to EUR 10 million per occurrence,

and this variance is designed to differentiate between the existing risk categories within Philips. Above a first

layer of working deductibles, Philips utilizes a re-insurance captive as part of its overall risk financing

structure, through which a portion of selected risks is retained, with excess coverage obtained from external

insurers.

New insurance contracts were signed effective December 31, 2025, for the coming year.

**30Subsequent events**

On January 15, 2026, Philips completed the acquisition of SpectraWAVE, Inc., a US-based innovator in

Enhanced Vascular Imaging (EVI) of coronary arteries, angiography-based physiology assessments, and the use

of AI in medical imaging. The acquisition forms part of Philips' Diagnosis & Treatment segment and

complements its intravascular imaging and physiology portfolio. The purchase price involved an upfront

amount of USD 265 million, which was paid from available cash on hand, and contingent consideration. Due

to the recent closing date, additional IFRS disclosures cannot be made until the initial accounting for the

business combination has been completed.

164<br>

**Further information**

165<br>

**Other Corporate governance**

**Stichting Preferente Aandelen Philips**

Stichting Preferente Aandelen Philips, a foundation (*stichting*)

organized under Dutch law, has been granted the right to acquire

preference shares in the capital of Royal Philips, as stated in the

company's Articles of Association. In addition, the Foundation has the

right to file a petition with the Enterprise Chamber of the Amsterdam

Court of Appeal to commence an inquiry procedure within the

meaning of article 2:344 of the Dutch Civil Code.

The object of the Foundation is to represent the interests of Royal

Philips, the enterprises maintained by the company and its affiliated

companies within the company's group, in such a way that the interests

of the company, these enterprises and all parties involved with them

are safeguarded as effectively as possible, and that they are afforded

maximum protection against influences which, in conflict with those

interests, may undermine the autonomy and identity of Philips and

those enterprises, and also to do anything related to the above ends or

conducive to them. The Foundation's objectives include the protection

of Philips against (an attempt at) an unsolicited takeover or other

attempt to exert (de facto) control of the company. The arrangement

will allow Philips to determine its position in relation to the relevant

third party (or parties) and its (their) plans, to seek alternatives and to

defend the company's interests and those of its stakeholders.

The mere notification that the Foundation exercises its right to acquire

preference shares will result in such shares being effectively issued. The

Foundation may exercise this right for as many preference shares as

there are common shares in the company outstanding at that time. No

preference shares have been issued as of December 31, 2025.

The members of the self-electing Board of the Foundation are Messrs

J.P. de Kreij, J.V. Timmermans, J. van der Veer and P.N. Wakkie. No

Philips Supervisory Board or Board of Management members or Philips

officers are represented on the board of the Foundation.

**Other protective measures**

Other than the arrangements made with the Foundation referred to

above, the company does not have any measures that exclusively or

almost exclusively have the purpose of defending against unsolicited

public offers for shares in the capital of the company. It should be

noted that the Board of Management and the Supervisory Board

remain under all circumstances authorized to exercise all powers vested

in them to promote the interests of Philips.

The company has issued certain corporate bonds, the provisions of

which contain a Change of Control Triggering Event or a Change of

Control Put Event. Upon the occurrence of such events, the company

might be required to offer to redeem or purchase any outstanding

bonds at certain pre-determined prices. Please also refer to [Debt](#i709b790389b445bdbcabcc2c3c292121_433).

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

166<br>

21, 2024, they jointly beneficially owned 17.51% (163,717,857 shares)

of the company's common shares.

On March 18, 2025, Exor N.V. and Giovanni Agnelli B.V. jointly filed a

Schedule 13D/A with the SEC indicating that, as of March 15, 2025, they

jointly beneficially owned 18.7% (172,779,520 shares) of the company's

common shares. On April 29, 2025, BlackRock, Inc. filed a Schedule

13G/A with the SEC indicating that, as of March 31, 2025, it beneficially

owned 4.4% (41,234,628 shares) of the company's common shares.

**Corporate information**

The company began as a limited partnership with the name Philips &

Co in Eindhoven, the Netherlands, in 1891, and was converted into the

company with limited liability N.V. Philips Gloeilampenfabrieken on

September 11, 1912. The company's name was changed to Philips

Electronics N.V. on May 6, 1994, to Koninklijke Philips Electronics N.V.

on April 1, 1998, and to Koninklijke Philips N.V. on May 15, 2013.

The majority of the shares in Royal Philips are held through the system

maintained by the Dutch Central Securities Depository (Euroclear

Nederland). In the past, Philips has also issued (physical) bearer share

certificates ('Share Certificates'). A limited number of Share Certificates

have never been surrendered. As a result of Dutch legislation that

became effective in July 2019, the relevant shares were registered in

the name of Royal Philips by operation of law per January 1, 2021. As

per January 2, 2026, the remaining entitlements attached to the Share

Certificates not surrendered, expired by operation of law. Philips

intends to use the relevant 1,017 shares to cover certain of its

obligations arising from its Long-Term Incentive plans. For more

information, please contact the Investor Relations department by

email, investor.relations@philips.com, or telephone, +31-20-59 77222.

The statutory seat of the company is Eindhoven, the Netherlands, and

the statutory list of all subsidiaries and affiliated companies, prepared

in accordance with the relevant legal requirements (Dutch Civil Code,

Book 2, articles 379 and 414), forms part of the notes to the financial

statements and is deposited at the office of the Commercial Register in

Eindhoven, the Netherlands (file no. 17001910). The executive offices of

the company are located at the Philips Center, Prinses Irenestraat 59,

1077 WV Amsterdam, the Netherlands, telephone +31-20-59 77777.

**Articles of association**

Set forth below is a summary of certain provisions of the Articles of

Association of the company, applicable Dutch law and related company

policies. This summary does not constitute legal advice regarding those

matters and should not be regarded as such.

**Object and purpose**

The objects of the company are to establish, participate in, administer

and finance legal entities, companies and other legal forms for the

purpose of the manufacture and trading of electrical, electronic,

mechanical or chemical products, the development and exploitation of

technical and other expertise, including software, or for the purpose of

other activities, and to do everything pertaining thereto or connected

therewith, including the provision of security in particular for

commitments of business undertakings which belong to its group, all

this in the widest sense, as may also be conducive to the proper

continuity of the collectivity of business undertakings, in the

Netherlands and abroad, which are carried on by the company and the

companies in which it directly or indirectly participates. These objects

can be found in Article 2 of the Articles of Association.

**Share capital**

On December 31, 2025, the issued share capital amounted to EUR

192,584,026.40 divided into 962,920,132 common shares and no

preference shares.

**Voting rights**

All issued and outstanding shares carry voting rights and each share

confers the right to cast one vote in a shareholders' meeting. Pursuant

to Dutch law, no votes may be cast at a General Meeting of

Shareholders in respect of shares which are held by the company. There

are no special statutory rights attached to the shares of the company

and no restrictions on the voting rights of the company's shares exist.

Major shareholders do not have different voting rights than other

shareholders.

**Dividends**

A dividend will first be declared on preference shares out of net

income. The Board of Management has the power to determine what

portion of the net income shall be retained by way of reserve, subject

to the approval of the Supervisory Board. The remainder of the net

income, after reservations made, shall be available for distribution to

holders of common shares subject to shareholder approval after year-

end.

**Liquidation rights**

In the event of the dissolution and liquidation of the company, the

assets remaining after payment of all debts and liquidation expenses

are to be distributed in the following order of priority: to the holders

of preference shares, the amount paid thereon, and the remainder to

the holders of the common shares.

**Preemptive rights**

Shareholders have a *pro rata* preferential right of subscription to any

common share issuance unless the right is restricted or excluded. If

designated by the General Meeting of Shareholders, the Board of

Management has the power to restrict or exclude the preferential

subscription rights. A designation of the Board of Management will be

effective for a specified period of up to five years and may be renewed.

As per the date of the Annual General Meeting of Shareholders, the

Board of Management has been granted the power to restrict or

exclude the preferential right of subscription, for a period of 18

months. If the Board of Management has not been designated, the

General Meeting of Shareholders has the power to restrict or exclude

such rights, upon the proposal of the Board of Management, which

proposal must be approved by the Supervisory Board. Resolutions by

the General Meeting of Shareholders referred to in this paragraph

require approval of at least two-thirds of the votes cast if less than half

of the issued share capital is represented at the meeting.

The foregoing provisions also apply to the issuance of rights to

subscribe for shares.

**General Meeting of Shareholders**

The Annual General Meeting of Shareholders shall be held each year

not later than June 30 and, at the Board of Management's option, in

Eindhoven, Amsterdam, The Hague, Rotterdam, Utrecht or

Haarlemmermeer (including Schiphol airport); the notice convening the

meeting shall inform the shareholders accordingly. Without prejudice

to applicable laws and regulations, the Board of Management may

167<br>

resolve to give notice to holders of its shares, listed and traded on a

stock exchange, via the company's website and/or by other electronic

means representing a public announcement, which announcement

remains directly and permanently accessible until the General Meeting

of Shareholders. Holders of registered shares shall be notified by letter,

unless the Board of Management resolves to give notice to holders of

registered shares by electronic means of communication by sending a

legible and reproducible message to the address indicated by the

shareholder to the company for such purpose provided the relevant

shareholder has agreed hereto.

In principle, all shareholders are entitled to attend a General Meeting

of Shareholders, to address the meeting and to vote, except for shares

held in treasury by the company. They may exercise the

aforementioned rights at a meeting only for the common shares which

on the record date are registered in their name. The record date is

published in the above announcement and is, pursuant to Dutch law,

set as the 28th day prior to the day of the relevant meeting. Holders of

registered shares must advise the company in writing of their intention

to attend the General Meeting of Shareholders. Holders of shares listed

and traded via a stock exchange who either in person or by proxy wish

to attend the General Meeting of Shareholders should notify ABN

AMRO Bank N.V., which is acting as agent for the company. They must

submit a confirmation by a participating institution, in which

administration they are registered as holders of the shares, that such

shares are registered and will remain registered in its administration up

to and including the record date, whereupon the holder will receive an

admission ticket for the General Meeting of Shareholders. Holders of

shares who wish to attend by proxy have to submit the proxy at the

same time. A participating institution is a bank or broker which,

according to the Dutch Securities Depository Act (*Wet giraal* 

*effectenverkeer*), is an intermediary (*intermediair*) of the Dutch Central

Securities Depository (Euroclear Nederland).

In connection with the General Meeting of Shareholders, the company

does not solicit proxies within the United States.

The Articles of Association of the company provide that there are no

quorum requirements to hold a General Meeting of Shareholders.

Subject to certain exceptions provided by Dutch law and/or the Articles

of Association, resolutions of the General Meeting of Shareholders are

passed by an absolute majority of votes cast and do not require a

quorum.

A resolution to amend the articles of association (or to dissolve the

Company) requires the approval of the Supervisory Board and can only

be adopted by a shareholders' vote of at least three-fourths of the

votes cast at a General Meeting of Shareholders where more than half

of the issued share capital is represented. If at such a meeting the

quorum is not met, a further meeting shall be convened, to be held

within eight weeks of the first meeting, at which no quorum will apply.

If a proposal to amend the articles of association (or to dissolve the

Company) is submitted to the General Meeting of Shareholders by the

Board of Management, only a simple majority vote is required and no

quorum applies.

**Limitations on right to hold or vote common shares**

There are no limitations imposed by Dutch law or by the Articles of

Association on the right of non-resident owners to hold or vote the

common shares.

**Exchange controls**

Cash dividends paid in euros on Dutch registered shares and bearer

shares may be officially transferred from the Netherlands and

converted into any other currency without Dutch legal restrictions,

except that for statistical purposes such payments and transactions

must be reported to the Dutch Central Bank. Furthermore, no

payments, including dividend payments, may be made to jurisdictions

subject to sanctions adopted by the government of the Netherlands

and implementing resolutions of the Security Council of the United

Nations.

The Articles of Association of the company provide that cash

distributions on New York Registry Shares shall be paid in US dollars,

converted at the rate of exchange on the stock market of Euronext

Amsterdam at the close of business on the day fixed and announced for

that purpose by the Board of Management.

**Significant differences in corporate governance** 

**practices**

The corporate governance rules established by the New York Stock

Exchange (NYSE) allow Foreign Private Issuers, such as Royal Philips, to

follow home country practices on most corporate governance matters

instead of those that apply to US domestic issuers, provided that they

disclose any significant ways in which their corporate governance

practices differ from those applying to listed US domestic issuers under

the NYSE listing standards. The following paragraphs summarize what

we believe to be the significant differences between certain Dutch

practices on corporate governance matters and the corporate

governance provisions applicable to US domestic issuers under the

NYSE listing standards.

**Dutch corporate governance code**

The company is a company organized under Dutch law, with its

common shares listed on Euronext Amsterdam, and is subject to the

Dutch Corporate Governance Code of March 20, 2025 (the Dutch

Corporate Governance Code). Philips' New York Registry Shares,

representing common shares of the company, are listed on the NYSE.

**Board structure**

The NYSE listing standards prescribe regularly scheduled executive

sessions of non-executive directors. The company has a two-tier

corporate structure: a Board of Management consisting of executive

directors under the supervision of a Supervisory Board consisting

exclusively of non-executive directors. Members of the Board of

Management and other officers and employees cannot simultaneously

act as member of the Supervisory Board. The Supervisory Board must

approve specified decisions of the Board of Management.

**Independence of members of our Supervisory Board**

The Dutch Corporate Governance Code sets forth certain best practices

limiting the number of non-independent members of the Supervisory

Board and its committees. The Supervisory Board considers all its

members to be independent under the Dutch Corporate Governance

Code, except for Mr Ribadeau-Dumas, to whom the independence

exception of best practice provision 2.1.7(iii) of the Dutch Corporate

Governance Code is deemed to apply. The definitions of independence

under the Dutch Corporate Governance Code, however, differ in their

168<br>

details from the definitions of independence under the NYSE listing

standards. In some cases the Dutch requirements are stricter than the

NYSE listing standards, and in other cases the NYSE listing standards are

the stricter of the two. The members of the Audit Committee of the

Supervisory Board are also independent under the NYSE listing

standards.

**Committees of our Supervisory Board**

The company has established four committees, consisting of members

of the Supervisory Board only: the Audit Committee, the Remuneration

Committee, the Corporate Governance and Nomination & Selection

Committee and the Quality & Regulatory Committee. The roles,

responsibilities and composition of these committees reflect the

requirements of the Dutch Corporate Governance Code, the company's

Articles of Association and Dutch law, which differ from the NYSE

listing standards in these respects. The role of each committee is to

advise the Supervisory Board and to prepare the decision-making of the

Supervisory Board. In principle, the entire Supervisory Board remains

responsible for its decisions even if such decisions were prepared by

one of the Supervisory Board's committees.

The NYSE requires that, when an audit committee member of a listed

US domestic issuer serves on four or more audit committees of public

companies, the listed company should disclose (either on its website or

in its annual report on Form 10-K) that the board of directors has

determined that this simultaneous service would not impair the

director's service to the listed company. Dutch law does not require the

company to make such a determination.

In accordance with the procedures laid down in the Philips Auditor

Policy and as mandatorily required by Dutch law, the external auditor

of the company is appointed by the General Meeting of Shareholders

on the proposal of the Supervisory Board, after the latter has been

advised by the Audit Committee and the Board of Management.

**Equity compensation plans**

The company complies with Dutch legal requirements regarding

shareholder approval of equity compensation plans for the members of

the Board of Management. Dutch law does not require shareholder

approval of certain equity compensation plans for which the NYSE

listing standards would require such approval. The company is subject

to a Dutch requirement to seek shareholder approval for equity

compensation plans for its members of the Board of Management.

**Related party transactions**

The NYSE listing standards require certain transactions with related

parties to be reviewed by a company's audit committee or another

independent body of the board of directors for potential conflicts of

interest, and for the audit committee or other independent body to

prohibit such a transaction if it determines it to be inconsistent with

the interests of the company and its shareholders. However, Foreign

Private Issuers can rely on home country practice with respect to review

and approval of related party transactions. Philips has internal

procedures in place to confirm that related party transactions are

entered into at arm's length and, if and to the extent required under

Dutch law, to enable the Supervisory Board to assess the terms of

significant related party transactions.

**New York Registry Shares**

Certain common shares of the company are registered in the register

maintained by Deutsche Bank Trust Company Americas, as the New

York transfer agent, registrar and dividend disbursing agent (the 'New

York Transfer Agent'), pursuant to a Transfer Agent Agreement, dated

July 16, 2018, between the New York Transfer Agent and the company

(such common shares, 'New York Registry Shares'). As soon as

practicable after receipt from the company, the New York Transfer

Agent will provide holders of New York Registry Shares with a notice of

any meeting or solicitation of consents or proxies with a notice

prepared by the company stating (i) such information as is contained in

such notice of meeting and any solicitation materials (or a summary

thereof in English provided by the company), (ii) that each registered

holder at the close of business on the record date set by the company

therefore will be entitled, subject to any applicable provisions of Dutch

law and the Articles of Association, to exercise the voting rights

pertaining to the New York Registry Shares, and (iii) the manner in

which such voting rights may be exercised. The New York Transfer

Agent may, to the extent not prohibited by applicable law or by the

requirements of the New York Stock Exchange, in lieu of distribution of

the materials provided to it in connection with any meeting of, or

solicitation of consents or proxies from, holders of common shares,

distribute to the registered holders of New York Registry Shares a

notice that provides such holders with, or otherwise publicizes to such

holders, instructions on how to retrieve such materials or receive such

materials upon request (i.e., by reference to a website containing the

materials for retrieval or a contact for requesting copies of the

materials).

**Fees and charges payable by a holder of New York Registry Shares**

Deutsche Bank Trust Company Americas ('Deutsche Bank'), as the US

registrar, transfer, dividend disbursement and shareholder servicing

agent ('Agent') under Philips' New York Registry Share program (the

'Program'), collects fees for the issuance, cancellation and/or transfer of

New York Registry Shares directly from investors depositing ordinary

shares or surrendering New York Registry Shares for the purpose of

withdrawal or from intermediaries acting for them. The Agent collects

fees for making distributions to investors by deducting those fees from

the amounts distributed or by selling a portion of the distributable

property to pay the fees.

The Agent may charge shareholders a fee of up to USD 5.00 per 100

shares for the exchange of New York Registry Shares for shares and vice

versa, for certain free distributions of shares and for shares issued upon

exercise of rights, as well as for certain taxes, fees and expenses

incurred in connection with issuances and cancellations. The Agent is

also permitted to charge a distribution fee of USD 0.05 per share to

holders of New York Registry Shares in connection with a corporate

action or event unless certain fees are otherwise charged to Philips.

**Fees and payments made by the Agent to Philips**

The Agent has agreed to reimburse certain expenses of Philips related

to the Program and incurred by Philips in connection with the Program.

The Agent has also agreed to waive certain fees for standard costs

associated with the administration of the program.

169<br>

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 <br>December 31, 2025<br>|
| 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.

170<br>

**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.

171<br>

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](#i709b790389b445bdbcabcc2c3c292121_451).

**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

172<br>

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

173<br>

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

174<br>

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

175<br>

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](#i709b790389b445bdbcabcc2c3c292121_451).

**Philips is exposed to tax risks which could have a** 

**significant adverse financial impact**

Philips is exposed to tax risks that could result in double taxation,

penalties and interest payments. The source of the risks could originate

from local tax laws and regulations as well as international and EU

regulatory frameworks. These tax risks include transfer pricing risks on

internal cross-border deliveries of goods and services, as well as tax risks

relating to changes in the transfer pricing model. Examples of

initiatives that may result in changing tax rules include, but are not

limited to, the OECD/G20 Inclusive Framework to address the allocation

of income to user markets (Pillar One) and a 15% minimum corporate

income tax rate (Pillar Two).

The formal adoption of the Council Directive (EU) 2022/2523 (the Pillar

Two Directive) in December 2022 achieved a coordinated

implementation of Pillar Two in EU Member States. The Dutch

government adopted the Minimum Tax Rate Act 2024 (MTR Act) in

December 2023, and the Pillar Two legislation has been applicable in

local law with effect from 2024 in the Netherlands, the EU and many

other countries around the world. However, the US withdrawal from

the OECD Pillar agreements, the pending implementation in local laws

of the statement issued by the Group of Seven (G7) on June 28, 2025 on

outlining a compromise on certain aspects of Pillar Two, including the

January 5, 2026 'side-by-side' package agreed between the United

States and the OECD Inclusive Framework exempting US-parented

multinational enterprises from Pillar Two brings uncertainty and

potential risk of retaliatory tax measures.

As Philips maintains substance in the form of relevant assets and

personnel in the countries in which it operates, Philips meets the

transitional safe harbor rules enacted by OECD in most countries and

therefore exposure to Pillar Two taxation is currently not material from

a group perspective. However, the future of the safe harbor rules,

including the implementation of the side-by-side safe harbors is

uncertain and Pillar Two increases Philips' tax compliance burden

significantly globally.

For Pillar One, the OECD's final guidance on Amount B (a simplified

and streamlined approach for applying the arm's length principle to in-

scope baseline marketing and distribution activities, as incorporated

into the OECD Transfer Pricing Guidelines), effective for fiscal years

commencing on or after January 1, 2025, introduces a standardized

approach for determining the arm's length returns for such activities.

While the framework aims to enhance tax certainty and reduce

compliance costs, it may also give rise to new tax risks. These include

the risk of double taxation due to potential mismatches between

implementation in local law and existing transfer pricing policies and

challenges in determining eligibility for the simplified regime.

The enactment of the One Big Beautiful Bill Act in July 2025 introduces

significant changes to US tax rules, including revised R&D expense

amortization, enhanced export incentives, and a permanent 10.5%

Base Erosion and Anti-Abuse Tax rate effective 2026, favoring US-based

companies and operations. While the immediate financial impact on

Philips is limited, these measures and ongoing US discussions on tax

retaliatory measures, for example against jurisdictions imposing digital

service taxes (being a tax on gross revenue derived from a variety of

digital services), expose Philips to financial risk and uncertainty.

Furthermore, Philips is exposed to tax risks related to acquisition and

divestment, permanent establishments, tax loss, interest and tax credits

carried forward, and potential changes in tax law that could result in

higher tax expenses and payments. The risks may have a significant

impact on local financial tax results, which could adversely affect

Philips' financial condition and operating results. The value of the

deferred tax assets, such as tax losses carried forward, is subject to the

availability of sufficient taxable income within the tax loss-carry-

forward period. Accordingly, there can be no absolute assurance that

all deferred tax assets, such as (net) tax losses and credits carried

forward, will be realized.

Implemented and potential tariffs and other restrictions on imports

proposed by the US administration, and retaliatory trade measures in

response thereto, have impacted and may continue to impact

international trade relations, supply chains and pricing strategies, with

notable consequences in the countries where we are present. In

addition, protectionism may increase general uncertainty on the

development of local regulations in response to those measures. These

uncertainties expose Philips to financial risk linked to increased trade

defense measures resulting in additional tariffs and customs duties.

Significant changes in import duties levied on the import of products

could materially impact Philips.

176<br>

**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](#i709b790389b445bdbcabcc2c3c292121_238)

[safety, quality and regulatory and the Medical Office](#i709b790389b445bdbcabcc2c3c292121_238) and the note

[Contingencies](#i709b790389b445bdbcabcc2c3c292121_451)

177<br>

**Philips is exposed to the risks of non-compliance** 

**with business conduct rules and regulations,** 

**including privacy and upcoming ESG disclosure and** 

**due diligence requirements**

In the execution of its strategy, Philips could be exposed to the risk of

non-compliance with business conduct rules and regulations and our

General Business Principles, including, but not limited to, patient safety,

quality, anti-bribery, anti-money laundering, antitrust, sanctions,

healthcare compliance, transparency, accountability and fairness in the

development and use of AI tools, privacy and data protection, as well

as the evolving and expanding ESG disclosure requirements and due

diligence requirements across jurisdictions. Examples of compliance risk

areas include commission and incentive payments to third parties and

remuneration payments to agents, distributors, consultants and similar

entities, as well as the acceptance of gifts, which may be considered in

some markets to be normal local business practice. The use of AI and

ongoing digitalization of Philips products and services, including the

processing of personal data, increases the importance of compliance,

and the risk of non-compliance, with privacy, data protection and

emerging AI governance frameworks such as the EU AI Act. If we do

not have sufficient rights to use the data on which AI relies or to the

outputs produced by AI applications, we may incur liability through the

violation of certain laws, third-party privacy or other rights, or contracts

to which we are a party. These risks could adversely affect Philips'

financial condition, reputation and brand and trigger the additional

risk of exposure to governmental investigations, inquiries and legal

proceedings and fines. The EU or its Member States or other regions

may introduce more regulatory and legislative initiatives to advance

ESG objectives. Such changes may introduce new compliance

requirements and may require Philips to expand the range of

mandatory ESG disclosures. Examples of these initiatives are the EU

Corporate Sustainability Reporting Directive (CSRD) and European

Sustainability Reporting Standards (ESRS), the European Carbon Border

Adjustment Mechanism (CBAM), and the EU Deforestation Regulation.

Regulatory and legislative initiatives such as the EU Corporate

Sustainability Due Diligence Directive (CSDDD) and case law developed

by courts will introduce or extend a duty of care, requiring Philips to

identify and act on adverse environmental and human rights impacts

arising from the organization and operations, and related to our

activities, beyond or different from our current efforts. Failure to meet

these requirements could trigger the additional risk of exposure to

inquiries from supervisory bodies and adversely affect Philips' reputation

or could adversely impact Philips' financial condition or operating results

through lost revenue and cost of any required remedial actions,

penalties or claims for damages. The risk of non-compliance is

heightened by the evolving and unpredictable nature of ESG-related

legislative initiatives, which continue to undergo frequent modifications

(e.g., the EU Omnibus legislative measures) with relatively short

implementation timelines.

In addition, we may also face potentially conflicting supervisory

directives, for example, as certain US regulatory and non-US authorities

have prioritized ESG-related issues, while others have signaled pursuing

potentially conflicting priorities. These circumstances, among others,

may result in pressure from investors, unfavorable reputational

impacts, including inaccurate perceptions or a misrepresentation of our

actual ESG-related practices, and diversion of management's attention

and resources. Any failure or perceived failure by us to adhere to our

public statements, comply fully with developing interpretations of ESG-

related laws and regulations (both 'pro-ESG' and 'anti-ESG'), or meet

evolving and varied stakeholder expectations and standards, could

adversely affect Philips' reputation or could adversely impact Philips'

financial condition or operating results through lost revenue and cost

of any required remedial actions, penalties or claims for damages.

For further details, please refer to the sub-section Legal proceedings

within the note [Co](#i709b790389b445bdbcabcc2c3c292121_451)[ntingencies](#i709b790389b445bdbcabcc2c3c292121_451).

178<br>

**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](#i709b790389b445bdbcabcc2c3c292121_382)

[financial statements](#i709b790389b445bdbcabcc2c3c292121_382), foreign currency sales and costs are translated

into Philips' presentation currency, the euro, at the exchange rates

prevailing at the respective transaction dates. As a result of significant

foreign currency sales and currency movements during the periods

presented, the effects of translating foreign currency sales amounts

into euros could have a material impact on the comparability of sales

between periods. Therefore, these impacts are excluded when

presenting comparable sales in euros by translating the foreign

currency sales of the previous period and the current period into euros

at the same average exchange rates. In addition, the years presented

were affected by a number of acquisitions and divestments, as a result

of which various activities were consolidated or deconsolidated. The

effect of consolidation changes has also been excluded in arriving at

the comparable sales. For the purpose of calculating comparable sales,

when a previously consolidated entity is sold or control is lost, relevant

sales of that entity for the corresponding prior year period are

excluded. Similarly, when an entity is acquired and consolidated,

relevant sales of that entity for the current year period are excluded.

Comparable sales growth is presented for the Philips Group, operating

segments and geographic area. Philips believes that the presentation of

comparable sales growth is meaningful for investors to evaluate the

performance of Philips' business activities over time. Comparable sales

growth may be subject to limitations as an analytical tool for investors,

because comparable sales growth figures are not adjusted for other

effects, such as increases or decreases in prices or quantity/volume. In

addition, interaction effects between currency movements and changes

in consolidation are not taken into account.

179<br>

Philips Group

**Sales growth composition by segment** in %

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | nominal <br>growth<br>| consolidation <br>changes<br>| currency <br>effects<br>| comparable <br>growth<br>|
| **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 <br>growth<br>| consolidation <br>changes<br>| currency <br>effects<br>| comparable <br>growth<br>|
| **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 <br>geographies<br>| (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 <br>geographies<br>| (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 <br>geographies<br>| (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](#i709b790389b445bdbcabcc2c3c292121_127) section of [Financial](#i709b790389b445bdbcabcc2c3c292121_109)

[performance](#i709b790389b445bdbcabcc2c3c292121_109).

Philips considers the use of Adjusted EBITA appropriate as Philips uses it

as a measure of segment performance and as one of its strategic drivers

to increase profitability through re-allocation of its resources toward

opportunities offering more consistent and higher returns. This is done

with the aim of making the underlying performance of the Businesses

more transparent.

EBITA excludes amortization and impairment of acquired intangible

assets (which primarily relates to brand names, customer relationships

and technology) and impairment of goodwill, as Philips believes that

such amounts are inconsistent in amount and frequency, are

significantly impacted by the timing and/or size of acquisitions and do

not factor into its decisions on allocation of its resources across

segments. Although we exclude amortization and impairment of

acquired intangible assets from the Adjusted EBITA measure, Philips

believes that it is important for investors to understand that these

acquired intangible assets contribute to revenue generation.

180<br>

Philips believes Adjusted EBITA is useful to evaluate financial

performance on a comparable basis over time by factoring out

restructuring costs, acquisition-related charges and other incidental

items that are not directly related to the operational performance of

Philips Group or its segments.

Adjusted EBITA may be subject to limitations as an analytical tool for

investors, as it excludes restructuring costs, acquisition-related charges

and other incidental items and therefore does not reflect the expense

associated with such items, which may be significant and have a

significant effect on Philips' net income.

Adjusted EBITA margin refers to Adjusted EBITA divided by sales

expressed as a percentage.

Adjusted EBITA is not a recognized measure of financial performance

under IFRS. The reconciliation of Adjusted EBITA to the most directly

comparable IFRS measure, Net income, for the years indicated is

presented in the accompanying table. Net income is not allocated to

segments as certain income and expense line items are monitored on a

centralized basis, resulting in them being shown on a Philips Group

level only.

**Adjusted EBITDA**

Adjusted EBITDA is defined as Income from operations excluding

amortization and impairment of intangible assets, impairment of

goodwill, depreciation and impairment of property, plant and

equipment, restructuring costs, acquisition-related charges and other

items.

Philips understands that Adjusted EBITDA is broadly used by analysts,

rating agencies and investors in their evaluation of different companies

because it excludes certain items that can vary widely across different

industries or among companies within the same industry. Philips

considers Adjusted EBITDA useful when comparing its performance to

other companies in the health tech industry. However, Adjusted

EBITDA may be subject to limitations as an analytical tool because of

the range of items excluded and their significance in a given reporting

period. Furthermore, comparisons with other companies may be

complicated due to the absence of a standardized meaning and

calculation framework. Philips management compensates for the

limitations of using Adjusted EBITDA by using this measure to

supplement IFRS results to provide a more complete understanding of

the factors and trends affecting the business rather than IFRS results

alone. In addition to the limitations noted above, Adjusted EBITDA

excludes items that may be recurring in nature and should not be

disregarded in the evaluation of performance. However, we believe it is

useful to exclude such items to provide a supplemental analysis of

current results and trends compared to other periods. This is because

certain excluded items can vary significantly depending on specific

underlying transactions or events. Also, the variability of such items

may not relate specifically to ongoing operating results or trends, and

certain excluded items, while potentially recurring in future periods,

may not be indicative of future results. Net income for the years

indicated is included in the accompanying table. Net income is not

allocated to segments as certain income and expense line items are

monitored on a centralized basis, resulting in them being shown on a

Philips Group level only.

181<br>

Philips Group

**Reconciliation of Net income to Adjusted EBITA and Adjusted EBITDA** in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Philips Group | Diagnosis & <br>Treatment<br>| Connected <br>Care<br>| Personal <br>Health<br>| 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** | **1424** | **804** | **89** | **631** | ***(100)*** |
| Amortization and impairment of acquired <br>intangible assets<br>| 240 | 73 | 141 | 14 | *12* |
| **EBITA** | **1665** | **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** | **2195** | **998** | **544** | **662** | **(9)** |
| Depreciation, amortization and impairment of <br>fixed assets and other intangible assets<br>| 885 | 191 | 263 | 98 | 332 |
| Adding back impairment of fixed assets included <br>in Restructuring and acquisition-related charges <br>and Other items<br>| (33) | (1) | (17) | (9) | (7) |
| **Adjusted EBITDA** | **3046** | **1188** | **791** | **752** | **316** |

---

Philips Group

**Reconciliation of Net income to Adjusted EBITA and Adjusted EBITDA** in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Philips Group | Diagnosis & <br>Treatment<br>| Connected <br>Care<br>| Personal <br>Health<br>| 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 <br>intangible assets<br>| 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** | **2077** | **1018** | **494** | **584** | **(18)** |
| Depreciation, amortization and impairment of <br>fixed assets and other intangible assets<br>| 998 | 240 | 262 | 102 | 394 |
| Adding back impairment of fixed assets included <br>in Restructuring and acquisition-related charges <br>and Other items<br>| (93) | (39) | (8) | (7) | (39) |
| **Adjusted EBITDA** | **2982** | **1219** | **747** | **679** | **337** |

---

182<br>

Philips Group

**Reconciliation of Net income to Adjusted EBITA and Adjusted EBITDA** in millions of EUR

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Philips Group | Diagnosis & <br>Treatment<br>| Connected <br>Care<br>| Personal <br>Health<br>| 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** | **(1199)** | **552** | **(190)** |
| Amortization and impairment of acquired <br>intangible assets<br>| 290 | 89 | 178 | 14 | 9 |
| Impairment of goodwill | 8 | 8 | - | - | - |
| **EBITA** | **183** | **818** | **(1020)** | **567** | **(181)** |
| Restructuring and acquisition-related charges | 381 | 118 | 115 | 9 | 140 |
| Other items: | 1358 | 92 | 1275 | 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** | **1921** | **1028** | **369** | **597** | **(73)** |
| Depreciation, amortization and impairment of <br>fixed assets and other intangible assets<br>| 971 | 217 | 267 | 101 | 385 |
| Adding back impairment of fixed assets included <br>in Restructuring and acquisition-related charges <br>and Other items<br>| (47) | (4) | (14) | - | (30) |
| **Adjusted EBITDA** | **2845** | **1241** | **623** | **698** | **283** |

---

183<br>

**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](#i709b790389b445bdbcabcc2c3c292121_382)

[statements](#i709b790389b445bdbcabcc2c3c292121_382), [Earnings per share](#i709b790389b445bdbcabcc2c3c292121_406) 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**<sup>1</sup> 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 <br>non-controlling interests<br>| (1) | (3) | (2) |
| **Income from continuing operations attributable** <br>**to shareholders ¹**<br>| **899** | **(843)** | **(456)** |
| Adjustments for: |  |  |  |
| Amortization and impairment of acquired intangible <br>assets<br>| 240 | 392 | 290 |
| Impairment of goodwill | - | - | 8 |
| Restructuring costs and acquisition-related charges | 260 | 326 | 381 |
| Other items: | 270 | 830 | 1358 |
| *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** <br>**attributable to shareholders** <sup>1</sup><br>| **1506** | **1300** | **1148** |
| **Earnings per common share:** |  |  |  |
| Income from continuing operations attributable to <br>shareholders¹ per common share (in EUR) - diluted<br>| 0.93 | (0.88) | (0.47) |
| Adjusted income from continuing operations <br>attributable to shareholders¹ per common share (in <br>EUR) - diluted<br>| 1.56 | 1.36 | 1.19 |

---

<sup>1</sup>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.

<sup>2</sup>Includes deferred tax assets derecognized in the line below.

184<br>

**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 <br>activities<br>| 1172 | 1569 | 2136 |
| 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* <br>*and equipment*<br>| *(269)* | *(317)* | *(345)* |
| *Proceeds from disposals of property,* <br>*plant and equipment*<br>| *9* | *13* | *90* |
| **Free cash flow** | **512** | **906** | **1582** |

---

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 | 6934 | 7113 | 7035 |
| Short-term debt | 1151 | 526 | 654 |
| **Total debt** | **8084** | **7639** | **7689** |
| Cash and cash equivalents | 2794 | 2401 | 1869 |
| **Net debt** | **5290** | **5238** | **5820** |
| Shareholders' equity | 10957 | 12006 | 12028 |
| Non-controlling interests | 32 | 37 | 33 |
| **Group equity** | **10990** | **12043** | **12061** |
| **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](#i709b790389b445bdbcabcc2c3c292121_127)

section of [Financial performance](#i709b790389b445bdbcabcc2c3c292121_109). 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<br>

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 | 1424 | 529 | (115) |
| Total assets | 26944 | 28976 | 29406 |
| **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** <sup>1</sup> in millions of EUR

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Tangible fixed assets | 2307 | 2467 | 2553 |
| Intangible assets (including goodwill) | 12435 | 13175 | 13475 |
| Inventories | 3178 | 3499 | 3984 |
| Receivable balances ² | 4512 | 4761 | 4981 |
| Payable balances ³ | (5935) | (6440) | (6810) |
| Provisions ⁴ | (1965) | (2909) | (2420) |
| **Group average net operating capital** | **14533** | **14554** | **15763** |
| Net operating capital of businesses <br>acquired<br>| (3163) | (3579) | (4081) |
| **Average net operating capital** | **11370** | **10974** | **11681** |

---

<sup>1</sup>All line items represent the average of each of the five quarters ending before

the relevant measurement date.

<sup>2</sup>Receivable balances consist of (Non-)Current receivables, Other (non-)current

assets, (Non-)Current derivative financial assets, and Income tax receivable.

<sup>3</sup>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.

<sup>4</sup>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 <br>taxes<br>| 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** | **1424** | **529** | **(115)** |
| Income tax (expense) benefit | (282) | (963) | 73 |
| Loss from operations of businesses <br>acquired<br>| 88 | 174 | 253 |
| Tax effects on loss from operations of <br>businesses acquired<br>| (21) | (41) | (56) |
| Goodwill impairment | - | - | 8 |
| Impairment of acquired intangible asset | 27 | 132 |  |
| Other items: | 213 | 691 | 1181 |
| *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 <br>deferred tax asset<br>|  | 941 |  |
| **Organic return** | **1400** | **1299** | **1204** |
| **Average net operating capital** | **11370** | **10974** | **11681** |
| **Organic ROIC (%)** | **12.3%** | **11.8%** | **10.3%** |

---

<sup>1</sup>Includes deferred tax assets derecognized in the line below.

186<br>

**Other key performance indicators**

In addition to monitoring the IFRS and non-IFRS financial measures

discussed under [Financial performance](#i709b790389b445bdbcabcc2c3c292121_109), 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 <br>kilotonnes CO₂-equivalent<br>| 372 | 424 | 418 |
| Circular revenues | 27.9% | 24.4% | 20.0% |
| Waste to landfill | -% | -% | -% |
| Closing the loop | 19.1% | 19.5% | 20.5% |
| Comparable order intake | 6% | 1% | (6)% |

---

**Lives improved** 

We aimed to improve the lives of 2 billion people a year by 2025,

including 300 million in underserved communities, and aim to improve

the lives of 2.5 billion and 400 million, respectively, by 2030. We use lives

improved as a measurement of our societal impact. We calculate lives

improved as the number of individual interactions for each product sold

(based on market intelligence and statistical data) and multiply by the

number of those products delivered in a year (eliminating double

counting for multiple different product touches per individual). Philips'

reported lives improved results only include contributions by Philips

Group, not contributions by the Philips Foundation.

**Operational carbon footprint**

We use the operational carbon footprint as one of the measurements

of our impact. We define operational carbon footprint as the total

greenhouse gas emissions caused by an organization, event, product or

person, expressed in kilotonnes CO2-equivalent. We calculate our

operational carbon footprint on a monthly basis and include our Scope

1, Scope 2 and Scope 3 – business travel and transportation and

distribution emissions.

**Circular revenues**

Propositions that qualify for circular revenues must comply with the

requirements for at least one of the circular revenue categories (circular

design, circular delivery and financing models, circular in-use phase and

circular end-of-use management). These include, among others, products

with low weight or containing a minimum threshold of recycled or bio-

based plastics, as-a-service models, software running on cloud,

telehealth, upgrades, lifetime extensions, and refurbished equipment.

We calculate circular revenues as a percentage of total revenues from

products, services and solutions contributing to circularity.

**Waste to Landfill**

We define waste to landfill as total waste that is delivered for landfill

and exclude one-time-only waste and waste delivered to landfill due to

regulatory requirements. We calculate waste to landfill in kilotonnes

per year.

**Closing the loop** 

Closing the loop means we are embedding a policy to responsibly take

back all professional medical equipment sold directly to customers as

part of a trade-in offer or as a service at customer request. As part of

the policy, we will ensure that equipment coming back to us is, where

feasible, made available for refurbishment and/or parts recovery, or

locally recycled in a certified way to ensure it does not end up in

landfill. We monitor the impact of our policies by measuring the

amount of equipment that we collect from our customers. We report

on this as 'reclaimed equipment'. We calculate closing the loop as the

number of systems or pieces of equipment taken back per year.

Philips believes that the five other key performance indicators described

above (lives improved, operational carbon footprint, circular revenues,

waste to landfill and closing the loop) provide important information to

investors and are important to understanding the long-term

performance and prospects of the business. In addition, these other key

performance indicators are also used for management compensation

purposes. Members of the Board of Management are eligible for grants

of performance shares under the Long-Term Incentive (LTI) plan, and

the vesting of the performance shares is subject to performance over a

period of three years and based on certain criteria, including a 10%

weighting for Sustainability Objectives, which Philips defines as the five

other key performance indicators described above. Philips believes that

including these other key performance indicators in our remuneration

policy encourages management to act responsibly and sustainably,

supporting the company's overall performance and enhancing the long-

term value of the company. See [Remuneration Report 2025](#i709b790389b445bdbcabcc2c3c292121_337) 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<br>

**Taxation**

**Dutch taxation**

The statements below are only a general summary of certain material

Dutch tax consequences for holders of common shares that are non-

residents of the Netherlands based on Dutch tax laws, presently in

force, and the Tax Convention of December 18, 1992, as amended by

the protocol that entered into force on December 28, 2004, between

the United States of America and the Kingdom of the Netherlands (the

US Tax Treaty) and are not to be read as extending by implication to

matters not specifically referred to herein. For general entity

qualification rules, reference is made to the last paragraph of this

statement. As to individual tax consequences, investors in common

shares should consult their own professional tax advisor.

With respect to a holder of common shares that is an individual who

receives income or derives capital gains from common shares and this

income received or capital gains derived are attributable to past,

present or future employment activities of such holder, the income of

which is taxable in the Netherlands, the Dutch tax position is not

discussed in this summary.

**Dividend withholding tax**

• In general, a distribution to shareholders by a company resident in

the Netherlands (such as the company) is subject to a withholding tax

imposed by the Netherlands at a rate of 15%, which is withheld on

the gross amount of the dividend. The term "dividends" within the

meaning of the Dutch Dividend Withholding Tax Act 1965 (*Wet op* 

*de Dividendbelasting 1965*) includes, but is not limited to:

• distributions in cash or in kind, deemed and constructive

distributions and repayments of paid-in capital not recognized for

Dutch dividend withholding tax purposes

• liquidation proceeds, proceeds of redemption of ordinary shares, or,

generally, consideration for the repurchase of ordinary shares in

excess of the average paid-in capital of those ordinary shares

recognized for Dutch dividend withholding tax purposes

• the nominal value of ordinary shares issued to a holder or an

increase of the nominal value of ordinary shares, as the case may be,

to the extent that it does not appear that a contribution to the

capital recognized for Dutch dividend withholding tax purposes was

made or will be made

• partial repayment of paid-in capital, recognized for Dutch dividend

withholding tax purposes, if and to the extent that there are net

profits (*zuivere winst*), within the meaning of the Dutch Dividend

Withholding Tax Act 1965, unless the general meeting of

shareholders has resolved in advance to make such payment and

provided that the nominal value of the ordinary shares concerned

has been reduced by a corresponding amount by way of an

amendment of the article of association of the company

Under the Dutch Dividend Withholding Tax Act 1965, relief at source

applies to certain qualifying corporate holders of common shares if

such common shares are attributable to a business carried out in the

Netherlands, provided that such holder demonstrates that it is the

beneficial owner of the dividend. Relief at source also applies for

dividend distributions to certain qualifying corporate holders of

common shares resident in EU/EEA member states, and to certain

qualifying corporate holders of common shares resident in non-EU/EEA

states with which the Netherlands has concluded a tax treaty that

includes a dividend article, provided that such holder demonstrates

that it is the beneficial owner of the dividend unless such holder holds

the common shares of the company with the primary aim or one of the

primary aims to avoid the levy of Dutch dividend withholding tax from

another person and the shareholding is put in place without valid

commercial reasons that reflect economic reality.

Upon request and under certain conditions, certain qualifying non-

resident individual and corporate holders of common shares resident in

EU/EEA member states or in a qualifying non-EU/EEA state may be

eligible for a refund of Dutch dividend withholding tax to the extent

that the withholding tax levied is higher than the personal and

corporate income tax which would have been due if they were resident

in the Netherlands. However, this refund is not applicable when, based

on the US Tax Treaty, the Dutch dividend withholding tax can be fully

credited in the United States by the US holder.

Pursuant to the provisions of the US Tax Treaty, a reduced rate may be

applicable in respect of dividends paid by the company to a beneficial

owner holding directly 10% or more of the voting power of the

company, if such owner is a company resident in the United States (as

defined in the US Tax Treaty) and entitled to the benefits of the US Tax

Treaty.

Pursuant to Dutch anti-dividend stripping legislation, a holder of

common shares who is the recipient of dividends will in any case not be

considered the beneficial owner of the dividends if (i) as a consequence

of a combination of transactions, a person other than the recipient

benefits, in full or in part, directly or indirectly, from the dividends; (ii)

whereby such other person retains, directly or indirectly, an interest

similar to that in the common shares on which the dividends were paid;

and (iii) that other person is entitled to a credit, reduction or refund of

dividend withholding tax that is less than that of the recipient. To

further combat dividend stripping, the record date for dividend

entitlement with respect to listed shares has been codified in the Dutch

Dividend Withholding Tax Act 1965 and the burden of proof lies with

the taxpayer that wants to credit or claim a refund of Dutch dividend

withholding tax.

Dividends paid to qualifying exempt US pension trusts and qualifying

exempt US organizations are, under certain conditions, exempt from

Dutch withholding tax under the US Tax Treaty. Qualifying exempt US

pension trusts normally remain subject to withholding at the rate of

15% and are required to file for a refund of the tax withheld. Only if

certain conditions are fulfilled, such pension trusts may be eligible for

relief at source upon payment of the dividend. However, for qualifying

exempt US organizations no relief at source upon payment of the

dividend is currently available under the US Tax Treaty; such exempt US

organizations should apply for a refund of the 15% withholding tax

withheld.

188<br>

Further, under certain circumstances, certain exempt organizations (e.g.

pension funds) may be eligible for a refund of Dutch withholding tax

upon their request pursuant to Dutch tax law. Provided certain

conditions are met, such tax exempt (US) organizations may be eligible

for relief at source upon request of a qualification decision

(*kwalificatiebeschikking*). The paying agent should in such case be

notified.

In addition to Dutch dividend withholding tax, Dutch conditional

withholding tax may apply at a statutory rate of 25.8% on dividends to

certain affiliated corporate holders in abuse situations. The term

"dividends" for Dutch conditional withholding tax purposes is equal to

the term "dividends" for Dutch dividend withholding tax purposes. A

corporate holder is generally considered to be affiliated (*gelieerd*) to

the company for the purpose of the Dutch Withholding Tax Act 2021

(Wet bronbelasting 2021) i) if the corporate shareholder alone or

together with other entities that belong to a qualifying unit

(*kwalificerende eenheid*) hold a qualifying interest in the company, or

ii) if the company alone or together with other entities that belong to

the qualifying unit hold a qualifying interest in the shareholder. There

is a qualifying unit if the entities act jointly with the main purpose or

one of the main purposes to avoid the levying of withholding. For the

purpose of the Dutch Withholding Tax Act 2021 a qualifying interest is

an interest in an entity enabling that decisions can be influenced in

such a way that the activities of that entity can be determined.

These abuse situations include and are not limited to i) a corporate

holder that is considered to be resident in a jurisdiction that is listed in

the yearly updated Dutch Regulation on low-taxing states and non-

cooperative jurisdictions for tax purposes (*Regeling laagbelastende* 

*staten en niet-coöperatieve rechtsgebieden voor belastingdoeleinden*),

or ii) a corporate holder that holds the shares through a permanent

establishment to which the shares are attributable located in a

jurisdiction as defined under i), or iii) a corporate holder that is

considered a (reverse) hybrid mismatch for Dutch conditional

withholding tax purposes. Specific rules and exceptions apply with

respect to payments to hybrid entities.

**Income and capital gains**

Income and capital gains derived from the common shares by a non-

resident individual or non-resident corporate shareholder are generally

not subject to Dutch income or corporation tax, unless (i) such income

and gains are attributable to a (deemed) permanent establishment or

(deemed) permanent representative of the shareholder in the

Netherlands; or (ii) the shareholder is entitled to a share in the profits

of an enterprise or (in the case of a non-resident corporate shareholder

only) a co-entitlement to the net worth of an enterprise that is

effectively managed in the Netherlands (other than by way of

securities) and to which enterprise the common shares are attributable;

or (iii) such income and capital gains are derived from a direct, indirect

or deemed substantial participation in the share capital of the

company, and, in the case of a non-resident individual shareholder,

such substantial participation not being a business asset, and, in the

case of a non-resident corporate shareholder only, it is being held with

the primary aim or one of the primary aims to avoid the levy of income

tax from another person and is put in place without valid commercial

reasons that reflect economic reality; or (iv) in the case of a non-

resident corporate shareholder, such shareholder is a resident of Aruba,

Curacao or Saint Martin with a permanent establishment or permanent

representative in Bonaire, Eustatius or Saba to which the common

shares are attributable and certain conditions are met; or (v) in the case

of a non-resident individual, such individual derives income or capital

gains from the common shares that are taxable as benefits from

'miscellaneous activities' in the Netherlands (*resultaat uit overige* 

*werkzaamheden*, as defined in the Dutch Income Tax Act 2001(*Wet* 

*inkomstenbelasting 2001*)), which includes the performance of activities

with respect to the common shares that exceed regular portfolio

management.

In general, a holder of common shares has a substantial participation if

he holds either directly or indirectly and either independently or jointly

with his partner (as defined in the Dutch Income Tax Act 2001), the

ownership of, or certain other rights over, at least 5% of the total

issued share capital or total issued particular class of shares of the

company or rights to acquire direct or indirect shares, whether or not

already issued, that represent at any time 5% or more of the total

issued capital (or the total issued particular class of shares) or the

ownership of certain profit participating certificates that relate to 5%

or more of the annual profit or to 5% or more of the liquidation

proceeds. A shareholder will also have a substantial participation in the

company if one or more of certain relatives of the shareholder hold a

substantial participation in the company. A deemed substantial

participation amongst others exists if (part of) a substantial

participation has been disposed of, or is deemed to have been disposed

of, on a nonrecognition basis.

**Estate and gift taxes**

No estate, inheritance or gift taxes are imposed by the Netherlands on

the transfer or deemed transfer of common shares by way of gift by or

on the death of a shareholder if, at the time of the death of the

shareholder or the gift of the common shares (as the case may be), such

shareholder is not a (deemed) resident of the Netherlands.

Inheritance or gift taxes (as the case may be) are due, however, if:

• such shareholder has Dutch nationality and has been a resident of

the Netherlands at any time during the 10 years preceding the time

of their death or gift

• such shareholder does not have Dutch nationality but has been a

resident of the Netherlands at any time during the 12 months

preceding the time of the gift (for Netherlands gift taxes only)

• in case of a gift of the shares under a condition precedent

(*opschortende voorwaarde*) by an individual who at the time of the

gift was not a (deemed) resident of the Netherlands, but such

individual is (deemed) resident of the Netherlands at the time of

fulfillment of the condition

**Other taxes and duties**

No Netherlands VAT and Netherlands registration tax, customs duty,

stamp duty or other similar documentary tax or duty will be payable by

a holder of common shares in connection with the holding or the

disposal of the ordinary shares.

As from January, 1 2025 a new qualification policy for foreign legal

forms took effect, which may be relevant for the qualification of holder

of shares as a transparent vehicle or as an entity from a Dutch tax

perspective. This new qualification policy consists of i) the

discontinuation of the Netherlands open limited partnership (*open* 

*commanditaire vennootschap*), ii) changes to the definition of a mutual

189<br>

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

190<br>

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.

191<br>

**Investor information**

**Share information**

Philips Group

**Share information at year-end 2025**

---

| | |
|:---|:---|
| Share listings | Euronext Amsterdam, New York <br>Stock Exchange<br>|
| 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, <br>STOXX Europe 600 Healthcare,<br>MSCI Europe Health Care<br>|

---

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** <sup>1</sup>

---

| | |
|:---|:---|
|  | **2025** |
| United States | 42% |
| Netherlands | 19% |
| United Kingdom | 10% |
| Switzerland | 3% |
| Rest of Europe | 7% |
| Retail and Other ² | 19% |

---

<sup>1</sup>Approximate split based on shareholders identified.

<sup>2</sup>No geography identified for Retail; Other represents other smaller geographies

and unidentified shareholders.

Philips Group

**Shareholders by style at year-end** <sup>1</sup>

---

| | |
|:---|:---|
|  | **2025** |
| Value | 53% |
| Index | 13% |
| GARP | 11% |
| Growth | 6% |
| Retail | 9% |
| Other | 7% |
| Hedge Fund | 1% |

---

<sup>1</sup>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.

192<br>

**Investor contact**

**Shareholder services**

Shareholders and other interested parties can make inquiries about the

Annual Report 2025 to:

Royal Philips

Annual Report Office

Philips Center

Prinses Irenestraat 59

1077 WV Amsterdam, The Netherlands

Email: annual.report@philips.com

The Annual Report on Form 20-F is filed electronically with the US

Securities and Exchange Commission.

**Holders of shares listed on Euronext Amsterdam**

Communications concerning share transfers, share certificates,

dividends and change of address should be directed to:

ABN AMRO Bank N.V.

Department Equity Capital Markets/Corporate Broking and Issuer

Services HQ7212

Gustav Mahlerlaan 10

1082 PP Amsterdam, The Netherlands

Telephone: +31-20-628-6070

Email: corporate.broking@nl.abnamro.com

**Holders of New York Registry shares**

Communications concerning share transfers, share certificates,

dividends and change of address should be directed to:

Deutsche Bank Trust Company Americas

C/O Equiniti Trust Company LLC

Peck Slip Station, PO Box 2050, New York, NY 10272-2050

Telephone (toll-free US): +1-866-706-8374

Telephone (outside of US): +1-718-921-8137

Website: www.equiniti.com/us/ast-access

Email: adr@equiniti.com

**International direct investment program**

Royal Philips offers a Dividend Reinvestment and Direct Stock Purchase

Plan designed for the US market. This program provides existing

shareholders and interested investors with an economical and

convenient way to purchase and sell Philips New York Registry shares

(listed at the New York Stock Exchange) and to reinvest cash dividends.

Deutsche Bank (the registrar of Philips NY Registry shares) has been

authorized to implement and administer both plans for registered

shareholders of and new investors in Philips NY Registry shares. Philips

does not administer or sponsor the program and assumes no obligation

or liability for the operation of the plan. For further information on

this program and for enrollment forms, contact:

Deutsche Bank Trust Company Americas

C/O Equiniti Trust Company LLC

PO Box 10027, Newark, NJ 07101

Telephone (toll free US): +1-866-706-8374

Telephone (outside of US): +1-718-921-8137

Website: www.equiniti.com/us/ast-access

Email: adr@equiniti.com

**Analysts' coverage**

Royal Philips is covered by approximately 20 analysts. For a list of our

current analysts, please refer to the company's website.

**How to reach us**

**Investor Relations** 

Royal Philips

Philips Center

Prinses Irenestraat 59

1077 WV Amsterdam, The Netherlands

Telephone: +31-20-59 77222

Website: www.philips.com/investor

Email: investor.relations@philips.com

**Sustainability** 

Royal Philips

High Tech Campus 34, 4th floor

5656 AE Eindhoven, The Netherlands

Website: www.philips.com/sustainability

Email: philips.sustainability@philips.com

**Media and press**

Royal Philips

Philips Center

Prinses Irenestraat 59

1077 WV Amsterdam, The Netherlands

Email: group.communications@philips.com

For media contacts please refer to the company's website.

**Registered address**

High Tech Campus 52, 5656 AG Eindhoven, The Netherlands

193<br>

**Definitions and abbreviations**

**Actionable**

In the context of the Respironics recall, actionable registrations are

those that contain the necessary information needed to complete the

remediation and are not awaiting further information, including from

patient registrants.

**Artificial intelligence (AI)**

While recognizing that Philips must abide by definitions of AI set by

applicable regulations in different regions in the world, Philips applies

the AI definition from the Organization for Economic Cooperation and

Development (OECD): "An AI system is a machine-based system that,

for explicit or implicit objectives, infers, from the input it receives, how

to generate outputs such as predictions, content, recommendations, or

decisions that can influence physical or virtual environments. Different

AI systems vary in their levels of autonomy and adaptiveness after

deployment."

**Biodiversity and ecosystem services (BES)**

Biodiversity is the variability among living organisms from all sources

including terrestrial, marine and other aquatic ecosystems and the

ecological complexes of which they are part. This includes diversity

within species, between species and of ecosystems. Ecosystem services

refers to the contributions of ecosystems to the benefits that are used

in economic and other human activity.

**Biome**

Global-scale zones, generally defined by the type of plant life that they

support in response to average rainfall and temperature patterns, e.g.,

tundra, coral reefs or savannas.

**Brominated flame retardants (BFR)**

Brominated flame retardants are a group of chemicals that have an

inhibitory effect on the ignition of combustible organic materials. Of

the commercialized chemical flame retardants, the brominated variety

are most widely used.

**Business/Business Unit**

In the Philips operating model, our three operating segments are made

up of six Businesses, which are in turn comprised of 15 Business Units.

See also the entry under Segment.

**CO2-equivalent**

CO2-equivalent or carbon dioxide equivalent is a quantity that

describes, for a given mixture and amount of greenhouse gas, the

amount of CO2 that would have the same global warming potential

(GWP), when measured over a specified timescale (generally 100 years).

**Circular economy**

A circular economy aims to decouple economic growth from the

consumption of natural resources by optimizing their use, eliminating

waste and pollution, and circulating products and materials for as long

as possible, while giving natural systems the opportunity to regenerate

themselves.

**Circular innovation**

Innovation with the objective to create a product, service or solution

contributing to circular practices.

**Circular materials management**

Circular materials management is a KPI for promoting an increase in

the proportion of waste treated using waste management hierarchy

levels that are circular: prevention, re-use, and recycling. Circular

materials management percentage is the proportion of materials

managed circularly in comparison to the total used materials baseline.

The total used materials baseline is the total of both circular and linear

waste, excluding linear disposal of waste that is required by law.

Circular materials management includes recycling, re-use, prevention

and other recovery (e.g., repurposing). It excludes all linear disposal,

which is classified as waste to energy, incineration and landfill.

**Circular revenues**

Circular revenues are revenues from Philips products, services and

solutions that contribute to circular practices. Circular revenues can be

expressed as percentage of the total Philips revenues.

**Closing the loop / reclaimed equipment**

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.

194<br>

**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 comprises 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<sup>®</sup>, or NPS<sup>®</sup>, 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.

195<br>

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 CO2-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.

196<br>

**Exhibits**

**Index of Exhibits**

---

| | |
|:---|:---|
| [Exhibit 1](https://www.sec.gov/Archives/edgar/data/313216/000031321619000007/phg-exhibit1.htm) | 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)](https://www.sec.gov/Archives/edgar/data/313216/000031321620000011/phg-exhibit2.htm) | Description of securities registered under Section 12 of the Exchange Act<br>(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)<br>|
| [Exhibit 2 (b)](phg-20251231xexx2b.htm) | 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<br>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.<br>|
| [Exhibit 4 (a)](https://www.sec.gov/Archives/edgar/data/313216/000031321620000011/phg-exhibit4a.htm) | 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)](phg-20251231xexx4b.htm) | 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)](phg-20251231xexx4c.htm) | Services contract between the company and M.J. van Ginneken |
| [Exhibit 4 (d)](https://www.sec.gov/Archives/edgar/data/313216/000031321621000008/phg-exhibit4d.htm) | Global Philips Performance Share Plan applicable to the Board of Management of Koninklijke Philips N.V.<br>(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)<br>|
| [Exhibit 4 (e)](https://www.sec.gov/Archives/edgar/data/313216/000119312524137875/d834502dex48.htm) | 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. <br>333-186849) filed with the SEC on May 14, 2024)<br>|
| [Exhibit 4 (f)](phg-20251231xexx4f.htm) | 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](phg-20251231xexx8.htm) | List of Subsidiaries. |
| [Exhibit 11](phg-20251231xexx11.htm) | 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)](phg-20251231xexx12a.htm) | Certification of R.W.O. Jakobs filed pursuant to 17 CFR 240. 13a-14(a). |
| [Exhibit 12 (b)](phg-20251231xexx12b.htm) | Certification of C.M. Hanneman filed pursuant to 17 CFR 240. 13a-14(a). |
| [Exhibit 13 (a)](phg-20251231xexx13a.htm) | Certification of R.W.O. Jakobs furnished pursuant to 17 CFR 240. 13a-14(b). |
| [Exhibit 13 (b)](phg-20251231xexx13b.htm) | Certification of C.M. Hanneman furnished pursuant to 17 CFR 240. 13a-14(b). |
| [Exhibit 15 (a)](phg-20251231xexx15a.htm) | PWC Consent of independent registered public accounting firm. |
| [Exhibit 15 (b)](phg-20251231xexx15b.htm) | EY Consent of independent registered public accounting firm. |
| [Exhibit 97](phg-20251231xexx97.htm) | 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.

197<br>

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

---

## Ex-2.B

**Exhibit 2 (b)**

KONINKLIJKE PHILIPS N.V.<br>AS ISSUER<br>AND<br>CITICORP TRUSTEE COMPANY LIMITED<br>AS TRUSTEE<br>AMENDED AND RESTATED<br>TRUST DEED<br>RELATING TO A<br>€10,000,000,000<br>EURO MEDIUM TERM NOTE PROGRAMME<br>CONTENTS

1. Definitions and Interpretation

2. Amount and Issue of the Notes

3. Covenant to Repay

4. The Notes

5. Covenant to Comply with the Trust Deed

6. Covenants by the Issuer

7. Waivers, Modifications, Substitution and Accession

8. Enforcement

9. Application of Moneys

10. Terms of Appointment

11. Costs and Expenses

12. Appointment and Retirement

13. Notices

14. Law and Jurisdiction

15. Severability

16. Contracts (Rights of Third Parties) Act 1999

17. Counterparts

Schedule 1 Terms and Conditions

Schedule 2 Forms of the Notes

Part A Form of Temporary Global Note

Part B Form of Permanent Global Note

Part C Form of Definitive Bearer Note

Part D Form of Coupon

Part E Form of Talon

Schedule 3 Provisions for Meetings of Note holders

Schedule 4 Form of Authorised Officers' Certificate<br>**THIS AMENDED AND RESTATED TRUST DEED** is made on 8 March 2024

**BETWEEN**:

(1) **KONINKLIJKE PHILIPS N.V.** (the "**Issuer**"); and

(2) **CITICORP TRUSTEE COMPANY LIMITED** (the "**Trustee**", which expression includes, where the context admits, all persons for the time being the trustee or trustees of this Trust Deed).

**WHEREAS**

(A) The Issuer has established a programme (the "**Programme**") pursuant to which the Issuer may issue notes (the "**Notes**") from time to time as set out herein. Notes up to a maximum principal amount from time to time outstanding of €10,000,000,000 (subject to increase as provided in the Dealer Agreement (as defined below)) (the "**Authorised Amount**") may be issued pursuant to the Programme.

(B) In connection with the Programme, the Issuer and the Trustee entered into a trust deed dated 9 March 2020, as most recently amended and restated on 8 March 2022 (the "**Original Trust Deed**").

------

(C) The parties to this Trust Deed have agreed to make certain modifications to the Original Trust Deed.

(D) The Trustee has agreed to act as trustee under this Trust Deed on the following terms and conditions.

**NOW THIS TRUST DEED WITNESSES AND IT IS HEREBY DECLARED** as follows:

1. **DEFINITIONS AND INTERPRETATION**

1.1 **Definitions**

In this Trust Deed the following expressions have the following meanings:

"**Agency Agreement**" means, in relation to the Notes of any Series, the agreement appointing the initial Paying Agents in relation to such Series and any other agreement for the time being in force appointing Successor paying agents in relation to such Series, together with any agreement for the time being in force amending or modifying with the prior written approval of the Trustee any of the aforesaid agreements in relation to such Series;

"**Agents**" means, in relation to the Notes of any Series, the Principal Paying Agent, the other Paying Agents, the Calculation Agent or any of them;

"**Appointee**" means any delegate, agent, nominee or custodian appointed pursuant to the provisions of this Trust Deed;

"**Auditors**" means the independent auditors for the time being of the Issuer or, in the event of their being unable or unwilling promptly to carry out any action requested of them pursuant to the provisions of this Trust Deed, such other firm of accountants whose identity is approved in writing by the Trustee for the purposes of this Trust Deed;

"**Authorised Signatory**" means any Director of the Issuer or any other person or persons notified to the Trustee by any such Director as being an Authorised Signatory pursuant to Clause 6.19 (*Authorised Signatories*);

"**Authority**" means any competent regulatory, prosecuting, tax or governmental authority in any jurisdiction, domestic or foreign;

"**Basic Terms Modification**" means any proposal to:

(a) change the date of maturity of the Notes or any date for payment of interest thereon, reduce or cancel the amount of principal or interest payable or, where applicable, modify the method of calculating the amount payable (including interest) *provided, however* that, for the avoidance of doubt, any Benchmark Amendment or Benchmark Replacement Conforming Change and the selection of a Successor Rate, an Alternative Reference Rate or an Adjustment Spread (in each case in accordance with the provisions of Condition 5 (*Interest*) shall be excluded;

(b) alter the currency in which payments under the Notes and Coupons are to be made;

(c) effect the exchange, conversion or substitution of the Notes for, or the conversion of the Notes into, shares, bonds or other obligations or securities of the Issuer or any other person or body corporate formed or to be formed (other than as permitted under Clause 7.3 (*Substitution*) of this Trust Deed);

(d) alter the quorum or majority required to pass an Extraordinary Resolution; and

(e) alter the definition of a Basic Terms Modification or the proviso to paragraph 5 of Schedule 3.

"**CGN Global Note**" means a CGN Permanent Global Note or a CGN Temporary Global Note.

"**CGN Permanent Global Note**" means a Permanent Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is not applicable;

"**CGN Temporary Global Note**" means a Temporary Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is not applicable;

"**Clearstream, Luxembourg**" means Clearstream Banking S.A.;

"**Common Safekeeper**" means an ICSD in its capacity as common safekeeper or a person nominated by the ICSDs to perform the role of common safekeeper;

"**Conditions**" means the terms and conditions to be endorsed on, or incorporated by reference in, the Notes of any Series, in the form set out in Schedule 1 or in such other form, having regard to the terms of the Notes of the relevant Series, as may be agreed between the Issuer, the Principal Paying Agent, the Trustee and the relevant Dealer(s) as completed by the Final Terms applicable to such Series, as any of the same may from time to time be modified in accordance with this Trust Deed and any reference in this Trust Deed to a particular numbered Condition shall be construed in relation to the Notes of such Series accordingly;

"**Contractual Currency**" means, in relation to any payment obligation of any Note, the currency in which that payment obligation is expressed and, in relation to Clause

11.1 (*Remuneration*), pounds sterling or such other currency as may be agreed between the Issuer and the Trustee from time to time;

"**Couponholder**" means the holder of a Coupon;

"**Coupons**" means any bearer interest coupons in or substantially in the form set out in Schedule 2Part D of Schedule 2 appertaining to the Notes of any Series and for the time being outstanding or, as the context may require, a specific number thereof and includes any replacement Coupons issued pursuant to Condition 12 (*Replacement of Notes and Coupons*) and, where the context so permits, the Talons appertaining to the Notes of such Series;

"**Director**" means any director of the Issuer from time to time;

------

"**Dealer Agreement**" means the agreement between the Issuer and the Dealers named therein concerning the purchase of Notes to be issued pursuant to the Programme as amended from time to time or any restatement thereof for the time being in force;

"**Dealers**" means any person appointed as a Dealer by the Dealer Agreement and any other person which the Issuer may appoint as a Dealer and notice of whose appointment has been given to the Principal Paying Agent and the Trustee by the Issuer in accordance with the provisions of the Dealer Agreement but excluding any entity whose appointment has been terminated in accordance with the terms of the Dealer Agreement and notice of whose termination has been given to the Principal Paying Agent and the Trustee by the Issuer in accordance with the provisions of the Dealer Agreement and references to the "**relevant Dealer(s)**" mean, in relation to any Note, the Dealer(s) with whom the Issuer has agreed the issue and purchase of such Note;

"**Electronic Consent**" has the meaning set out in Schedule 3;

"**euro**", "**€**" and "**EUR**" means the single currency introduced at the start of the third stage of European economic and monetary union and as defined in Article 2 of Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro, as amended;

"**Euroclear**" means Euroclear Bank SA/NV;

"**Event of Default**" means any one of the circumstances described in Condition 10 (*Events of Default*), but in the case of any of the events described in paragraphs (b) to

(g) (other than (d)) only if such event is, pursuant to the provisions of Condition 10 (*Events of Default*) certified by the Trustee to be materially prejudicial to the interests of the Noteholders.;

"**Extraordinary Resolution**" has the meaning set out in Schedule 3;

"**Final Terms**" has the meaning ascribed to it in the Dealer Agreement;

"**Fixed Rate Note**" means a Note on which interest is calculated at a fixed rate payable in arrear on a fixed date or dates in each year and on redemption or on such other dates as may be agreed between the Issuer and the relevant Dealer(s) (as indicated in the relevant Final Terms);

"**Floating Rate Note**" means a Note on which interest is calculated at a floating rate payable on an Interest Payment Date (as defined in the Conditions) or Interest Payment Dates as may be agreed between the Issuer and the relevant Dealer(s) and on redemption (as indicated in the relevant Final Terms);

"**Global Note**" means a CGN Global Note or an NGN Global Note; "**ICSDs**" means Clearstream, Luxembourg and Euroclear;

"**Issue Date**" means, in relation to any Note, the date of issue of such Note pursuant to the Dealer Agreement or any other relevant agreement between the Issuer and the relevant Dealer(s);

"**Interest Commencement Date**" means, in relation to any interest-bearing Note, the date specified in the relevant Final Terms from which such Note bears interest or, if no such date is specified therein, the Issue Date;

"**Liabilities**" means any loss, damage, cost, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever (including, without limitation, in respect of taxes, duties, levies, imposts and other charges) including legal fees and expenses properly incurred on a full indemnity basis;

"**London Business Day**" means a day on which commercial banks are open for business in London.

"**Material Subsidiary**" means, at any time, a Subsidiary of the Issuer whose total assets represent at least 5 per cent. of the consolidated total assets of the Group or whose total net sales represent at least 7.5 per cent. of the consolidated net sales of the Group and in relation to which the Issuer has, directly or indirectly, the power to direct its management and policies whether through the ownership of voting capital, by contract or otherwise. For this purpose:

(a) in the case of each Subsidiary, the calculation shall be made by comparing the total assets or, as the case may be, total net sales of that Subsidiary individually (and not on a consolidated basis) to those of the Group;

(b) assets or sales which arise from transactions between members of the Group and which would be eliminated in the consolidated financial statements of the Group shall be excluded;

(c) the total assets or total net sales of a Subsidiary shall be calculated by reference to:

(i) the accounts of that Subsidiary used for the purpose of the latest audited consolidated financial statements of the Group; or

(ii) if the company became a Subsidiary after the end of the financial period to which the latest audited consolidated financial statements of the Group relate, its then latest audited accounts;

(d) the consolidated total assets or consolidated net sales of the Group shall be calculated by reference to the latest audited consolidated financial statements of the Group, adjusted as appropriate to reflect the total assets or total net sales of any company which has become or ceased to be a Subsidiary after the end of the financial period to which those accounts relate; and

(e) where a Material Subsidiary transfers all or substantially all of its assets to the Issuer or another Subsidiary, the transferor (if it is not the Holding Company of the transferee) shall cease to be a Material Subsidiary and (if the transferee is a Subsidiary but not a Material Subsidiary) the transferee shall become a Material Subsidiary.

For the purposes of this definition of Material Subsidiary, the term "**Group**" means the Issuer and its Subsidiaries, provided, however, that any reference to the financial statements of the Group shall be to the financial statements of the Issuer and its present and future subsidiaries, direct and indirect, within the meaning of Article 2:24 a of the Dutch Civil Code (*Burgerlijk Wetboek*); the term "Holding Company" of any other person means a company in respect of which that other person is a Subsidiary.

------

"**NGN Global Note**" means an NGN Permanent Global Note or an NGN Temporary Global Note.

"**NGN Permanent Global Note**" means a Permanent Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is applicable;

"**NGN Temporary Global Note**" means a Temporary Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is applicable;

"**Noteholders**" means the several persons who are for the time being bearers of Notes save that, in respect of the Notes of any Series, for so long as such Notes or any part thereof are represented by a Global Note deposited with a common depositary (in the case of a CGN Global Note) or common safekeeper (in the case of a NGN Global Note) for Euroclear and Clearstream, Luxembourg or, in respect of Notes in definitive form held in an account with Euroclear or Clearstream, Luxembourg, each person who is for the time being shown in the records of Euroclear or Clearstream, Luxembourg (other than Clearstream, Luxembourg, if Clearstream, Luxembourg shall be an accountholder of Euroclear and Euroclear, if Euroclear shall be an accountholder of Clearstream, Luxembourg) as the holder of a particular principal amount of the Notes of such Series (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the principal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer, the Paying Agents and the Trustee as the holder of such principal amount of such Notes for all purposes other than with respect to the payment of principal or interest on such principal amount of such Notes, for which purpose the bearer of the relevant Global Note shall be treated by the Issuer, any Paying Agent and the Trustee as the holder of such principal amount of such Notes in accordance with and subject to the terms of the relevant Global Note and the expressions "**holder**" and "**holder of Notes**" and related expressions shall be construed accordingly;

"**Notes**" means the bearer notes of each Series constituted in relation to or by this Trust Deed which shall be in or substantially in the form set out in Schedule 2 and, for the time being outstanding or, as the case may be, a specific number thereof and includes any replacement Notes of such Series issued pursuant to Condition 12 (*Replacement of Notes and Coupons*) and (except for the purposes of Clause 4.1 (*Global Notes*) and 4.3 (*Signature*)) each Global Note in respect of such Series for so long as it has not been exchanged in accordance with the terms thereof;

"**outstanding**" means, in relation to the Notes of any Series, all the Notes of such Series other than:

(a) those which have been redeemed in accordance with this Trust Deed;

(b) those in respect of which the date for redemption in accordance with the Conditions has occurred and for which the redemption moneys (including all interest accrued thereon to the date for such redemption) have been duly paid to the Trustee or the Principal Paying Agent in the manner provided for in the Agency Agreement (and, where appropriate, notice to that effect has been given to the Noteholders in accordance with Condition 13 (*Notices*)) and remain available for payment in accordance with the Conditions;

(c) those which have been purchased and surrendered for cancellation as provided in Condition 7 (*Redemption and Purchase*);

(d) those which have become void under Condition 9 (*Prescription*);

(e) those mutilated or defaced Notes which have been surrendered or cancelled and in respect of which replacement Notes have been issued pursuant to Condition 12 (*Replacement of Notes and Coupons*);

(f) (for the purpose only of ascertaining the aggregate principal amount of Notes outstanding and without prejudice to the status for any other purpose of the relevant Notes) those Notes which are alleged to have been lost, stolen or destroyed and in respect of which replacements have been issued pursuant to Condition 12 (*Replacement of Notes and Coupons*);

**provided that** for each of the following purposes, namely:

(i) the right to attend and vote at any meeting of the holders of Notes of any Series and any direction or request by the holders of the Notes of any Series;

(ii) the determination of how many and which Notes of any Series are for the time being outstanding for the purposes of Clauses 8.1 (*Legal Proceedings*) and 7.1 (*Waiver*), Conditions 10 (*Events of Default*) and 14 (*Meetings of Noteholders, Modification, Waiver, Authorisation and Determination, Substitution*) and Schedule 3; and

(iii) any discretion, power or authority, whether contained in this Trust Deed or provided by law, which the Trustee is required to exercise in or by reference to the interests of the holders of the Notes of any Series or any of them;

those Notes (if any) of the relevant Series which are for the time being held by any person (including but not limited to the Issuer) for the benefit of the Issuer shall (unless and until ceasing to be so held) be deemed not to remain outstanding;

"**Paying Agents**" means, in relation to the Notes of any Series, the several institutions (including, where the context permits, the Principal Paying Agent) at their respective specified offices initially appointed pursuant to the relative Agency Agreement and/or, if applicable, any Successor paying agents in relation to such Series at their respective specified offices;

"**Permanent Global Note**" means, in relation to any Series, a Global Note to be issued pursuant to Clause 4.1 (*Global Notes*) in the form or substantially in the form set out in Part B of Schedule 2, with such modifications (if any) as may be agreed between the Issuer, the Paying Agent, the Trustee and the relevant Dealer(s);

"**Potential Event of Default**" means an event or circumstance which could, with the giving of notice, lapse of time, the issuing of a certificate and/or fulfilment of any other requirement provided for in Condition 10 (*Events of Default*), become an Event of Default;

"**Principal Paying Agent**" means, in relation to the Notes of any Series, the institution at its Specified Office initially appointed as issuing and principal paying agent in relation to such Series pursuant to the relative Agency Agreement or, if applicable, any Successor principal paying agent in relation to such Series at its Specified Office;

------

"**repay**" includes "**redeem**" and *vice versa* and "**repaid**", "**repayable**", "**repayment**", "**redeemed**", "**redeemable**" and "**redemption**" shall be construed accordingly;

"**Series**" means a Tranche of Notes together with any further Tranche or Tranches of Notes expressed to be consolidated and form a single series with the Notes of the original Tranche and the terms of which are identical (save for the Issue Date and/or the Interest Commencement Date but including as to whether or not the Notes are listed);

"**specified office**" means, in relation to any Agent in respect of any Series, either the office identified with its name in the Conditions of such Series or any other office notified to any relevant parties pursuant to the Agency Agreement;

"**Subsidiary**" has the meaning set out in Condition 1.1 (*Interpretation – Definitions*);

"**Successor**" means in relation to the Paying Agents, such other or further person as may from time to time be appointed pursuant to the Agency Agreement as a Paying Agent, notice of whose appointment has been given to the Noteholders pursuant to Clause 6.13 (*Notification of change in Principal Paying Agent*) in accordance with Condition 13 (*Notices*).

"**Talonholder**" means the holder of a Talon;

"**Talons**" means any bearer talons appertaining to the Notes of any Series or, as the context may require, a specific number thereof and includes any replacement Talons issued pursuant to Condition 12 (*Replacement of Notes and Coupons*);

"**Temporary Global Note**" means, in relation to any Series, a Global Note to be issued pursuant to Clause 4.1 (*Global Notes*) in the form or substantially in the form set out in Part A of Schedule 2, with such modifications (if any) as may be agreed between the Issuer, the Paying Agent, the Trustee and the relevant Dealer(s);

"**the Stock Exchange**" means, in relation to the Notes of any relevant series, the stock exchange or exchanges (if any) on which such Notes are for the time being quoted or listed;

"**this Trust Deed**" means this Trust Deed and the Schedules (as from time to time modified in accordance with the provisions contained herein) and (unless the context requires otherwise) includes any deed or other document executed in accordance with the provisions hereof (as from time to time modified as aforesaid) and expressed to be supplemental hereto;

"**Tranche**" means all Notes of the same Series with the same Issue Date and Interest Commencement Date;

"**Trustee Acts**" means both the Trustee Act 1925 and the Trustee Act 2000 of England and Wales;

"**VAT**" means any value added tax, goods and services tax, sales or use tax or similar tax, including, without limitation, such tax as may be chargeable under or pursuant to Council Directive 2006/112/EC.

"**Written Resolution**" has the meaning set out in Schedule 3; and

"**Zero Coupon Note**" means a Note that is in bearer form and that constitutes a claim for a fixed sum against the Issuer and on which interest does not become due during their tenor or other Notes which qualify as savings certificates as defined in the Dutch Savings Certificates Act (*Wet inzake spaarbewijzen*).

1.2 **Principles of interpretation**

In this Trust Deed:

1.2.1 *Statutory modification*: a provision of any statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under such modification or re-enactment;

1.2.2 *Additional amounts*: all references in this Trust Deed to principal and/or interest in respect of the Notes or to any moneys payable by the Issuer under this Trust Deed shall be deemed to include, in the case of amounts of principal payable, a reference to any specific redemption price (as described in the Conditions) and, in any case, a reference to any additional amounts which may be payable under Condition 8 (*Taxation*) or, if applicable, under any undertaking or covenant given pursuant to Clause 3.1 (*Covenant to repay and to pay interest*);

1.2.3 *Relevant Currency:* "relevant currency" shall be construed as a reference to the currency in which payments in respect of the Notes and/or Coupons of the relevant Series are to be made as indicated in the relevant Final Terms;

1.2.4 *Enforcement of rights*: an action, remedy or method of judicial proceedings for the enforcement of rights of creditors shall include, in respect of any jurisdiction other than England, references to such action, remedy or method of judicial proceedings for the enforcement of rights of creditors available or appropriate in such jurisdictions as shall most nearly approximate thereto;

1.2.5 *Clauses and Schedules*: a Schedule or a Clause, sub-clause, paragraph or sub- paragraph is, unless otherwise stated, to a Schedule hereto or a clause, sub- clause, paragraph or sub-paragraph hereof respectively;

1.2.6 *Clearing systems*: Euroclear and/or Clearstream, Luxembourg shall, wherever the context so admits, be deemed to include references to any additional or alternative clearing system approved by the Issuer and the Trustee;

1.2.7 *Trust corporation:* a trust corporation denotes a corporation entitled by rules made under the Public Trustee Act 1906 to act as a custodian trustee or entitled pursuant to any other legislation applicable to a trustee in any jurisdiction other than England to act as trustee and carry on trust business under the laws of the country of its incorporation;

1.2.8 *Coupons*: in the case of any Notes which are Zero Coupon Notes references to Coupons and Couponholders in this Trust Deed are not applicable to such Notes;

------

1.2.9 *Interpretation:* words denoting individuals shall include companies, corporations and partnerships, words importing the singular number shall include the plural and, in each case, *vice versa*;

1.2.10 *Records*: any reference to the records of an ICSD shall be to the records that each of the ICSDs holds for its customers which reflect the amount of such customers' interests in the Notes (but excluding any interest in any Notes of one ICSD shown in the records of another ICSD).

1.3 **The Conditions**

In this Trust Deed, unless the context requires or the same are otherwise defined, words and expressions defined in the Conditions and not otherwise defined herein shall have the same meaning in this Trust Deed.

1.4 **Headings**

The headings and sub-headings are for ease of reference only and shall not affect the construction of this Trust Deed.

1.5 **The Schedules**

The Schedules are part of this Trust Deed and shall have effect accordingly.

1.6 **Amendment and Restatement**

Save in relation to all Series of Notes issued during the period up to and including the day last preceding the date of this Trust Deed and any Notes issued on or after the date of this Trust Deed so as to be consolidated and form a single Series with the Notes of any Series issued up to and including such last preceding day, with effect on and from the date of this Trust Deed.

(a) the Original Trust Deed is amended and restated on the terms of this Trust Deed; and

(b) the provisions of the Original Trust Deed insofar as the same still have effect and shall cease to have effect and in lieu thereof the provisions of this Trust Deed shall have effect.

2. AMOUNT AND ISSUE OF THE NOTES

2.1 **Amount of the Notes**

The Notes will be issued in Series in an aggregate principal amount from time to time outstanding not exceeding the Authorised Amount and for the purpose of determining such aggregate principal amount clause 14 (*Increase in Authorised Amount*) of the Dealer Agreement shall apply.

2.2 **Prior to each Issue Date**

By not later than 3.00 p.m. (London time) on the London Business Day (which for this purpose shall be a day on which commercial banks are open for business in London) preceding each proposed Issue Date, the Issuer shall:

(a) deliver or cause to be delivered to the Trustee a copy of the relevant Final Terms; and

(b) notify the Trustee in writing without delay of the Issue Date and the principal amount of the Notes of the relevant Tranche.

2.3 **Constitution of Notes**

Upon the issue of the Temporary Global Note, initially representing the Notes of any Tranche, such Notes shall become constituted by this Trust Deed without further formality.

2.4 **Further legal opinions**

Before the first issue of Notes occurring after each anniversary of this Trust Deed, on each occasion as the Trustee so requests (on the basis that the Trustee considers it reasonably necessary in view of a change (or proposed change) in applicable law affecting the Issuer or in English law affecting the Issuer, this Trust Deed or the Agency Agreement, the Issuer will procure at its cost that further legal opinions in such form and with such content as the Trustee may require from the legal advisers specified in the Dealer Agreement or in the relevant jurisdiction approved by the Trustee are delivered to the Trustee.

3. **CONVENANT TO REPAY**

3.1 **Covenant to repay and to pay interest**

The Issuer covenants with the Trustee that it shall, as and when the Notes of any Series or any of them become due to be redeemed or any principal on the Notes of any Series or any of them becomes due to be repaid in accordance with the Conditions, unconditionally pay or procure to be paid to or to the order of the Trustee in immediately available freely transferable funds in the relevant currency the principal amount of the Notes of such Series or any of them becoming due for payment on that date and shall (subject to the provisions of the Conditions and except in the case of Zero Coupon Notes), until all such payments (both before and after judgment or other order of any court of competent jurisdiction) are duly made, unconditionally pay or procure to be paid to or to the order of the Trustee as aforesaid on the dates provided for in the Conditions interest on the principal amount (or such other amount as may be specified in the Final Terms) of the Notes or any of them of such Series outstanding from time to time as set out in the Conditions (subject to Clause 3.3 (*Interest on Floating Rate Notes following Event of Default*)), **provided that**:

3.1.1 every payment of principal or interest in respect of such Notes or any of them made to or to the order of the Principal Paying Agent in the manner provided in the Agency Agreement shall satisfy, to the extent of such payment, the relevant covenant by the Issuer contained in this Clause 3 except to the extent that there is default in the subsequent payment thereof to the relevant Noteholders or Couponholders (as the case may be) in accordance with the Conditions;

------

3.1.2 if any payment of principal or interest in respect of such Notes or any of them is made after the due date, payment shall be deemed not to have been made until either the full amount is paid to the relevant Noteholders or Couponholders (as the case may be) or, if earlier, the seventh day after notice has been given to the relevant Noteholders in accordance with the Conditions that the full amount has been received by the Principal Paying Agent or the Trustee.

3.1.3 in any case where payment of the whole or any part of the principal amount due in respect of any Note is improperly withheld or refused upon due presentation of the relevant Note, interest shall accrue on the whole or such part of such principal amount (except in the case of Zero Coupon Notes, to which the provision of Condition 7 (*Redemption and Purchase*) shall apply) from the date of such withholding or refusal until the date either on which such principal amount due is paid to the relevant Noteholders or, if earlier, the seventh day after notice has been given to the relevant Noteholders in accordance with the Conditions that the full amount payable in respect of the said principal amount is available for collection by the relevant Noteholders **provided that** on further due presentation of the relevant Note such payment is in fact made.

The Trustee will hold the benefit of this covenant and the covenant in Clause 5 (*Covenant to comply with the Trust Deed*) on trust for the Noteholders in accordance with this Trust Deed

3.2 **Following an Event of Default**

At any time after any Event of Default or Potential Event of Default shall have occurred, the Trustee may:

3.2.1 by notice in writing to the Issuer, the Principal Paying Agent and the other Agents require the Principal Paying Agent and the other Agents or any of them:

(a) to act thereafter, until otherwise instructed by the Trustee, as Agents of the Trustee under the provisions of this Trust Deed on the terms provided in the Agency Agreement (with consequential amendments as necessary and save that the Trustee's liability under any provisions thereof for the indemnification, remuneration and payment of out-of- pocket expenses of the Agents shall be limited to amounts for the time being held by the Trustee on the trusts of this Trust Deed in relation to the Notes on the terms of this Trust Deed and available to the Trustee for such purpose) and thereafter to hold all Notes and Coupons and all sums, documents and records held by them in respect of Notes and Coupons on behalf of the Trustee; and/or

(b) to deliver up all Notes and Coupons and all sums, documents and records held by them in respect of Notes and Coupons to the Trustee or as the Trustee shall direct in such notice **provided that** such notice shall be deemed not to apply to any document or records which the relevant Agent is obliged not to release by any law or regulation; and

3.2.2 by notice in writing to the Issuer require the Issuer to make all subsequent payments in respect of Notes and Coupons to or to the order of the Trustee and, with effect from the issue of any such notice until such notice is withdrawn, proviso 3.1.1 to Clause 3.1 (*Covenant to repay and to pay interest*) and (so far as it concerns payments by the Issuer) Clause 9.4 (*Payment to Noteholders and Couponholders*) shall cease to have effect.

3.3 **Interest on Floating Rate Notes following Event of Default**

If Floating Rate Notes become immediately due and repayable under Condition 10 (*Events of Default*) the rate and/or amount of interest payable in respect of them will be calculated by the Principal Paying Agent at the same intervals as if such Notes had not become due and repayable, the first of which will commence on the expiry of the Interest Period (as defined in the Conditions) during which the Notes become so due and repayable in accordance with Condition 5 (*Interest*) (with consequential amendments as necessary) except that the rates of interest need not be published.

3.4 **Currency of payments**

All payments in respect of, under and in connection with this Trust Deed and the Notes to the relevant Noteholders and Couponholders shall be made in the relevant currency as required by the Conditions.

3.5 **Separate Series**

The Notes of each Series shall form a separate Series of Notes and accordingly, unless for any purpose the Trustee in its absolute discretion shall otherwise determine, all the provisions of this Trust Deed shall apply *mutatis mutandis* separately and independently to the Notes of each Series and in such Clauses and Schedule the expressions "**Notes**", "**Noteholders**", "**Coupons**", "**Couponholders**", "**Talons**" and "**Talonholders**" shall be construed accordingly.

4. **THE NOTES**

4. 1 **Global Notes**

4.1.1 The Notes of each Tranche will initially be together represented by a Temporary Global Note. Each Temporary Global Note shall (save as may be specified in the relevant Final Terms) be exchangeable, in accordance with its terms, for interests in a Permanent Global Note or Notes in definitive form.

4.1.2 Each Permanent Global Note shall be exchangeable, in accordance with its terms, for Notes in definitive form.

4.1.3 All Global Notes shall be prepared, completed and delivered to a common depositary (in the case of a CGN Global Note) for Clearstream, Luxembourg and Euroclear or, as the case may be, a Common Safekeeper (in the case of an NGN Global Note), in accordance with the Dealer Agreement or to another appropriate depositary in accordance with any other agreement between the Issuer and the relevant Dealer(s) and, in each case, in accordance with the Agency Agreement. The relevant Final Terms shall be annexed to each Global Note.

4. 2 **Notes in definitive form**

------

Notes in definitive form will be security printed in accordance with applicable legal and stock exchange requirements substantially in the form set out in Part C of Schedule 2. Any Coupons and Talons will also be security printed in accordance with the same requirements and will be attached to the Notes in definitive form at the time of issue. Notes in definitive form will be endorsed with the Conditions.

4. 3 **Signature**

The Global Notes and the Notes in definitive form will be signed manually or in facsimile by an Authorised Signatory of the Issuer and will be authenticated manually by or on behalf of the Principal Paying Agent and, if applicable, will be effectuated manually by or on behalf of the Common Safekeeper. The Issuer may use the facsimile signature of a person who at the date such signature was originally produced was an Authorised Signatory even if at the time of issue of any Global Note or Note in definitive form such person no longer holds that office. Global Notes and Notes in definitive form so executed and duly authenticated and, if applicable, duly effectuated will be binding and valid obligations of the Issuer.

4.4 **Entitlement to treat holder as owner**

Each of the Issuer, the Trustee and any Agent may deem and treat the holder of any Note or Coupon or of a particular principal amount of the Notes as the absolute owner of such Note or principal amount, as the case may be, free of any equity, set- off or counterclaim on the part of the Issuer against the original or any intermediate holder of such Note or Coupon or principal amount (whether or not such Note or Coupon or principal amount shall be overdue and notwithstanding any notation of ownership or other writing thereon or any notice of previous loss or theft of such Note or Coupon) for all purposes and, except as ordered by a court of competent jurisdiction or as required by applicable law, the Issuer, the Trustee and the Paying Agent shall not be affected by any notice to the contrary. All payments made to any such holder shall be valid and, to the extent of the sums so paid, effective to satisfy and discharge the liability for the moneys payable in respect of such Note or principal amount, as the case may be.

5 **COVENANT TO COMPLY WITH THE TRUST DEED**

5.1 **Covenant to comply with the Trust Deed**

The Issuer covenants with the Trustee to comply with those provisions of this Trust Deed and the Conditions which are expressed to be binding on it and to perform and observe the same. The Notes and the Coupons are subject to the provisions contained in this Trust Deed, all of which shall be binding upon the Issuer, the Noteholders, the Couponholders and all persons claiming through or under them respectively.

5.1 Trustee may enforce Conditions

The Trustee shall itself be entitled to enforce the obligations of the Issuer under the Notes and the Conditions as if the same were set out and contained in this Trust Deed which shall be read and construed as one document with the Notes.

5.2 Covenant held upon Trust

The Trustee shall hold the benefit of the covenant of this Clause 5 upon trust for the Noteholders and the Couponholders according to their respective interests.

6. COVENANTS BY THE ISSUER

The Issuer covenants with the Trustee that, so long as any of the Notes remain outstanding, it will:

6.1 **Information**

So far as permitted by applicable law, give or procure to be given to the Trustee such opinions, certificates, information and evidence as it shall reasonably require and in such form as it shall reasonably require (including without limitation the procurement by the Issuer of all such certificates called for by the Trustee pursuant to Clause 10.1(c) for the purpose of the discharge or exercise of the duties, trusts, powers, authorities and discretions vested in it under this Trust Deed or by operation of law.

6.2 **Books of account**

At all times keep proper books of account as may be necessary to comply with all applicable laws as so to enable the financial statements of the Issuer to be prepared and, at any time after the occurrence of an Event of Default or a Potential Event of Default or if the Trustee has grounds to believe that an Event of Default or a Potential Event of Default has occurred, allow so far as permitted by applicable law the Trustee and any person appointed by the Trustee to whom the Issuer shall have no reasonable objection free access to such books of account at all reasonable times during normal business hours.

6.3 **Financial and other information**

Send to the Trustee two copies in English of its annual audited accounts and every document issued or sent to holders of debt securities (including the Noteholders), in each case as soon as practicable after the issue or publication thereof.

6.4 **List of Material Subsidiaries**

Give to the Trustee (i) on the date hereof and (ii) at the same time as sending to it the certificate referred to in Clause 6.7 (*Certificate of compliance*), a certificate signed by two Authorised Signatories of the Issuer addressed to the Trustee (with a form and content satisfactory to the Trustee) listing those Subsidiaries of the Issuer which as at the date of such certificate are Material Subsidiaries.

6.5 **Changes in list of Material Subsidiaries**

Give to the Trustee, as soon as reasonably practicable after the completion of the acquisition or disposal of any company which thereby becomes or ceases to be a Material Subsidiary or after any transfer is made to any Subsidiary which thereby becomes a Material Subsidiary, a certificate signed by two Authorised Signatories of the Issuer to such effect.

------

6.6 **Events of Default**

Forthwith give notice in writing to the Trustee upon becoming aware of any Event of Default or any Potential Event of Default without waiting for the Trustee to take any further action.

6.7 **Certificate of compliance**

Give to the Trustee (i) within 14 days after demand by the Trustee therefor and (ii) (without the necessity for any such demand) within 14 days after the publication of its audited accounts in respect of each financial year commencing with the financial year ending 31 December 2024 and in any event not later than 180 days after the end of each such financial year a certificate in or substantially in the form set out in Schedule 4 signed by two Authorised Signatories of the Issuer to the effect that as at the date which is not earlier than 7 days prior to the date of such certificate (the "**certification date**") there did not exist and had not existed since the certification date of the previous certificate (or in the case of the first such certificate the date hereof) any Event of Default or any Potential Event of Default (or if such exists or existed specifying the same) and that during the period from and including the certification date of the last such certificate (or in the case of the first such certificate the date hereof) to and including the certification date of such certificate the Issuer has complied with all its obligations contained in this Trust Deed or (if such is not the case) specifying the respects in which it has not complied.

6.8 **Further assurance**

So far as permitted by applicable law, at all times execute and do all such further documents, acts and things as may be necessary at any time or times in the opinion of the Trustee to give effect to this Trust Deed.

6.9 **Maintenance of Principal Paying Agent**

At all times maintain a Principal Paying Agent in accordance with the Conditions.

6.10 **Notification of non-payment**

Use all reasonable endeavours to procure the Principal Paying Agent to notify the Trustee forthwith in the event that the Principal Paying Agent does not, on or before the due date for any payment in respect of the Notes or any of them or any of the Coupons, receive unconditionally pursuant to the Agency Agreement payment of the full amount in the requisite currency of the moneys payable on such due date on all such Notes or Coupons as the case may be.

6.11 **Notification of late payment**

In the event of the unconditional payment to the Principal Paying Agent or the Trustee of any sum due in respect of the Notes or any of them or any of the Coupons being made after the due date for payment thereof forthwith give or procure to be given notice to the Noteholders in accordance with Condition 13 (*Notices*) that such payment has been made.

6.12 **Listing**

If the Notes are admitted to listing, trading and/or quotation, use all reasonable endeavours to maintain the listing of the Notes on the Stock Exchange or, if it is unable to do so having used all reasonable endeavours or if the maintenance of such listing is agreed by the Trustee to be unduly onerous or impractical use all reasonable endeavours to obtain and maintain an admission to listing, trading and/or quotation of the Notes on such other listing authority, stock exchange(s), securities market(s) and/or quotation system(s) (if any) as the Issuer may (with the prior written approval of the Trustee) decide and shall also upon obtaining an admission to listing, trading and/or quotation of the Notes on such other listing authority, stock exchange(s), securities market(s) and/or quotation system(s) (if any) enter into a trust deed supplemental to this Trust Deed to effect such consequential amendments to this Trust Deed as the Trustee may require or as shall be requisite to comply with the requirements of any such listing authority, stock exchange(s), securities market(s) and/or quotation systems (if any) and promptly give notice of the identity of such listing authority, stock exchange(s), securities market(s) and/or quotation systems (if any) to the Noteholders.

6.13 **Notification of change in Principal Paying Agent**

Give notice to the Noteholders in accordance with Condition 13 (*Notices*) of any appointment, resignation or removal of the Principal Paying Agent (other than the appointment of the initial Principal Paying Agent) after having obtained the prior written approval of the Trustee thereto or any change of the Principal Paying Agent's specified office and (except as provided by the Agency Agreement or the Conditions) at least 30 days prior to such event taking effect; provided always that so long as any of the Notes or Coupons remains liable to prescription in the case of the termination of the appointment of the Principal Paying Agent no such termination shall take effect until a new Principal Paying Agent has been appointed on terms previously approved in writing by the Trustee.

6.14 **Notices to Noteholders**

Send or procure to be sent to the Trustee, not less than 7 days prior to which any such notice is to be given, the form of every notice to be given to the Noteholders in accordance with Condition 13 (*Notices*) and obtain the prior written approval of the Trustee to, and promptly give to the Trustee two copies of, the final form of every notice to be given to the Noteholders in accordance with Condition 13 (*Notices*) (such approval, unless so expressed, not to constitute approval for the purposes of Section 21 of the Financial Services and Markets Act 2000 of the United Kingdom (as amended, the "**FSMA**") of a communication within the meaning of Section 21 of the FSMA).

6.15 **Compliance with Agency Agreement**

Comply with and perform all its obligations under the Agency Agreement and use all reasonable endeavours to procure that the Principal Paying Agent complies with and performs all its respective obligations thereunder and any notice given by the Trustee pursuant to Clause 3.2.1 and not make any amendment or modification to the Agency Agreement without the prior written approval of the Trustee.

------

6.16 **Notes held by the Issuer and its Subsidiaries**

In order to enable the Trustee to ascertain the principal amount of Notes of each series for the time being outstanding for any of the purposes referred to in the proviso to the definition of outstanding in Clause 1.1 (*Definitions*), deliver to the Trustee forthwith upon being so requested in writing by the Trustee a certificate in writing signed by two Authorised Signatories of the Issuer setting out the total number and aggregate principal amount of Notes of each series which:

(a) up to and including the date of such certificate have been purchased by the Issuer or any of its Subsidiaries and cancelled; and

(b) are at the date of such certificate held by, for the benefit of, or on behalf of, the Issuer or any of its Subsidiaries.

6.17 **Clearing systems**

Use all reasonable endeavours to procure that Euroclear and/or Clearstream, Luxembourg (as the case may be) issue(s) any certificate or other document requested by the Trustee under Clause 10.1(t) as soon as practicable after such request.

6.18 **Redemption of Notes**

Give notice to the Trustee of the proposed redemption of the Notes not less than the number of days specified in the Conditions prior to the redemption date in respect of such Note or Coupon and duly proceed to redeem such Notes or Coupons accordingly.

6.19 **Authorised Signatories**

Upon the execution hereof and thereafter as soon as reasonably practicable upon any change of the same, deliver to the Trustee (with a copy to the Principal Paying Agent) a list of the Authorised Signatories of the Issuer, together with certified specimen signatures of the same.

6.20 **Notification of amendment to Dealer Agreement**

Notify the Trustee of any amendment to the Dealer Agreement.

6.21 **Benchmark Amendment Certificate**

No later than notifying the Trustee, pursuant to Condition 5 (*Interest*), the Issuer shall deliver to the Trustee and the Agents a certificate (on which the Trustee shall be entitled to rely on without further enquiry or liability) signed by two Authorised Signatories of the Issuer certifying (i) that each change which the Issuer requests the Trustee to make pursuant to Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser)*) is a Benchmark Amendment (as defined in the Conditions) and that the effect of the drafting of such change is solely to implement a Benchmark Amendment (as defined in the Conditions) and/or (ii) that each change which the Issuer requires the Trustee to make pursuant to Condition 5.2(f)(*Interest – Floating Rate Notes referencing SOFR*) is a Benchmark Replacement Conforming Change (as defined in the Conditions) and that the effect of the drafting of such change is solely to implement a Benchmark Replacement Conforming Change (as defined in the Conditions).

7 **WAIVERS, MODIFICATIONS, SUBSTITUTION AND ACCESSION** 

7.1 **Waiver**

The Trustee may, without any consent or sanction of the Noteholders or Couponholders and without prejudice to its rights in respect of any subsequent breach, Event of Default or Potential Event of Default, from time to time and at any time, but only if and in so far as in its opinion the interests of the Noteholders shall not be materially prejudiced thereby, authorise or waive, any breach or proposed breach by the Issuer of any of the covenants or provisions contained in the Conditions, this Trust Deed or the Agency Agreement or determine that any Event of Default or Potential Event of Default shall not be treated as such for the purposes of this Trust Deed; any such authorisation, waiver or determination shall be binding on the Noteholders and the Couponholders and, if, but only if, the Trustee shall so require, the Issuer shall cause such authorisation, waiver or determination to be notified to the Noteholders as soon as practicable thereafter in accordance with the Conditions, **provided that** the Trustee shall not exercise any powers conferred upon it by this Clause 7 in contravention of any express direction by an Extraordinary Resolution or of a request in writing made by the holders of not less than 25 per cent. in aggregate principal amount of the Notes then outstanding (but so that no such direction or request shall affect any authorisation, waiver or determination previously given or made).

7.2 **Modifications**

7.2.1 The Trustee may from time to time and at any time without any consent or sanction of the Noteholders or Couponholders concur with the Issuer in making any modification (a) to the Conditions, the Notes, this Trust Deed or the Agency Agreement (other than any Basic Terms Modification) provided that the Trustee is of the opinion that such modification will not be materially prejudicial to the interests of the Noteholders or (b) to the Conditions, the Notes, this Trust Deed or the Agency Agreement if in the opinion of the Trustee such modification is of a formal, minor or technical nature or made to correct a manifest error or an error which is, in the opinion of the Trustee, proven or which modification is required to comply with a mandatory provision of law. Any such modification shall be binding on the Noteholders and the Couponholders and, unless the Trustee otherwise agrees, the Issuer shall cause such modification to be notified to the Noteholders as soon as practicable thereafter in accordance with the Conditions.

------

7.2.2 In addition, the Trustee shall agree to vary or amend the Conditions, this Trust Deed and/or the Agency Agreement to give effect to certain amendments without any requirement for the consent or approval of the Noteholders, on the basis set out in Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser)*) and Condition 5.2(f) (*Interest – Floating Rate Notes referencing SOFR*) but it shall not be obliged to concur with the Issuer in respect of any Benchmark Amendments and/or Benchmark Replacement Conforming Changes (each as defined in the Conditions) which, in its sole opinion, would have the effect of (i) imposing more onerous obligations upon it or exposing it to any additional duties, responsibilities or liabilities or reducing or amending the protective provisions afforded to the Trustee in this Trust Deed, the Agency Agreement and/or the Conditions or (ii) exposing the Trustee and/or the Agents (as applicable) to any additional liabilities against which it has not been indemnified and/or secured and/or prefunded to its satisfaction.

7.3 **Substitution**

7.3.1 Subject to Clause 7.3.2 below, the Trustee may without the consent of the Noteholders or Couponholders at any time agree with the Issuer to the substitution in place of the Issuer (or of any previous substitute under this Clause 7) as the principal debtor under this Trust Deed in relation to the Notes and Coupons of any Series and under such Notes and Coupons of (a) any Subsidiary of the Issuer or (b) any company which directly or indirectly owns 100 per cent. of the shares or other equity interests (as the case may be) carrying the right to vote in the Issuer in place of the Issuer as issuer and principal debtor under this Trust Deed and the Notes (each substituted entity hereinafter called the "**Substituted Obligor**") if a trust deed is executed or some other written form of undertaking is given by the Substituted Obligor to the Trustee, in form and manner satisfactory to the Trustee, agreeing to be bound by the terms of this Trust Deed, the Notes and the Coupons with any consequential amendments which the Trustee may deem appropriate as fully as if the Substituted Obligor had been named in this Trust Deed and on the Notes and the Coupons as the principal debtor in place of the Issuer (or of any previous substitute under this Clause 7) in the case of a substitution of the Issuer (or any such previous substitute).

7.3.2 The following further conditions shall apply to Clause 7.3.1 above:

(a) the Issuer and the New Company shall comply with such other requirements as the Trustee may direct in order that the substitution is fully effective in the interests of the Noteholders and the Couponholders;

(b) a legal opinion addressed to the Trustee has been provided confirming that (i) the Substituted Obligor has obtained all governmental and regulatory approvals and consents necessary for its assumption of liability as principal debtor in respect of the Notes and the Coupons in place of the Issuer (or such previous substitute as aforesaid) and (ii) such approvals and consents are at the time of substitution in full force and effect;

(c) (without prejudice to the generality of the preceding sub-clauses of this sub-Clause 7.3.2) where the Substituted Obligor is incorporated, domiciled or resident in or is otherwise subject generally to the taxing jurisdiction of any territory or any political sub-division thereof or any authority of or in such territory having power to tax (the "**Substituted Territory**") other than or in addition to the territory, the taxing jurisdiction of which (or to any such authority of or in which) the Issuer is subject generally (the "**Issuer's Territory**"), the Substituted Obligor will (unless the Trustee otherwise agrees) give to the Trustee an undertaking in form and manner satisfactory to the Trustee in terms corresponding to the terms of Condition 8 (*Taxation*) with the substitution for the reference in that Condition to the Issuer's Territory of references to the Substituted Territory and in such event the Trust Deed and Notes and Coupons will be interpreted accordingly; and

(d) any two Authorised Signatories of the Substituted Obligor certify that immediately prior to the assumption of its obligations as Substituted Obligor under this Trust Deed the Substituted Obligor is solvent after taking account of all prospective and contingent liabilities resulting from its becoming the Substituted Obligor, the Trustee need not have regard to the financial condition, profits or prospects of the Substituted Obligor or compare the same with those of the Issuer (or of any previous substitute under this Clause 7.3).

7.3.3 *Release*: Any agreement by the Trustee pursuant to sub-clause 7.3.1 shall, if so expressed, operate to release the Issuer (or any such previous substitute as *aforesaid*) the subject of such release from any or all of its obligations as principal debtor under the Notes and this Trust Deed. Not later than fourteen days after the execution of any such documents as aforesaid and after compliance with the said requirements of the Trustee, the Substituted Obligor shall cause notice thereof to be given to the Noteholders.

*7.3.4 Completion of substitution*: Upon the execution of such documents and compliance with the requirements in this Clause 7.3.4, the Substituted Obligor shall be deemed to be named in this Trust Deed and the Notes and as the principal debtor in place of the Issuer (or of any previous substitute under this Clause 7.3) and this Trust Deed, the Notes and the Coupons shall thereupon be deemed to be amended in such manner as shall be necessary to give effect to the substitution and without prejudice to the generality of the foregoing any references in this Trust Deed, in the Notes and Coupons to the Issuer shall be deemed to be references to the Substituted Obligor.

8. **ENFORCEMENT**

8.1 **Legal proceedings**

The Trustee may at any time, at its discretion and without further notice, institute such proceedings and/or take such action against the Issuer as it may think fit to enforce the provisions of this Trust Deed or the Conditions but it shall not be bound to take any such proceedings or action or to take any other action under or pursuant to this Trust Deed or the Notes unless it shall have been so directed by an Extraordinary Resolution or so requested in writing by the holders of at least one-quarter in principal amount of the outstanding Notes and it shall have been indemnified and/or secured and/or prefunded to its satisfaction against all Liabilities to which it may thereby become liable and or which it may incur by so doing **provided that** the Trustee shall not be held liable for the consequence of taking any such action and may take such action without having regard to the effect of such action on individual Noteholders or Couponholders. Only the Trustee may enforce the provisions of the Notes or this Trust Deed and no Noteholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails to do so within a reasonable time and such failure is continuing.

8.2 **Evidence of default**

------

If the Trustee (or any Noteholder or Couponholder where entitled under this Trust Deed so to do) makes any claim, institutes any legal proceeding or lodges any proof in a winding up or insolvency of the Issuer under this Trust Deed or under the Notes, proof therein that:

8.2.1 as regards any specified Note within a given Series, the Issuer has made default in paying any principal due in respect of such Note shall (unless the contrary be proved) be sufficient evidence that the Issuer has made the like default as regards all other Notes in respect of which a corresponding payment is then due;

8.2.2 as regards any specified Coupon the Issuer has made default in paying any interest due in respect of such Coupon shall (unless the contrary be proved) be sufficient evidence that the Issuer has made the like default as regards all other Coupons in respect of which a corresponding payment is then due; and

8.2.3 as regards any Talon, the Issuer has made default in exchanging such Talon for further Coupons and a further Talon as provided by its terms shall (unless the contrary be proved) be sufficient evidence that the Issuer has made the like default as regards all other Talons which are then available for exchange,

and for the purposes of Clauses 8.2.1 and 8.2.2 a payment shall be a "corresponding" payment notwithstanding that it is due in respect of a Note of a different denomination from that in respect of the above specified Note.

9. **APPLICATION OF MONEYS** 

9.1 **Application of moneys**

All moneys received by the Trustee in respect of the Notes of any Series or amounts payable under this Trust Deed will despite any appropriation of all or part of them by the Issuer (including any moneys which represent principal or interest in respect of Notes or Coupons which have become void under the Conditions) be held by the Trustee on trust to apply them (subject to Clause 9.2 (*Investment of moneys*)):

(a) *firstly*, in payment or satisfaction of those costs, charges, expenses and liabilities incurred by the Trustee in the preparation and execution of the trusts of this Trust Deed (including remuneration of the Trustee);

(b) *secondly*, in or towards payment *pari passu* and rateably of all interest remaining unpaid in respect of the Notes of the relevant Series and all principal moneys due on or in respect of the Notes of that Series **provided that** where the Notes of more than one Series have become so due and payable, such monies shall be applied as between the amounts outstanding in respect of the different Series

(c) *pari passu* and rateably (except where, in the opinion of the Trustee, such monies are paid in respect of a specific Series or several specific Series, in which event such monies shall be applied solely to the amounts outstanding in respect of that Series or those Series respectively); and

(d) *thirdly*, the balance (if any) in payment to the Issuer

9.2 **Investment of moneys**

The Trustee may at its absolute discretion and pending payment invest moneys at any time available for the payment of principal and interest on the Notes of any series in some or one of the investments hereinafter authorised for such periods as it may consider expedient with power from time to time at the like absolute discretion to vary such investments and to accumulate such investments and the resulting interest and other income derived therefrom. The accumulated investments shall be applied under this Clause 9. All interest and other income deriving from such investments shall be applied first in payment or satisfaction of all amounts then due and unpaid under this Trust Deed, including without limitation Clause 9.1 (*Application of Moneys*) to the Trustee and/or any Appointee and otherwise held for the benefit of and paid to the holders of the Notes of such series or the holders of the related Coupons, as the case may be.

9.3 **Authorised Investments**

Any moneys which under this Trust Deed may be invested by the Trustee may be invested in the name or under the control of the Trustee in any of the investments for the time being authorised by English law for the investment by trustees of trust moneys or in any other investments, whether similar to those aforesaid or not, which may be selected by the Trustee or by placing the same on deposit in the name or under the control of the Trustee with such bank or other financial institution as the Trustee may think fit and in such currency as the Trustee in its absolute discretion may determine and The Trustee may at any time vary or transfer any of such investments for or into other such investments or convert any moneys so deposited into any other currency and shall not be responsible for any Liability occasioned by reason of any such investments or such deposit whether by depreciation in value, fluctuation in exchange rates or otherwise.

9.4 **Payment to Noteholders and Couponholders**

The Trustee shall give notice to the Noteholders in accordance with Condition 13 (*Notices*) of the date fixed for any payment under Clause 9.1 (*Application of Moneys*). Any payment to be made in respect of the Notes or Coupons of any Series by the Issuer or the Trustee may be made in the manner provided in the Conditions, the Agency Agreement and this Trust Deed and any payment so made shall be a good discharge to the extent of such payment by the Issuer or the Trustee (as the case may be). Any payment in full of interest made in respect of a Coupon in the manner aforesaid shall extinguish any claim of a Noteholder which may arise directly or indirectly in respect of such interest.

9.5 **Production of Notes and Coupons**

------

Upon any payment under Clause 9.4 (*Payment to Noteholders and Couponholders)* of principal or interest, the Note or Coupon in respect of which such payment is made shall, if the Trustee so requires, be produced to the Trustee or the Paying Agent by or through whom such payment is made and the Trustee shall in respect of a Note or Coupon, (a) in the case of part payment, enface or cause such Paying Agent to enface a memorandum of the amount and date of payment thereon (or, in the case of part payment of an NGN Global Note cause the Principal Paying Agent to procure that the ICSDs make appropriate entries in their records to reflect such payment) or (b) in the case of payment in full, cause such Note or Coupon to be surrendered or shall cancel or procure the same to be cancelled and shall certify or procure the certification of such cancellation.

9.6 **Noteholders to be treated as holding all Coupons**

Wherever in this Trust Deed the Trustee is required or entitled to exercise a power, trust, authority or discretion under this Trust Deed, the Trustee shall, notwithstanding that it may have express notice to the contrary, assume that each Noteholder is the holder of all Coupons and Talons appertaining to each Note of which they are the holder.

10. **TERMS OF APPOINTMENT** 

By way of supplement to the Trustee Acts, it is expressly declared as follows:

10.1 **SUPPLEMENT TO TRUSTEE ACTS**

Section 1 of the Trustee Act 2000 of England and Wales shall not apply to the duties of the Trustee in relation to the trusts constituted by this Trust Deed. Where there are any inconsistencies between the Trustee Acts and the provisions of this Trust Deed, the provisions of this Trust Deed shall, to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000 of England and Wales, the provisions of this Trust Deed shall constitute a restriction or exclusion for the purposes of that Act. The Trustee shall have all the powers conferred upon trustees by the Trustee Acts and by way of supplement thereto it is expressly declared as follows:

(a) The Trustee may in relation to this Trust Deed act on the advice, opinion or certificate of or any information (whether addressed to the Trustee or not) obtained from any lawyer, valuer, accountant, surveyor, banker, broker, auctioneer or other expert whether obtained by the Issuer, the Trustee or otherwise and which advice may be provided on such terms (including as to limitations on liability) as the Trustee may consider in its sole discretion to be consistent with prevailing market practice with respect to advice or opinions of that nature and shall not be responsible for any Liability occasioned by so acting.

(b) Any such advice, opinion, certificate or information may be sent or obtained by letter, facsimile transmission or email and the Trustee shall not be liable for acting on any advice, opinion, certificate or information purporting to be conveyed by any such letter, facsimile transmission or email although the same shall contain some error or shall not be authentic.

(c) The Trustee may call for and shall be at liberty to accept as sufficient evidence of any fact or matter or the expediency of any transaction or thing a certificate signed by any two Directors or Authorised Signatories of the Issuer and the Trustee shall not be bound in any such case to call for further evidence or be responsible for any Liability that may be occasioned by it acting on such certificate.

(d) The Trustee shall not be responsible for the receipt or application of the proceeds of the issue of any of the Notes by the Issuer, the exchange of any Global Note for another Global Note or definitive Notes, the delivery of any Global Note or definitive Notes to the person(s) entitled to it or them.

(e) The Trustee shall not be bound to give notice to any person of the execution of any documents comprised or referred to in this Trust Deed or to take any steps to ascertain whether any Event of Default or any Potential Event of Default has happened and, until it shall have actual knowledge or express notice pursuant to this Trust Deed to the contrary, the Trustee shall be entitled to assume that no Event of Default or Potential Event of Default has happened and that the Issuer is observing and performing all its obligations under this Trust Deed.

(f) Save as expressly otherwise provided in this Trust Deed, the Trustee shall have absolute and uncontrolled discretion as to the exercise or non-exercise of its trusts, powers, authorities and discretions under this Trust Deed (the exercise or non-exercise of which as between the Trustee and the Noteholders and Couponholders shall be conclusive and binding on the Noteholders and Couponholders) and shall not be responsible for any Liability which may result from their exercise or non-exercise and in particular the Trustee shall not be bound to act at the request or direction of the Noteholders or otherwise under any provision of this Trust Deed or to take at such request or direction or otherwise any other action under any provision of this Trust Deed, without prejudice to the generality of Clause 9.1 (*Application of Moneys*), unless it shall first be indemnified and/or secured and/or prefunded to its satisfaction against all Liabilities to which it may render itself liable or which it may incur by so doing.

(g) The Trustee shall not be liable to any person by reason of having acted upon any Extraordinary Resolution in writing or any Extraordinary Resolution or other resolution purporting to have been passed at any meeting of holders of Notes of all or any series in respect whereof minutes have been made and signed or any direction or request of holders of Notes of all or any series even though subsequent to its acting it may be found that there was some defect in the constitution of the meeting or the passing of the resolution or (in the case of an Extraordinary Resolution in writing) that not all Noteholders had signed the Extraordinary Resolution or (in the case of a direction or request) it was not signed by the requisite number of Noteholders or that for any reason the resolution, direction or request was not valid or binding upon such Noteholders and the relative Couponholders.

(h) The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any Note or Coupon purporting to be such and subsequently found to be forged or not authentic.

------

(i) Any consent or approval given by the Trustee for the purposes of this Trust Deed may be given on such terms and subject to such conditions (if any) as the Trustee thinks fit and notwithstanding anything to the contrary in this Trust Deed may be given retrospectively. The Trustee may give any consent or approval, exercise any power, authority or discretion or take any similar action if it is satisfied that the interests of the Noteholders will not be materially prejudiced thereby whether or not such consent, approval, power, authority, discretion or action is specifically referred to in this Trust Deed as being so determinable, but without prejudice to any provision of this Trust Deed to the contrary. For the avoidance of doubt, the Trustee shall not have any duty to the Noteholders in relation to such matters other than that which is contained in the preceding sentence where exercised by the Trustee.

(j) The Trustee shall not (unless and to the extent ordered so to do by a court of competent jurisdiction) be required to disclose to any Noteholder or Couponholder any information (including, without limitation, information of a confidential, financial or price sensitive nature) made available to the Trustee by the Issuer or any other person in connection with this Trust Deed and no Noteholder or Couponholder shall be entitled to take any action to obtain from the Trustee any such information.

(k) Where it is necessary or desirable for any purpose in connection with this Trust Deed to convert any sum from one currency to another it shall (unless otherwise provided by this Trust Deed or required by law) be converted at such rate or rates, in accordance with such method and as at such date for the determination of such rate of exchange, as may be agreed by the Trustee in consultation with the Issuer and any rate, method and date so agreed shall be binding on the Issuer, the Noteholders and the Couponholders.

(l) The Trustee may certify that any of the conditions, events and acts set out in subparagraphs (b) to (g) (other than (d)) of Condition 10 (*Events of Default*) (each of which conditions, events and acts shall, unless in any case the Trustee in its absolute discretion shall otherwise determine, for all the purposes of this Trust Deed be deemed to include the circumstances resulting therein and the consequences resulting therefrom), is in its opinion materially prejudicial to the interests of the Noteholders and any such certificate shall be conclusive and binding upon the Issuer, the Noteholders and the Couponholders.

(m) The Trustee as between itself and the Noteholders and Couponholders may determine all questions and doubts arising in relation to any of the provisions of this Trust Deed. Every such determination, whether or not relating in whole or in part to the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee and the Noteholders and Couponholders.

(n) In connection with the exercise by it of any of its trusts, powers, authorities and discretions under this Trust Deed (including, without limitation, any modification, waiver, authorisation or determination), the Trustee shall have regard to the general interests of the Noteholders as a class and shall not have regard to any interests arising from circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except to the extent already provided for in Condition 8 (*Taxation*) and/or any undertaking given in addition thereto or in substitution therefor under this Trust Deed.

(o) Any trustee of this Trust Deed being a lawyer, accountant, broker or other person engaged in any profession or business shall be entitled to charge and be paid all usual professional and other charges for business transacted and acts done by such person or such person's firm in connection with the trusts of this Trust Deed and also their properly incurred charges in addition to disbursements for all other work and business done and all time spent by such person or such person's firm in connection with matters arising in connection with this Trust Deed.

(p) The Trustee may in the execution and exercise of all or any of the trusts, powers, authorities and discretions vested in it by this Trust Deed whenever it thinks fit delegate by power of attorney or otherwise to any person or persons or fluctuating body of persons (whether being a joint trustee of this Trust Deed or not) all or any of its trusts, powers, authorities and discretions under this Trust Deed. Such delegation may be made upon such terms (including power to sub- delegate) and subject to such conditions and regulations as the Trustee may in the interests of the Noteholders think fit. The Trustee shall not be under any obligation to supervise the proceedings or acts of any such delegate or sub- delegate or be in any way responsible for any Liability incurred by reason of any misconduct or default on the part of any such delegate or sub-delegate provided that the Trustee shall have exercised reasonable care in selecting such person.

(q) The Trustee may in the conduct of the trusts of this Trust Deed instead of acting personally employ and pay an agent (whether being a lawyer or other professional person) to transact or conduct, or concur in transacting or conducting, any business and to do, or concur in doing, all acts required to be done by the Trustee in connection with this Trust Deed (including the receipt and payment of money). The Trustee shall not be in any way responsible for any Liability incurred by reason of any misconduct or default on the part of any such agent or be bound to supervise the proceedings or acts of any such agent provided that the Trustee shall have exercised reasonable care in selecting such person.

(r) The Trustee may appoint and pay any person to act as a custodian or nominee on any terms in relation to such assets of the trusts constituted by this Trust Deed as the Trustee may determine, including for the purpose of depositing with a custodian this Trust Deed or any document relating to the trusts constituted by this Trust Deed and the Trustee shall not be responsible for or required to insure against any Liability incurred in connection with such deposit or by reason of the misconduct, omission or default on the part of any person appointed by it hereunder or be bound to supervise the proceedings or acts of such person and may pay all sums required to be paid on account of or in respect of any such deposit; the Trustee is not obliged to appoint a custodian if the Trustee invests in securities payable to bearer provided that the Trustee shall have exercised reasonable care in selecting such person.

------

(s) The Trustee shall not be responsible for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of this Trust Deed or any other document relating or expressed to be supplemental thereto and shall not be liable for any failure to obtain any licence, consent or other authority for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of this Trust Deed or any other document relating or expressed to be supplemental thereto.

(t) The Trustee may call for any certificate or other document issued by Euroclear, Clearstream, Luxembourg or any other relevant clearing system in relation to any matter. Any such certificate or other document shall, in the absence of manifest error, be conclusive and binding for all purposes. Any such certificate or other document may comprise any form of statement or print out of electronic records provided by the relevant clearing system (including Euroclear's EUCLID or Clearstream, Luxembourg's Creation Online system) in accordance with its usual procedures and in which the account holding a particular principal or nominal amount of the Notes is clearly identified together with the amount of such holding. The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any certificate or other document to such effect purporting to be issued by Euroclear or Clearstream, Luxembourg or any other applicable clearing system and subsequently found to be forged or not authentic.

(u) The Trustee shall not be responsible to any person for failing to request, require or receive any legal opinion relating to the Notes or for checking or commenting upon the content of any such legal opinion and shall not be responsible for any Liability incurred thereby.

(v) Notwithstanding anything else herein contained, the Trustee may refrain without liability from doing anything which in its reasonable opinion would or may be illegal or contrary to any law of any state or jurisdiction (including but not limited to the laws of the United States of America or any jurisdiction forming part of it and England & Wales) or any directive or regulation of any agency of any such state or jurisdiction and may without Liability do anything which is, in its reasonable opinion, necessary to comply with any such law, directive or regulation.

(w) No provision of this Trust Deed shall require the Trustee to do anything which may cause it to expend or risk its own funds or otherwise incur any Liability in the performance of any of its duties or in the exercise of any of its rights, powers or discretions, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or Liability is not assured to it.

(x) In the absence of knowledge or express notice to the contrary, the Trustee shall be entitled to assume without enquiry (other than requesting a certificate pursuant to Clause 6.16 (*Notes held by the Issuer and its Subsidiaries*) that no Notes are held by, for the benefit of, or on behalf of, the Issuer or any of its Subsidiaries).

(y) The Trustee shall not be responsible for, or for investigating any matter which is the subject of, any recital, statement, representation, warranty or covenant of any person contained in this Trust Deed, or any other agreement or document relating to the transactions contemplated in this Trust Deed or under such other agreement or document.

(z) The Trustee shall be under no obligation to monitor or supervise the functions of any other person under the Notes or Coupons or any other agreement or document relating to the transactions herein or therein contemplated and shall be entitled, in the absence of actual knowledge of a breach of obligation, to assume that each such person is properly performing and complying with its obligations.

(aa) When determining whether an indemnity or any security or pre-funding is satisfactory to it, the Trustee shall be entitled, acting reasonably, to evaluate its risk in any given circumstance by considering the worst-case scenario and, for this purpose, it may take into account, without limitation, the potential costs of defending or commencing proceedings in England or elsewhere.

(bb) The Trustee shall not incur any Liability to the Issuer, Noteholders or any other person in connection with any approval given by it pursuant to Clause 6.14 to any notice to be given to Noteholders by the Issuer; the Trustee shall not be deemed to have represented, warranted, verified or confirmed that the contents of any such notice are true, accurate or complete in any respects or that it may be lawfully issued or received in any jurisdiction.

(cc) The Trustee shall not be responsible for monitoring whether any notices to Noteholders are given in compliance with the requirements of the Stock Exchange or with any other legal or regulatory requirements.

(dd) A certificate of the Auditors that in their opinion a Subsidiary is or is not or was or was at any particular period a Material Subsidiary shall, in the absence of manifest error, be conclusive and binding on the Issuer, the Trustee, the Noteholders and the Couponholders.

(ee) Notwithstanding anything contained in this Trust Deed, to the extent required by any applicable law, if the Trustee is or will be required to make any deduction or withholding from any distribution or payment made by it hereunder or if the Trustee is or will be otherwise charged to, or is or may become liable to, tax (other than, for the avoidance of doubt, taxes imposed in respect of net income by a taxing jurisdiction wherein the Trustee is incorporated or resident for tax purposes or carries on or is deemed to carry on business) as a consequence of performing its duties hereunder whether as principal, agent or otherwise, and whether by reason of any assessment, prospective assessment or other imposition of liability to taxation of whatsoever nature and whensoever made upon the Trustee, and whether in connection with or arising from any sums received or distributed by it or to which it may be entitled under this Trust Deed (other than in connection with its remuneration as provided for herein) or any investments or deposits from time to time representing the same, including any income or gains arising therefrom or any action of the Trustee in connection with the trusts of this Trust Deed (other than the remuneration herein specified) or otherwise, then the Trustee shall be entitled to make such deduction or withholding or, as the case may be, to retain out of sums received by it an amount sufficient to discharge any liability to tax which relates to sums so received or distributed or to discharge any such other liability of the Trustee to tax from the funds held by the Trustee upon the trusts of this Trust Deed.

10.2 **TRUSTEE'S LIABILITY**

------

10.2.1 Subject to section 750 of the Companies Act 2006 (if applicable), nothing in this Trust Deed shall in any case in which the Trustee has failed to show the degree of care and diligence required of it as trustee having regard to the provisions of this Trust Deed conferring on it any trusts, powers, authorities or discretions exempt the Trustee from or indemnify it against any Liability for its own gross negligence, wilful default or fraud which it may be guilty in relation to its duties under this Trust Deed.

10.2.2 Notwithstanding any provision of this Trust Deed to the contrary, the Trustee shall not in any event be liable for:

(a) loss of profit, loss of business, loss of goodwill, loss of opportunity, whether direct or indirect; and

(b) special, indirect, punitive or consequential loss or damage of any kind whatsoever,

whether or not foreseeable, even if the Trustee has been advised of the likelihood of such loss or damage, unless the claim for loss or damage is made in respect of fraud on the part of the Trustee.

10.3 **Disapplication**

Section 1 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by this Trust Deed. Where there are any inconsistencies between the Trustee Acts and the provisions of this Trust Deed, the provisions of this Trust Deed shall, to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of this Trust Deed shall constitute a restriction or exclusion for the purposes of that Act.

10.4 **Trustee liable for negligence**

10.4.1 Subject to section 750 of the Companies Act 2006 (if applicable), nothing in this Trust Deed shall in any case in which the Trustee has failed to show the degree of care and diligence required of it as trustee having regard to the provisions of this Trust Deed conferring on it any trusts, powers, authorities or discretions exempt the Trustee from or indemnify it against any Liability for its own gross negligence, wilful default or fraud of which it may be guilty in relation to its duties under this Trust Deed.

10.4.2 Notwithstanding any provision of this Trust Deed to the contrary, the Trustee shall not in any event be liable for:

(a) loss of profit, loss of business, loss of goodwill, loss of opportunity, whether direct or indirect; and

(b) special, indirect, punitive or consequential loss or damage of any kind whatsoever, whether or not foreseeable, even if the Trustee has been advised of the likelihood of such loss or damage, unless the claim for loss or damage is made in respect of fraud on the part of the Trustee.

11. **COSTS AND EXPENSES**

11.1 **Remuneration**

11.1.1 *Normal remuneration:* The Issuer shall pay to the Trustee remuneration for its services as trustee as from the date of this Trust Deed, such remuneration to be at such rate and on such dates as may from time to time be agreed in writing between the Issuer and the Trustee. Such remuneration shall accrue from day to day and be payable (in priority to payments to the Noteholders and Couponholders) up to and including the date when, all the Notes having become due for redemption, the redemption moneys and interest thereon to the date of redemption have been paid to the Principal Paying Agent or, as the case may be, the Trustee ***provided that*** if upon due presentation of any Note or Coupon, payment of the moneys due in respect thereof is improperly withheld or refused, remuneration will commence again to accrue.

11.1.2 *Extra remuneration:* In the event of the occurrence of an Event of Default or a Potential Event of Default, if the Trustee considers it expedient or necessary or is requested by the Issuer to undertake duties which the Trustee and the Issuer agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under this Trust Deed the Issuer shall pay to the Trustee such additional remuneration as shall be agreed between them (and which may be calculated by reference to the Trustee's normal hourly rates in force from time to time).

11.1.3 *Failure to agree:* In the event of the Trustee and the Issuer failing to agree:

(a) (in a case to which Clause 11.1.1 (*Normal remuneration*) above applies) upon the amount of the remuneration; or

(b) (in a case to which Clause 11.1.2 (*Extra remuneration*) above applies) upon whether such duties shall be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under this Trust Deed, or upon such additional remuneration,

such matters shall be determined by a merchant or investment bank (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuer or, failing such approval, nominated (on the application of the Trustee) by the President for the time being of The Law Society of England and Wales (the expenses involved in such nomination and the fees of such merchant or investment bank being payable by the Issuer) and the determination of any such merchant or investment bank shall be final and binding upon the Trustee, the Issuer the Noteholders and the Couponholders.

11.1.4 *Indemnity:* Without prejudice to the right of indemnity by law given to trustees, but subject to Clauses 11.1.9 (*Value Added Tax*) and 11.1.10 (*Income taxes*), the Issuer shall indemnify the Trustee and every Appointee and keep such person indemnified against all Liabilities to which such person may be or become subject or which may be incurred by such person in the preparation and execution or purported execution of any of their trusts, powers, authorities and discretions under this Trust Deed or its or their functions under any such appointment or in respect of any other matter or thing done or omitted in any way relating to this Trust Deed or any such appointment (including all Liabilities incurred in disputing or defending any of the foregoing).

------

11.1.5 *Expenses*: The Issuer shall also pay or discharge all costs, charges and expenses (including stamp duties, levies, imposts, issue, registration, documentary and other similar taxes or duties to the extent provided for in Clause 11.2 (*Stamp duties*), and VAT in accordance with Clause 11.1.9 (*Value Added Tax*) but excluding all other taxes) incurred by the Trustee in relation to the preparation and execution of, the exercise of its powers and the performance of its duties under, and in any other manner relating to, this Trust Deed, including but not limited to travelling expenses and any stamp, issue, registration, documentary and other similar taxes or duties paid or payable by the Trustee in connection with any action properly taken by or on behalf of the Trustee for enforcing this Trust Deed.

11.1.6 *Third parties*: Where any amount which would otherwise be payable by the Issuer under this Clause 11.1 has instead been paid by any person or persons other than the Issuer (each, an "Indemnifying Party"), the Issuer shall pay to the Trustee an equal amount for the purpose of enabling the Trustee to reimburse the Indemnifying Parties.

11.1.7 *Payments of amounts due*: All amounts payable pursuant to Clause 11.1.6 (*Third parties*) above and/or this Clause 11.1.7 shall be payable by the Issuer on the date specified in a demand by the Trustee and in the case of payments actually made by the Trustee prior to such demand shall carry interest at the rate of three per cent. per annum above the base rate (on the date on which payment was made by the Trustee) of National Westminster Bank Plc from the date specified in such demand, and in all other cases shall (if not paid within 30 days after the date of such demand or, if such demand specifies that payment is to be made on an earlier date, on such earlier date) carry interest at such rate from such 30th day of such other date specified in such demand. All remuneration payable to the Trustee shall carry interest at such rate from the due date therefor.

11.1.8 *Payments*: The Issuer hereby further undertakes to the Trustee that all monies payable by the Issuer to the Trustee under this Clause 11.1 shall be made without set-off, counterclaim, deduction or withholding unless required by law. In the event of deduction or withholding being required by law, the Issuer will pay such additional amounts as will result in the receipt by the Trustee of the amounts which would otherwise have been payable by the Issuer to the Trustee under this Clause 11.1 in the absence of any such deduction or withholding.

11.1.9 *Value Added Tax*: All amounts payable by the Issuer under this Trust Deed are exclusive of VAT. If the Trustee or the representative member (as that term is used in the Value Added Tax Act 1994) of a group to which it belongs for VAT purposes is liable to account for VAT in respect of any service made to the Issuer in accordance with this Trust Deed, the Issuer shall pay to the Trustee (in addition to and at the same time as paying any other remuneration for such supply, and upon receipt of a valid VAT invoice) an amount equal to the amount of such VAT if and to the extent such VAT is not recoverable by the relevant Agent or representative member. Where the Issuer is required to reimburse or indemnify the Trustee for any cost or expense, the Issuer shall reimburse or indemnify (as the case may be) the Trustee for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that the Trustee or the representative member of a group to which it belongs for VAT purposes is entitled to credit or repayment in respect of such VAT.

11.1.10 *Income taxes*: For the avoidance of doubt, the Trustee shall be responsible for its own corporate income tax and nothing in this Trust Deed shall require the Issuer to pay taxes imposed in respect of net income by a taxing jurisdiction wherein the Trustee is incorporated or resident or carries on or is deemed to carry on business for tax purposes.

11.1.11 *Discharge*: Unless otherwise specifically stated in any discharge of this Trust Deed the provisions of this Clause 11.1 shall continue in full force and effect notwithstanding such discharge.

11.2 **Stamp duties**

The Issuer will pay any stamp, issue, registration, documentary and other similar fees, duties and taxes, including interest and penalties, payable (a) in the United Kingdom or the Netherlands on or in connection with (i) the execution and delivery of this Trust Deed and (ii) the constitution and original issue of the Notes and the Coupons and (b) in any jurisdiction on or in connection with any action properly taken by or on behalf of the Trustee or (where permitted under this Trust Deed so to do) any Noteholder or Couponholder to enforce this Trust Deed.

11.3 **Currency indemnity**

The Issuer shall indemnify the Trustee, every Appointee, the Noteholders and the Couponholders and, subject to Clauses 11.1.9 (*Value Added Tax*) and 11.1.10 (*Income taxes*), keep them indemnified against:

11.3.1 any Liability incurred by any of them arising from the non-payment by the Issuer of any amount due to the Trustee or the Noteholders or Couponholders under this Trust Deed by reason of any variation in the rates of exchange between those used for the purposes of calculating the amount due under a judgment or order in respect thereof and those prevailing at the date of actual payment by the Issuer; and

11.3.2 any deficiency arising or resulting from any variation in rates of exchange between (i) the date as of which the local currency equivalent of the amounts due or contingently due under this Trust Deed (other than this Clause 11.3) is calculated for the purposes of any bankruptcy, insolvency or liquidation of the Issuer and (ii) the final date for ascertaining the amount of claims in such bankruptcy, insolvency or liquidation. The amount of such deficiency shall be deemed not to be reduced by any variation in rates of exchange occurring between the said final date and the date of any distribution of assets in connection with any such bankruptcy, insolvency or liquidation.

11.4 **Indemnities separate**

------

The indemnities in this Clause 11 constitute separate and independent obligations from the other obligations in this Trust Deed, will give rise to separate and independent causes of action, will apply irrespective of any indulgence granted by the Trustee and/or any Noteholder or Couponholder and will continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under this Trust Deed or the Notes or the Coupons or any other judgment or order. Any such Liability as referred to in this Clause 11 shall be deemed to constitute a Liability suffered by the Trustee, the Noteholders and the Couponholders and no proof or evidence of any actual Liability shall be required by the Issuer or its liquidator or liquidators.

12. **APPOINTMENT AND RETIREMENT**

12.1 **Appointment of Trustees**

The power of appointing new trustees of this Trust Deed shall be vested in the Issuer but no person shall be appointed who shall not previously have been approved by an Extraordinary Resolution of the Noteholders. A trust corporation may be appointed sole trustee hereof but subject thereto there shall be at least two trustees hereof one at least of which shall be a trust corporation. Any appointment of a new trustee hereof shall as soon as practicable thereafter be notified by the Issuer to the Agents and the Noteholders. The Noteholders shall together have the power, exercisable by Extraordinary Resolution, to remove any trustee or trustees for the time being hereof. The removal of any trustee shall not become effective unless there remains a trustee hereof (being a trust corporation) in office after such removal or until a trust corporation is appointed as successor.

12.2 **Co-trustees**

12.2.1 Notwithstanding the provisions of Clause 12.1 (*Appointment of Trustees*), the Trustee may, upon giving prior notice to the Issuer but without the consent of the Issuer or the Noteholders or the Couponholders, appoint any person established or resident in any jurisdiction (whether a trust corporation or not) to act either as a separate trustee or as a co-trustee jointly with the Trustee:

(a) if the Trustee considers such appointment to be in the interests of the Noteholders or the Couponholders; or

(b) for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction in which any particular act or acts are to be performed; or

(c) for the purposes of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction either of a judgment already obtained or of this Trust Deed.

12.2.2 The Issuer hereby irrevocably appoints the Trustee to be its attorney in its name and on its behalf to execute any such instrument of appointment.

12.2.3 Such a separate trustee or co-trustee shall (subject always to the provisions of this Trust Deed) have such trusts, powers, authorities and discretions (not exceeding those conferred on the Trustee by this Trust Deed) and such duties and obligations as shall be conferred on such person or imposed by the instrument of appointment.

12.2.4 The Trustee shall have power in like manner to remove any such person.

12.2.5 Such proper remuneration as the Trustee may pay to any such person, together with any attributable costs, charges and expenses incurred by it in performing its function as such separate trustee or co-trustee, shall for the purposes of this Trust Deed be treated as costs, charges and expenses incurred by the Trustee.

12.3 **Retirement of Trustees**

A trustee of this Trust Deed may retire at any time on giving not less than 90 days' prior written notice to the Issuer without giving any reason and without being responsible for any costs, charges and expenses properly incurred by reason of such retirement. The Noteholders may by Extraordinary Resolution remove any trustee or trustees for the time being of this Trust Deed in relation to Notes. The Issuer undertakes that in the event of the only trustee of this Trust Deed which is a Trust Corporation (for the avoidance of doubt, disregarding for this purpose any separate or co-trustee appointed under Clause 12.2 (*Co-trustees*) giving notice under this Clause 12.3 or being removed by Extraordinary Resolution it will use all reasonable endeavours to procure that a new trustee of this Trust Deed being a Trust Corporation is appointed as soon as reasonably practicable thereafter. The retirement or removal of any such trustee shall not become effective until a successor trustee being a Trust Corporation is appointed. If, in such circumstances, no appointment of such a new trustee has become effective within 90 days of the date of such notice or Extraordinary Resolution, the Trustee shall be entitled to appoint a Trust Corporation as trustee of this Trust Deed, but no such appointment shall take effect unless previously approved by an Extraordinary Resolution.

12.4 **Competence of a majority of Trustees**

Whenever there shall be more than two trustees hereof the majority of such trustees shall (provided such majority includes a trust corporation) be competent to execute and exercise all the trusts, powers, authorities and discretions vested by this Trust Deed in the Trustee generally.

12.3 **Powers additional**

The powers conferred by this Trust Deed upon the Trustee shall be in addition to any powers which may from time to time be vested in it by general law or as the holder of any of the Notes or the Coupons.

12.4 **Merger**

------

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Clause 12.6, without the execution or filing of any paper or any further act on the part of any of the parties hereto.

13. **NOTICES**

13.1 **Addresses for notices**

All notices and other communications hereunder shall be made in writing and in English (by letter or email) and shall be sent as follows:

13.1.1 *Issuer:* if to the Issuer, to it at:

Koninklijke Philips N.V.

Philips Center

Amstelplein 2

1096 BC Amsterdam

The Netherlands

Attention: Group Treasury

Email: treasury.middleoffice@philips.com

13.1.2 *Trustee:* if to the Trustee, to it at:

Citicorp Trustee Company Limited

Citigroup Centre

Canada Square

London E14 5LB

England

Email: emea.at.debt@citi.com

Attention: Agency & Trust

13.2 **Effectiveness**

Every notice or other communication sent in accordance with Clause 13.1 (*Addresses for notices*) shall be effective as follows:

13.2.1 *Letter*: if sent by letter, it shall be deemed to have been delivered 7 days after the time of despatch; and

13.2.2 *Email*: if sent by email, it shall be deemed to have been delivered at the time of delivery to the recipient's email address,

**provided that** any such notice or other communication which would otherwise take effect after 4.00 p.m. on any particular day shall not take effect until 10.00 a.m. on the immediately succeeding Business Day in the place of the addressee, and further provided that in the case of a notice or demand given by email a delivery receipt is received by the sending party confirming the email has been delivered to the recipient's correct email address.

13.3 **No Notice to Couponholders**

Neither the Trustee nor the Issuer shall be required to give any notice to the Couponholders for any purpose under this Trust Deed and the Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders in accordance with Condition 13 (*Notices*).

14. **LAW AND JURISDICTION** 

14.1 **Governing Law**

This Trust Deed and the Notes and any non-contractual obligations arising out of or in connection with them are governed by English law.

14.2 **English Courts**

The courts of England have exclusive jurisdiction to settle any disputes (a "**Dispute**"), arising from or connected with this Trust Deed or the Notes (including a dispute regarding the existence, validity or termination of, and all non-contractual obligations arising out of or in connection with, this Trust Deed or the Notes) or the consequences of their nullity.

14.3 **Appropriate forum**

The parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and, accordingly that they will not argue to the contrary.

14.4 **Rights of the Issuer and the Trustee to take proceedings outside England**

------

Notwithstanding Clauses 14.2 (*English Courts*) and 14.3 (*Appropriate forum*), to the extent allowed by law, the Issuer and the Trustee may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction and (ii) concurrent proceedings in any number of jurisdictions.

14.5 **Process agent**

The Issuer agrees that the documents which start any Proceedings and any other documents required to be served in relation to those Proceedings may be served on it by being delivered to Philips Electronics UK Limited (Attention: Company Secretary), Ascent 1 Aerospace Boulevard, Farnborough, England, GU14 6XW. If such person is not or ceases to be effectively appointed to accept service of process on behalf of the Issuer, the Issuer shall, on the written demand of the Trustee, appoint a further person in England to accept service of process on their behalf and, failing such appointment within 15 days, the Trustee shall be entitled to appoint such a person by written notice addressed to the Issuer. Nothing in this paragraph shall affect the right of the Trustee or (when they are entitled to do so) any of the Noteholders to serve process in any other manner permitted by law.

14.6 **Power of Attorney**

If the Issuer is represented by an attorney or attorneys in connection with the signing and/or execution and/or delivery of this Trust Deed or any agreement or document referred to herein or made pursuant hereto and the relevant power or powers of attorney is or are expressed to be governed by the laws of the Netherlands, it is hereby expressly acknowledged and accepted by the other parties hereto that such laws shall govern the existence and extent of such attorney's or attorney's authority and the effects of the exercise thereof.

15. **SEVERABILITY**

In case any provision in or obligation under this Trust Deed shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

16. **CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999**

No person shall have any right to enforce any provision of this Trust Deed under the Contracts (Rights of Third Parties) Act 1999.

17. **COUNTERPARTS**

This Trust Deed may be executed in any number of counterparts, each of which shall be deemed an original.

**IN WITNESS WHEREOF** this Trust Deed has been executed as a deed by the parties hereto and is intended to be and is hereby delivered on the date first before written.

**SCHEDULE 1**

**TERMS AND CONDITIONS**

Koninklijke Philips N.V. (the "**Issuer**") has established a Euro Medium Term Note Programme (the "**Programme**") for the issue of up to €10,000,000,000 in aggregate principal amount of notes (the "**Notes**") on the terms set out in these Conditions and in the Trust Deed (as defined below).

Notes issued under the Programme are issued in series (each a "**Series**") and each Series may comprise one or more tranches (each a "**Tranche**") of Notes. Each Tranche is the subject of final terms (the "**Final Terms**") which complete these terms and conditions (the "**Conditions**"). The terms and conditions applicable to any particular Tranche of Notes are these Conditions as completed by the relevant Final Terms.

The Notes are constituted by, are subject to and have the benefit of a trust deed dated 9 March 2020 as amended and restated on 8 March 2024 (as amended and/or restated and/or supplemented from time to time, the "**Trust Deed**") made between the Issuer and Citicorp Trustee Company Limited as trustee (the "**Trustee**", which expression shall include its successor(s)) as trustee for the holders of the Notes (the "**Noteholders**")) and the holders of the interest coupons appertaining thereto (the "**Couponholders**" and the "**Coupons**" respectively) and are the subject of an agency agreement dated 9 March 2020 as amended and restated on 8 March 2024 (as amended or supplemented from time to time, the "**Agency Agreement**") made between the Issuer, Citibank, N.A., London Branch as principal paying agent (the "**Principal Paying Agent**" and, together with any other agents appointed in accordance with such agreement, the "**Paying Agents**", which expression shall include any successor(s)), Citibank, N.A., London Branch as calculation agent (the "**Calculation Agent**" and, together with the Paying Agents, the "**Agents**")), and the Trustee.

All subsequent references in these Conditions to "**Notes**" are to the Notes of the relevant Series. Copies of the relevant Final Terms are available for inspection and may be obtained during normal business hours at the registered office of the Trustee and the specified office of the Principal Paying Agent.

Certain provisions of these Conditions are summaries of, and are subject to, the detailed provisions of and definitions in the Trust Deed and the Agency Agreement. The Noteholders and the Couponholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable to them.

Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business hours by the Noteholders and the Couponholders at the principal office for the time being of the Trustee, being at the date of issue of the Notes at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, United Kingdom and at the specified office of each of the Paying Agents.

**1. Interpretation**

**1.1 Definitions**

In these Conditions the following expressions have the following meanings: "**Business Day**" means a day which is both:

------

(i) a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London and any Additional Business Centre specified in the relevant Final Terms; and

(ii) either (i) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which if the Specified Currency is

Australian dollars or New Zealand dollars shall be Sydney and Auckland, respectively); or (ii) in relation to any sum payable in euro, a day on which the real time gross settlement system operated by the Eurosystem or any successor system (the "**T2**") is open; and

(iii) in respect of Notes for which the Reference Rate is specified as SOFR in the relevant Final Terms, any weekday that is a U.S. Government Securities Business Day (as defined below) and is not a legal holiday in New York and each (if any) Additional Business Centre(s) and is not a date on which banking institutions in those cities are authorised or required by law or regulation to be closed;

"**Business Day Convention**", in relation to any particular date, the following expressions shall have the following meanings:

(i) "**Following Business Day Convention**" means that the relevant date shall be postponed to the first following day that is a Business Day;

(ii) "**Modified Following Business Day Convention**" or "**Modified Business Day Convention**" means that the relevant date shall be postponed to the first following day that is a Business Day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a Business Day save in respect of Notes for which the Reference Rate is SOFR, for which the final Interest Payment Date will not be postponed and interest on that payment will not accrue during the period from and after the scheduled final Interest Payment Date;

(iii) "**Preceding Business Day Convention**" means that the relevant date shall be brought forward to the first preceding day that is a Business Day;

(iv) "**FRN Convention**", "**Floating Rate Convention**" or "**Eurodollar Convention**" means that each relevant date shall be the date which numerically corresponds to the preceding such date in the calendar month which is the number of months specified in the relevant Final Terms as the Specified Period after the calendar month in which the preceding such date occurred; **provided, however, that**:

(A) if there is no such numerically corresponding day in the calendar month in which any such date should occur, then such date will be the last day which is a Business Day in that calendar month;

(B) if any such date would otherwise fall on a day which is not a Business Day, then such date will be the first following day which is a Business Day unless that day falls in the next calendar month, in which case it will be the first preceding day which is a Business Day; and

(C) if the preceding such date occurred on the last day in a calendar month which was a Business Day, then all subsequent such dates will be the last day which is a Business Day in the calendar month which is the specified number of months after the calendar month in which the preceding such date occurred; and

(v) "**No Adjustment**" means that the relevant date shall not be adjusted in accordance with any Business Day Convention;

"**Coupon Sheet**" means, in respect of a Note in definitive form, a coupon sheet relating to the Note;

"**Day Count Fraction**" means (subject as provided in Condition 5.1 (*Fixed Rate Note Provisions*), in respect of the calculation of an amount for any period of time (the "**Calculation Period**"), such day count fraction as may be specified in these Conditions or the relevant Final Terms and:

(i) if "**Actual/365**" or "**Actual/Actual (ICMA)**" is so specified, means the actual number of days in the Calculation Period divided by 365 (or, if any portion of the Calculation Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non- leap year divided by 365);

(ii) if "**Actual/365 (Fixed)**" is so specified, means the actual number of days in the Calculation Period divided by 365;

(iii) if "**Actual/365 (Sterling)**" is so specified, means the actual number of days in the Calculation Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366;

(iv) if "**Actual/360**" is so specified, means the actual number of days in the Calculation Period divided by 360;

(v) if "**30/360**" is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction = {[360 x (*Y*2 - *Y*1)] + [30 x (*M*2 - *M*1)] + (*D*2 - *D*1)}/ 360

where:

"**Y1**" is the year, expressed as a number, in which the first day of the Calculation Period falls;

"**Y2**" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

"**M1**" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

"**M2**" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

------

"**D1**" is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1will be 30; and "**D2**" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case D2will be 30;

(vi) if "**30E/360**" or "**Eurobond Basis**" is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction = {[360 x (*Y*2 - *Y*1)] + [30 x (*M*2 - *M*1)] + (*D*2 - *D*1)}/ 360

where:

"**Y1**" is the year, expressed as a number, in which the first day of the Calculation Period falls;

"**Y2**" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

"**M1**" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

"**M2**" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

"**D1**" is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and

"**D2**" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D2 will be 30; and

(vii) if "**30E/360 (ISDA)**" is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction = {[360 x (*Y*2 - *Y*1)] + [30 x (*M*2 - *M*1)] + (*D*2 - *D*1)}/ 360

where:

"**Y1**" is the year, expressed as a number, in which the first day of the Calculation Period falls;

"**Y2**" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

"**M1**" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

"**M2**" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

"**D1**" is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and "**D2**" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case **D2**will be 30, **provided, however, that** in each such case the number of days in the Calculation Period is calculated from and including the first day of the Calculation Period to but excluding the last day of the Calculation Period;

"**Determination Period**" means each period from (and including) an Interest Determination Date to (but excluding) the next Interest Determination Date (including, where either the Interest Commencement Date or the final Interest Payment Date is not an Interest Determination Date, the period commencing on the first Interest Determination Date prior to, and ending on the first Interest Determination Date falling after, such date);

"**Early Redemption Amount**" means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms;

"**EURIBOR**" means, in respect of any specified currency and any specified period, the interest rate benchmark known as the Euro interbank offered rate which is calculated and published by a designated distributor (currently Thomson Reuters) in accordance with the requirements from time to time of the European Money Markets Institute (or any other person which takes over the administration of that rate) based on estimated interbank borrowing rates for a number of designated currencies and maturities which are

provided, in respect of each such currency, by a panel of contributor banks (details of historic EURIBOR rates can be obtained from the designated distributor);

"**euro**" means the single currency introduced at the start of the third stage of European economic and monetary union, and as defined in Article 2 of Council Regulation (EC) No. 974/98 of 3 May 1998 on the introduction of the euro as amended;

"**Extraordinary Resolution**" has the meaning given in the Trust Deed;

"**Final Redemption Amount**" means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms;

"**Group**" means the Issuer and its Subsidiaries from time to time;

"**Holding Company**" of any other person means a company in respect of which that other person is a Subsidiary;

"**Interest Amount**" means, in relation to a Note and an Interest Period, the amount of interest payable in respect of that Note for that Interest Period;

"**Interest Commencement Date**" means the Issue Date or such other date as may be specified as the Interest Commencement Date in the relevant Final Terms;

------

"**Interest Determination Date**" has the meaning given in the relevant Final Terms or if none is so specified, the Reference Rate is EURIBOR, the second day on which T2 is open prior to the start of each Interest Period;

"**Interest Payment Date**" means the date or dates specified as such in, or determined in accordance with the provisions of, the relevant Final Terms and, if a Business Day Convention is specified in the relevant Final Terms:

(i) as the same may be adjusted in accordance with the relevant Business Day Convention; or

(ii) if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention and an interval of a number of calendar months is specified in the relevant Final Terms as being the Specified Period, each of such dates as may occur in accordance with the FRN Convention, Floating Rate Convention or Eurodollar Convention at such Specified Period of calendar months following the Interest Commencement Date (in the case of the first Interest Payment Date) or the previous Interest Payment Date (in any other case);

"**Interest Period**" means each period beginning on (and including) the Interest Commencement Date or any Interest Period End Date and ending on (but excluding) the next Interest Period End Date;

"**Interest Period End Date**" means each Interest Payment Date or such other date or dates specified as such in, or determined in accordance with the provisions of, the relevant Final Terms;

"**ISDA Definitions**" means, in relation to any Series of Notes:

(a) unless "ISDA 2021 Definitions" are specified as being applicable in the relevant Final Terms, the 2006 ISDA Definitions (as supplemented, amended and updated as at the date of issue of the first Tranche of the Notes of such Series), as published by the International Swaps and Derivatives Association, Inc. ("**ISDA**") (copies of which may be obtained from ISDA at isda.org); or

(b) if "ISDA 2021 Definitions" are specified as being applicable in the relevant Final Terms, the latest version of the ISDA 2021 Interest Rate Derivatives Definitions, including each Matrix (as defined therein) (and any successor thereto), each as published by ISDA (or any successor) on its website (http://www.isda.org), on the date of issue of the first Tranche of the Notes of such Series;

"**Margin**" has the meaning given in the relevant Final Terms;

"**Material Subsidiary**" means, at any time, a Subsidiary of the Issuer whose total assets represent at least 5 per cent. of the consolidated total assets of the Group or whose total net sales represent at least 7.5 per cent. of the consolidated net sales of the Group and in relation to which the Issuer has, directly or indirectly, the power to direct its management and policies whether through the ownership of voting capital, by contract or otherwise. For this purpose:

(a) in the case of each Subsidiary, the calculation shall be made by comparing the total assets or, as the case may be, total net sales of that Subsidiary individually (and not on a consolidated basis) to those of the Group;

(b) assets or sales which arise from transactions between members of the Group and which would be eliminated in the consolidated financial statements of the Group shall be excluded;

(c) the total assets or total net sales of a Subsidiary shall be calculated by reference to:

(i) the accounts of that Subsidiary used for the purpose of the latest audited consolidated financial statements of the Group; or

(ii) if the company became a Subsidiary after the end of the financial period to which the latest audited consolidated financial statements of the Group relate, its then latest audited accounts;

(d) the consolidated total assets or consolidated net sales of the Group shall be calculated by reference to the latest audited consolidated financial statements of the Group, adjusted as appropriate to reflect the total assets or total net sales of any company which has become or ceased to be a Subsidiary after the end of the financial period to which those accounts relate; and

(e) where a Material Subsidiary transfers all or substantially all of its assets to the Issuer or another Subsidiary, the transferor (if it is not the Holding Company of the transferee) shall cease to be a Material Subsidiary and (if the transferee is a Subsidiary but not a Material Subsidiary) the transferee shall become a Material Subsidiary;

"**Payment Business Day**" means any day which is:

(i) a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in (a) in the case of Notes in definitive form only, the relevant place of presentation, and (b) each Additional Financial Centre specified in the relevant Final Terms; and

(ii) either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland, respectively) or (2) in relation to any sum payable in euro, a day on which T2 is open;

"**Permitted Reorganisation**" means (i) any merger, consolidation, amalgamation, reorganisation, transfer of all or substantially all of its business, assets or undertaking (by operation of law or by way of sale, contribution, lease, conveyance, demerger or otherwise), reconstruction or restructuring on a solvent basis of the Issuer or a Material Subsidiary, and in the case of the Issuer, pursuant to which the surviving or acquiring company (if not the Issuer) assumes all obligations of the Issuer under the Notes and the Trust Deed either expressly, by operation of law or by universal succession; or (ii) for the purposes of or in connection with, and followed by, a substitution of the relevant entity pursuant to and in accordance with Condition 14.5 (*Substitution*);

------

"**Person**" means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;

"**Principal Financial Centre**" means, in relation to any currency, the principal financial centre for that currency; **provided, however, that**:

(i) in relation to euro, it means the principal financial centre of such Member State of the European Union as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Principal Paying Agent; and

(ii) in relation to Australian dollars or New Zealand dollars, it means either Sydney or Auckland; in each case as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Principal Paying Agent;

"**Rate of Interest**" means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the Notes specified in the relevant Final Terms or calculated or determined in accordance with the provisions of these Conditions and/or the relevant Final Terms;

"**Redemption Amount**" means, as appropriate, the Final Redemption Amount, the Make-Whole Redemption Amount, the Residual Call Early Redemption Amount, or such other amount in the nature of a redemption amount as may be specified in the relevant Final Terms;

"**Reference Banks**" means four major banks selected by the Issuer in the market that is most closely connected with the Reference Rate;

"**Reference Rate**" means EURIBOR, SONIA, SOFR or €STR as specified in the relevant Final Terms in respect of the currency and period specified in the relevant Final Terms. Other than in the case of U.S. dollar- denominated floating rate Notes for which the "Reference Rate" is specified in the relevant Final Terms as being SOFR, the term Reference Rate shall, following the occurrence of a Benchmark Event under Condition 5.2(m) *(Benchmark Discontinuation (Independent Adviser))*, include any Successor Rate or Alternative Reference Rate and shall, if a Benchmark Event should occur subsequently in respect of any such Successor Rate or Alternative Reference Rate, also include any further Successor Rate or further Alternative Reference Rate.

"**Relevant Date**" means the date on which the payment first becomes due but, if the full amount of the money payable has not been received by the Principal Paying Agent or the Trustee on or before the due date, it means the date on which, the full amount of the money having been so received, notice to that effect has been duly given to the Noteholders by the Issuer in accordance with Condition 13 (*Notices*).

"**Relevant Indebtedness**" means any indebtedness which is in the form of or represented by any bond, note, debenture, debenture stock, loan stock, certificate or other debt security which is, or is intended to be, listed, quoted or traded on any stock exchange or on any other recognised securities market (including, without limitation, any over-the-counter securities market);

"**Relevant Jurisdiction**" means the Netherlands or any political subdivision or any authority thereof or therein having power to tax or any other jurisdiction or any political subdivision or any authority thereof or therein having power to tax to which the Issuer becomes subject by reason of its tax residence in respect of payments made by or on behalf of it of principal and interest on the Notes and Coupons;

"**Relevant Screen Page**" means the page, section or other part of a particular information service (including, without limitation, Reuters or Bloomberg) specified as the Relevant Screen Page in the relevant Final Terms, or such other page, section or other part as may replace it on that information service or such other information service, in each case, as may be nominated by the Person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate;

"**Specified Currency**" means the relevant currency as specified in the relevant Final Terms;

"**Specified Denomination**" means such denominations as specified in the relevant Final Terms;

"**specified office**" has the meaning given in the Agency Agreement;

"**Specified Period**" means each period specified as such in the relevant Final Terms;

"**Subsidiary**" means a consolidated entity of which a person has direct or indirect control or owns directly or indirectly more than 50 per cent. of the voting rights or similar right of ownership and "**control**" for this purpose means the power to direct the management and the policies of the entity whether through the ownership of voting capital, by contract or otherwise;

"**Sub-Unit**" means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.;

"**Talon**" means a talon for further Coupons; and

"**Zero Coupon Note**" means a Note specified as such in the relevant Final Terms.

**1.2 Interpretation**

In these Conditions:

(i) if the Notes are Zero Coupon Notes, references to Coupons and Couponholders are not applicable;

(ii) if Talons are specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Coupons shall be deemed to include references to Talons;

(iii) if Talons are not specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Talons are not applicable;

------

(iv) any reference to principal shall be deemed to include the Redemption Amount, any additional amounts in respect of principal which may be payable under Condition 8 (*Taxation*) or any undertakings given in addition to or in substitution for that Condition, any premium payable in respect of a Note and any other amount in the nature of principal payable pursuant to these Conditions;

(v) any reference to interest shall be deemed to include any additional amounts in respect of interest which may be payable under Condition 8 (*Taxation*) or any undertakings given in addition to or in substitution for that Condition and any other amount in the nature of interest payable pursuant to these Conditions;

(vi) references to Notes being "**outstanding**" shall be construed in accordance with the Trust Deed;

(vii) if an expression is stated in Condition 1.1 (*Definitions*) to have the meaning given in the relevant Final Terms, but the relevant Final Terms give no such meaning or specify that such expression is "not applicable" then such expression is not applicable to the Notes; and

(viii) Any reference in these Conditions to any legislation (whether primary legislation or other subsidiary legislation made pursuant to primary legislation) shall be construed as a reference to such legislation as the same may have been, or may from time to time be, amended or re-enacted.

**2. Form, Denomination and title**

The Notes are in bearer form and, in the case of definitive Notes, serially numbered, in the Specified Currency and in the Specified Denomination(s) and, if interest-bearing (in the case of definitive Notes), with Coupons and, if specified in the relevant Final Terms, Talons attached at the time of issue. In the case of a Series of Notes with more than one Specified Denomination, Notes of one Specified Denomination will not be exchangeable for Notes of another Specified Denomination. Subject as set out below, title to the Notes and the Coupons will pass by delivery. The Issuer, the Paying Agents and the Trustee will (except as otherwise required by law) deem and treat the bearer of any Note or Coupon as the absolute owner thereof (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing thereon or any notice of any previous loss or theft thereof) for all purposes and shall not be liable to any Person for so treating such bearer, but in the case of a Note in global form (a "**Global Note**") without prejudice to the provisions set out in the next succeeding paragraph.

For so long as any of the Notes is represented by a Global Note held on behalf of Euroclear Bank SA/NV ("**Euroclear**") and/or Clearstream Banking S.A. ("**Clearstream, Luxembourg**"), each Person (other than Euroclear or Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular principal amount of such Notes (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the principal amount of such Notes standing to the account of any Person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer, the Paying Agents and the Trustee as the holder of such principal amount of such Notes for all purposes other than with respect to the payment of principal or interest on such principal amount of such Notes, for which purpose the bearer of the relevant Global Note shall be treated by the Issuer, any Paying Agent and the Trustee as the holder of such principal amount of such Notes in accordance with and subject to the terms of the relevant Global Note and the expressions "**Noteholder**" and "**holder of Notes**" and related expressions shall be construed accordingly. In determining whether a particular Person is entitled to a particular principal amount of Notes as aforesaid, the Trustee may rely on such evidence and/or information and/or certification as it shall, in its absolute discretion, think fit and, if it does so rely, such evidence and/or information and/or certification shall, in the absence of manifest error, be conclusive and binding on all concerned. Payment in respect of Notes represented by a Global Note will only be made in accordance with the rules and procedures for the time being of Euroclear or Clearstream, Luxembourg, as the case may be.

Notes which are represented by a Global Note will be transferable only in accordance with the rules and procedures for the time being of Euroclear and Clearstream, Luxembourg, as the case may be.

References to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system specified in the relevant Final Terms or as may otherwise be approved by the Issuer, the Paying Agents and the Trustee.

**3. Status**

The Notes and the Coupons are direct, unconditional and (subject to the provisions of Condition 4 (*Negative Pledge*)) unsecured obligations of the Issuer and (subject as aforesaid) rank and will rank *pari passu*, without any preference among themselves, with all other outstanding unsecured and unsubordinated obligations of the Issuer, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors' rights.

**4. Negative Pledge**

So long as any Note remains outstanding (as defined in the Trust Deed), the Issuer shall not create or permit to subsist any mortgage, charge, pledge, lien or other security interest upon the whole or any part of its present or future undertaking, assets or revenues (including uncalled capital) to secure any Relevant Indebtedness (as defined below) or any guarantee of Relevant Indebtedness, without:

(a) at the same time or prior thereto ensuring that the Issuer's obligations under the Notes are secured equally and rateably therewith to the satisfaction of the Trustee; or

(b) providing such other guarantee or other arrangement (whether or not comprising security) as the Trustee may in its absolute discretion consider to be not materially less beneficial to the interests of the Noteholders or as may be approved by an Extraordinary Resolution (as defined in the Trust Deed).

**5. Interest**

**5.1 Fixed Rate Note Provisions**

(a) *Application*

------

This Condition 5.1 (*Fixed Rate Note Provisions*) is applicable to the Notes only if the Fixed Rate Note Provisions are specified in the relevant Final Terms as being applicable.

(b) *Accrual of interest*

The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject to Condition 6 (*Payments*). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 5.1 (*Fixed Rate Note Provisions*) (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Principal Paying Agent or as the case may be the Trustee has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c) *Fixed Coupon Amount and Broken Amount*

If the Notes are in definitive form, except as provided in the relevant Final Terms, the amount of interest payable in respect of each Note for any Interest Period shall be the relevant Fixed Coupon Amount. If the Notes are in definitive form, if so specified in the relevant Final Terms, the amount of interest payable on any Interest Payment Date shall be the Broken Amount so specified. The amount of interest payable shall be the product of the Fixed Coupon Amount or, as the case may be, the Broken Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination.

(d) *Calculation of Interest Amount*

Except in the case of Notes in definitive form where an applicable Fixed Coupon Amount or an applicable Broken Amount is specified in the relevant Final Terms, interest shall be calculated in respect of any period by applying the Rate of Interest to:

(i) in the case of Notes which are represented by a Global Note, the aggregate outstanding principal amount of the Fixed Rate Notes represented by such Global Note; or

(ii) in the case of Notes in definitive form, the Calculation Amount;

and, in each case, multiplying such product by the applicable Day Count Fraction, and rounding the resultant figure to the nearest Sub-Unit of the relevant Specified Currency, half of any such Sub-Unit being rounded upwards or otherwise in accordance with applicable market convention. The amount of interest payable shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding.

"**Day Count Fraction**" means, in respect of the calculation of an amount of interest in accordance with this Condition 5.1 (*Fixed Rate Note Provisions*):

(i) if "**Actual/Actual (ICMA)**" is specified in the relevant Final Terms:

(A) in the case of Notes where the number of days in the relevant period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (the "**Accrual Period**") is equal to or shorter than the Determination Period during which the Accrual Period ends, the number of days in such Accrual Period divided by the product of (I) the number of days in such Determination Period and (II) the number of Interest Determination Dates (as specified in the relevant Final Terms) that would occur in one calendar year; or

(B) in the case of Notes where the Accrual Period is longer than the Determination Period during which the Accrual Period ends, the sum of:

(1) the number of days in such Accrual Period falling in the Determination Period in which the Accrual Period begins divided by the product of (x) the number of days in such Determination Period and (y) the number of Interest Determination Dates that would occur in one calendar year; and

(2) the number of days in such Accrual Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Interest Determination Dates that would occur in one calendar year; and

(ii) if "**30/360**" is specified in the relevant Final Terms, the number of days in the period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (such number of days being calculated on the basis of a year of 360 days with 12 30-day months) divided by 360.

**5.2 Floating Rate Note Provisions**

(a) *Application*

This Condition 5.2 (*Floating Rate Note Provisions*) is applicable to the Notes only if the Floating Rate Note Provisions are specified in the relevant Final Terms as being applicable.

(b) *Accrual of interest*

------

The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 6 (*Payments*). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 5.2 (*Floating Rate Note Provisions*) (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Principal Paying Agent or as the case may be the Trustee has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c) *Screen Rate Determination*

If Screen Rate Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be (other than in respect of Notes for which SONIA, SOFR and/or €STR is specified as the Reference Rate in the relevant Final Terms) determined, subject to Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser)*), by the Calculation Agent on the following basis:

(i) if the Reference Rate is a composite quotation or customarily supplied by one entity, the Calculation Agent will determine the Reference Rate which appears on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(ii) if Linear Interpolation is specified as applicable in respect of an Interest Period in the applicable Final Terms, the Rate of Interest for such Interest Period shall be calculated by the Calculation Agent by straight-line linear interpolation by reference to two rates which appear on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date, where:

(A) one rate shall be determined as if the relevant Interest Period were the period of time for which rates are available next shorter than the length of the relevant Interest Period; and

(B) the other rate shall be determined as if the relevant Interest Period were the period of time for which rates are available next longer than the length of the relevant Interest Period; **provided, however, that** if no rate is available for a period of time next shorter or, as the case may be, next longer than the length of the relevant Interest Period, then Calculation Agent shall determine such rate at such time and by reference to such sources as it determines appropriate;

in any other case, the Calculation Agent will determine the arithmetic mean of the Reference Rates which appear on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(iii) if, in the case of (i) above, such rate does not appear on that page or, in the case of (ii) above, fewer than two such rates appear on that page or if, in either case, the Relevant Screen Page is unavailable, the Issuer will:

(A) request the principal Relevant Financial Centre office of each of the Reference Banks to provide a quotation of the Reference Rate at approximately the Relevant Time on the Interest Determination Date to prime banks in the Relevant Financial Centre inter-bank market in an amount that is representative for a single transaction in that market at that time; and

(B) provide such quotations to the Calculation Agent who shall determine the arithmetic mean of such quotations; and

(iv) if fewer than two such quotations are provided as requested, the Calculation Agent will determine the arithmetic mean of the rates (being the nearest to the Reference Rate, as determined by the Principal Paying Agent) quoted by major banks in the Principal Financial Centre of the Specified Currency, requested and selected by the Issuer, at approximately 11.00 a.m. (local time in the Principal Financial Centre of the Specified Currency) on the first day of the relevant Interest Period for loans in the Specified Currency to leading European banks for a period equal to the relevant Interest Period and in an amount that is representative for a single transaction in that market at that time, and the Rate of Interest for such Interest Period shall be the sum of the Margin (as specified in the Final Terms) and the rate or (as the case may be) the arithmetic mean so determined; **provided, however, that** if the Calculation Agent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance with the above provisions in relation to any Interest Period, the Rate of Interest applicable to the Notes during such Interest Period will be the sum of the Margin and the rate or (as the case may be) the arithmetic mean last determined in relation to the Notes in respect of the preceding Interest Period.

(d) *ISDA Determination*

If ISDA Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be the sum of the Margin and the relevant ISDA Rate where:

"**ISDA Rate**" in relation to any Interest Period means a rate equal to the Floating Rate (as defined in the ISDA Definitions) that would be determined by the Calculation Agent under an interest rate swap transaction if the Calculation Agent were acting as Calculation Agent (as defined in the ISDA Definitions) for that interest rate swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:

(i) the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the relevant Final Terms;

(ii) the Designated Maturity (as defined in the ISDA Definitions) is a period specified in the relevant Final Terms;

(iii) the relevant Reset Date (as defined in the ISDA Definitions) is either (A) the first day of that Interest Period or (B) in any other case, as specified in the relevant Final Terms;

(iv) if applicable, the "Applicable Benchmark", "Fixing Day", "Fixing Time" and/or any other items specified in the relevant Final Terms are as specified in the relevant Final Terms; and

------

(v) if Linear Interpolation is specified as applicable in respect of an Interest Period in the applicable Final Terms, the Rate of Interest for such Interest Period shall be calculated by the Calculation Agent by straight-line linear interpolation by reference to two rates based on the relevant Floating Rate Option, where:

(A) one rate shall be determined as if the Designated Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Period; and

(B) the other rate shall be determined as if the Designated Maturity were the period of time for which rates are available next longer than the length of the relevant Interest Period; **provided, however, that** if there is no rate available for a period of time next shorter than the length of the relevant Interest Period or, as the case may be, next longer than the length of the relevant Interest Period, then the Rate of Interest for such Interest Period shall be calculated as if Linear Interpolation were not applicable.

(e) *Interest – Floating Rate Notes referencing SONIA*

(i) This Condition 2(e) (*Interest – Floating Rate Notes referencing SONIA*) is applicable to the Notes only if the Floating Rate Note Provisions are specified in the relevant Final Terms as being applicable and the "Reference Rate" is specified in the relevant Final Terms as being "SONIA". Where "SONIA" is specified as the Reference Rate in the Final Terms, the Rate of Interest for each Interest Period will, subject as provided below, be Compounded Daily SONIA plus or minus (as specified in the relevant Final Terms) the Margin, all as determined by the Calculation Agent.

For the purposes of this Condition 5.2(e) (*Interest – Floating Rate Notes referencing SONIA*):

"**Compounded Daily SONIA**", with respect to an Interest Period, will be calculated by the Calculation Agent on each Interest Determination Date in accordance with the following formula, and the resulting percentage will be rounded, if necessary, to the fourth decimal place, with 0.00005 being rounded upwards:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *do* |  |  |  |  |  |
| ∏ | 1+ | *SONIAi-pLBD* x *ni* | -1 | x | 365 |
| ∏ | 1+ | 365 | -1 | x | *d* |
| *i*=1 |  |  |  |  |  |

---

**d**" means the number of calendar days in:

(i) where "Lag" is specified as the Observation Method in the relevant Final Terms, the relevant Interest Period; or

(ii) where "Observation Shift" is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period;

"**do**" means the number of London Banking Days in:

(i) where "Lag" is specified as the Observation Method in the relevant Final Terms, the relevant Interest Period; or

(ii) where "Observation Shift" is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period;

"**i**" means a series of whole numbers from one to do, each representing the relevant London Banking Day in chronological order from, and including, the first London Banking Day in:

(i) where "Lag" is specified as the Observation Method in the relevant Final Terms, the relevant Interest Period; or

(ii) where "Observation Shift" is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period;

to, and including, the last London Banking Day in such period;

"**Interest Determination Date**" means, in respect of any Interest Period, the date falling p London Banking Days prior to the Interest Payment Date for such Interest Period (or the date falling "p" London Banking Days prior to such earlier date, if any, on which the Notes are due and payable).

"**London Banking Day**" or "**LBD**" means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London;

"**ni**" for any London Banking Day "i", in the relevant Interest Period or Observation Period (as applicable) is the number of calendar days from, and including, such London Banking Day "i" up to, but excluding, the following London Banking Day;

"**Observation Period**" means, in respect of an Interest Period, the period from, and including, the date falling "p" London Banking Days prior to the first day of such Interest Period (and the first Interest Period shall begin on and include the Interest Commencement Date) and ending on, but excluding, the date which is "p" London Banking Days prior to the Interest Payment Date for such Interest Period (or the date falling "p" London Banking Days prior to such earlier date, if any, on which the Notes become due and payable);

"**p**" for any Interest Period or Observation Period (as applicable), means the number of London Banking Days specified as the "Lag Period" or the "Observation Shift Period" (as applicable) in the relevant Final Terms;

"**SONIA Reference Rate**" means, in respect of any London Banking Day, a reference rate equal to the daily Sterling Overnight Index Average ("**SONIA**") rate for such London Banking Day as provided by the administrator of SONIA to authorised distributors and as then published on the Relevant Screen Page (or if the Relevant Screen Page is unavailable, as otherwise is published by such authorised distributors) on the London Banking Day immediately following such London Banking Day; and

"**SONIAi**" means the SONIA Reference Rate for:

------

(i) where "Lag" is specified as the Observation Method in the relevant Final Terms, the London Banking Day falling "p" London Banking Days prior to the relevant London Banking Day "i"; or

(ii) where "Observation Shift" is specified as the Observation Method in the relevant Final Terms; the relevant London Banking Day "i";

*For the avoidance of doubt, the formula for the calculation of Compounded Daily SONIA only compounds the SONIA Reference Rate in respect of any London Banking Day. The SONIA Reference Rate applied to a day that is a non-London Banking Day will be taken by applying the SONIA Reference Rate for the previous London Banking Day but without compounding.*

(ii) If, in respect of any London Banking Day in the relevant Interest Period or Observation Period (as applicable), the SONIA Reference Rate is not available on the Relevant Screen Page or has not otherwise been published by the relevant authorised distributors, such SONIA Reference Rate shall, subject to Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser)*), be:

(A) the Bank of England's Bank Rate (the "**Bank Rate**") prevailing at close of business on the relevant London Banking Day; plus (B) the mean of the spread of the SONIA Reference Rate to the Bank Rate over the previous five London Banking Days on which a SONIA Reference Rate has been published, excluding the highest spread (or, if there is more than one highest spread, one only of those highest spreads) and lowest spread (or, if there is more than one lowest spread, one only of those lowest spreads) to the Bank Rate; or

(B) if the Bank Rate is not published by the Bank of England at close of business on the relevant London Banking Day, the SONIA Reference Rate published on the Relevant Screen Page (or otherwise published by the relevant authorised distributors) for the first preceding London Banking Day on which the SONIA Reference Rate was published on the Relevant Screen Page (or otherwise published by the relevant authorised distributors).

(ii) Subject to Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser)*), if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this Condition 5.2(e) (*Interest – Floating Rate Notes referencing SONIA*), the Issuer shall give notice thereof to the Agents, the Trustee and the Noteholders in accordance with Condition 13 (*Notices*) no later than the Determination Cut-off Date and the Rate of Interest shall be (A) that determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period) or (B) if there is no such preceding Interest Determination Date, the initial Rate of Interest which would have been applicable to the Notes for the first Interest Period had the Notes been in issue for a period equal in duration to the scheduled first Interest Period but ending on (and excluding) the Interest Commencement Date (but applying the Margin applicable to the first Interest Period), in each case as determined by the Calculation Agent.

(f) *Interest – Floating Rate Notes referencing SOFR*

(i) This Condition 2(f) (*Interest – Floating Rate Notes referencing SOFR*) is applicable to the Notes only if the Floating Rate Note Provisions are specified in the relevant Final Terms as being applicable and the "Reference Rate" is specified in the relevant Final Terms as being "SOFR". Where "SOFR" is specified as the Reference Rate in the Final Terms, the Rate of Interest for each Interest Period will, subject as provided below, be the Benchmark plus or minus (as specified in the relevant Final Terms) the Margin, all as determined by the Calculation Agent on each Interest Determination Date.

For the purposes of this Condition 5.2(f) (*Interest – Floating Rate Notes referencing SOFR*):

"**Benchmark**" means Compounded SOFR, which is a compounded average of daily SOFR, as determined for each Interest Period in accordance with the specific formula and other provisions set out in this Condition 5.2(f) (*Interest – Floating Rate Notes referencing SOFR*).

*DailySOFRrateswillnotbepublishedinrespectofanydaythatisnotaU.S.GovernmentSecurities Business Day, such as a Saturday, Sunday or holiday. For this reason, in determining Compounded SOFR in accordance with the specific formula and other provisions set forth herein, the daily SOFR rate for any U.S. Government Securities Business Day that immediately precedes one or more days that are not U.S. Government Securities Business Days will be multiplied by the number of calendar days from and including such U.S. Government Securities Business Day to, but excluding, the following U.S. Government Securities Business Day.*

*If the Issuer determines that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred in respect of Compounded SOFR (or the daily SOFR used in the calculation hereof) prior to the relevant SOFR Determination Time, then the provisions under Condition 5.2(f)(i) to (iv) below will apply.*

"**Business Day**" means any weekday that is a U.S. Government Securities Business Day and is not a legal holiday in New York and each (if any) Additional Business Centre(s) and is not a date on which banking institutions in those cities are authorised or required by law or regulation to be closed;

"**Compounded SOFR**" with respect to any Interest Period, means the rate of return of a daily compound interest investment computed in accordance with the following formula (and the resulting percentage will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with 0.000005 being rounded upwards to 0.00001):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *do* |  |  |  |  |  |
| ∏ | 1+ | *SOFRi x ni* | -1 | x | 360 |
| ∏ | 1+ | 360 | -1 | x | *d* |
| *i*=1 |  |  |  |  |  |

---

"**d**" is the number of calendar days in:

(i) where "Lag" is specified as the Observation Method in the relevant Final Terms, the relevant Interest Period; or

------

(ii) where "Observation Shift" is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period.

"**do**" is the number of U.S. Government Securities Business Days in:

(i) where "Lag" is specified as the Observation Method in the relevant Final Terms, the relevant Interest Period; or

(ii) where "Observation Shift" is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period.

"**i**" is a series of whole numbers from one to "do", each representing the relevant U.S. Government Securities Business Day in chronological order from, and including, the first U.S. Government Securities Business Day in:

(i) where "Lag" is specified as the Observation Method in the relevant Final Terms, the relevant Interest Period; or

(ii) where "Observation Shift" is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period,

to and including the last US Government Securities Business Day in such period;

"**Interest Determination Date**" means, in respect of any Interest Period, the date falling "p" U.S. Government Securities Business Days prior to the Interest Payment Date for such Interest Period (or the date falling "p" U.S. Government Securities Business Days prior to such earlier date, if any, on which the Notes are due and payable);

"**ni**" for any U.S. Government Securities Business Day "i" in the relevant Interest Period or Observation Period (as applicable), is the number of calendar days from, and including, such U.S. Government Securities Business Day "i" to, but excluding, the following U.S. Government Securities Business Day ("**i+1**");

"**Observation Period**" in respect of an Interest Period means the period from, and including, the date falling "p" U.S. Government Securities Business Days preceding the first day in such Interest Period (and the first Interest Period shall begin on and include the Interest Commencement Date) to, but excluding, the date falling "p" U.S. Government Securities Business Days preceding the Interest Payment Date for such Interest Period (or the date falling "p" U.S. Government Securities Business Days prior to such earlier date, if any, on which the Notes become due and payable);

"**p**" for any Interest Period or Observation Period (as applicable) means the number of U.S. Government Securities Business Days specified as the "Lag Period" or the "Observation Shift Period" (as applicable) in the relevant Final Terms;

"**SOFR**" with respect to any U.S. Government Securities Business Day, means:

(i) the Secured Overnight Financing Rate published for such U.S. Government Securities Business Day as such rate appears on the SOFR Administrator's Website at 3:00 m. (New York time) on the immediately following U.S. Government Securities Business Day (the "**SOFR Determination Time**"); or

(ii) Subject to Condition 5.2(f)(ii) below, if the rate specified in (i) above does not so appear, the Secured Overnight Financing Rate as published in respect of the first preceding U.S. Government Securities Business Day for which the Secured Overnight Financing Rate was published on the SOFR Administrator's Website;

"**SOFR Administrator**" means the Federal Reserve Bank of New York (or a successor administrator of the Secured Overnight Financing Rate);

"**SOFR Administrator's Website**" means the website of the Federal Reserve Bank of New York, or any successor source;

"**SOFRi**" means the SOFR for:

(i) where "Lag" is specified as the Observation Method in the applicable Final Terms, the S. Government Securities Business Day falling "p" U.S. Government Securities Business Days prior to the relevant U.S. Government Securities Business Day "i"; or

(ii) where "Observation Shift" is specified as the Observation Method in the relevant Final Terms, the relevant U.S. Government Securities Business Day "i"; and

"**U.S. Government Securities Business Day**" means any day except for a Saturday, a Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.

------

(ii) If the Issuer or, at the Issuer's request, the Independent Adviser determines on or prior to the relevant Reference Time that a Benchmark Transition Event and its related Benchmark Replacement Date (each as defined below) have occurred with respect to the then-current Benchmark, the Benchmark Replacement will replace the then-current Benchmark for all purposes relating to the Notes in respect of all determinations on such date and for all determinations on all subsequent dates. In connection with the implementation of a Benchmark Replacement, the Issuer will have the right to make Benchmark Replacement Conforming Changes from time to time. If the Issuer exercises its right to make Benchmark Replacement Conforming Changes at any time, at the request and expense of the Issuer, but subject to receipt by the Trustee and the Paying Agents of a certificate signed by two Authorised Signatories of the Issuer pursuant to the below, the Trustee, without any requirement for the consent or approval of the Noteholders, and the Paying Agents shall concur with the Issuer in effecting any Benchmark Replacement Conforming Changes required to these Conditions, the Trust Deed and/or the Agency Agreement (regardless of whether or not the effecting of such Benchmark Replacement Conforming Changes would constitute a Basic Terms Modification (as defined in the Trust Deed) or one or more provisos under Condition 14 (*Meetings of Noteholders, Modification, Waiver, Authorisation and Determination, Substitution*) and neither the Trustee nor the Paying Agents shall be liable to any party for any consequences thereof. Notwithstanding the above, neither the Trustee nor the Paying Agents shall be obliged so to concur if in its reasonable opinion doing so would have the effect of (i) imposing more onerous obligations upon it or exposing it to any additional duties, responsibilities or liabilities or reducing or amending the rights and/or protective provisions afforded to it in these Conditions, the Trust Deed or the Agency Agreement (including, for the avoidance of doubt, any supplemental trust deed or agency agreement) in any way or (ii) exposing the Trustee to any liabilities against which it has not been indemnified and/or prefunded and/or secured to their satisfaction.

Any determination, decision or election that may be made by the Issuer or the Independent Adviser, as the case may be pursuant to this section, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection: (i) will be conclusive and binding absent manifest error; (ii) if made by the Issuer, will be made in the sole discretion of the Issuer; and (iii) if made by the Independent Adviser, will be made after consultation with the Issuer and the Independent Adviser will not make any such determination, decision or election to which the Issuer reasonably objects; and (iv) notwithstanding anything to the contrary in the documentation relating to the Notes, shall become effective without consent from the holders of the Notes or any other

For the purposes of this Condition 5.2(f)(ii):

"**Benchmark**" means, initially, Compounded SOFR, as such term is defined above; *provided that* if the Issuer determines on or prior to the Reference Time that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to Compounded SOFR (or the published daily SOFR used in the calculation thereof) or the then-current Benchmark, then "Benchmark" shall mean the applicable Benchmark Replacement.

"**Benchmark Replacement**" means the first alternative set forth in the order below that can be determined by the Issuer or the Independent Adviser, as the case may be, as of the Benchmark Replacement Date:

(i) the sum of: (A) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark and (B) the Benchmark Replacement Adjustment;

(ii) the sum of: (A) the ISDA Fallback Rate and (B) the Benchmark Replacement Adjustment; or

(iii) the sum of: (A) the alternate rate of interest that has been selected by the Issuer or the Independent Adviser, as the case may be, as the replacement for the then-current Benchmark giving due consideration to any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar-denominated floating rate notes at such time and (B) the Benchmark Replacement Adjustment;

"**Benchmark Replacement Adjustment**" means the first alternative set forth in the order below that can be determined by the Issuer or the Independent Adviser, as the case may be, as of the Benchmark Replacement Date:

(i) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;

(ii) if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, the ISDA Fallback Adjustment; or

(iii) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Issuer or the Independent Adviser, as the case may be, giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated floating rate notes at such time;

"**Benchmark Replacement Conforming Changes**" means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the timing and frequency of determining rates and making payments of interest, rounding of amounts or tenors, and other administrative matters) that the Issuer or the Independent Adviser, as the case may be, decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the Issuer or the Independent Adviser, as the case may be, decides that adoption of any portion of such market practice is not administratively feasible or if the Issuer determines that no market practice for use of the Benchmark Replacement exists, in such other manner as the Issuer or the Independent Adviser, as the case may be, determines is reasonably necessary);

"**Benchmark Replacement Date**" means the earliest to occur of the following events with respect to the then-current Benchmark (including the daily published component used in the calculation thereof):

------

(i) in the case of clause (i) or (ii) of the definition of "Benchmark Transition Event", the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the Benchmark permanently or indefinitely ceases to provide the Benchmark (or such component); or

(ii) in the case of clause (iii) of the definition of "Benchmark Transition Event", the date of the public statement or publication of information referenced therein.

For the avoidance of doubt, if the event that gives rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination;

"**Benchmark Transition Event**" means the occurrence of one or more of the following events with respect to the then-current Benchmark (including the daily published component used in the calculation thereof):

(i) a public statement or publication of information by or on behalf of the administrator of the Benchmark (or such component) announcing that such administrator has ceased or will cease to provide the Benchmark (or such component), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark (or such component); or

(ii) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark (or such component), the central bank for the currency of the Benchmark (or such component), an insolvency official with jurisdiction over the administrator for the Benchmark (or such component), a resolution authority with jurisdiction over the administrator for the Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark, which states that the administrator of the Benchmark (or such component) has ceased or will cease to provide the Benchmark (or such component) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark (or such component); or

(iii) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative;

"**ISDA Fallback Adjustment**" means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark;

"**ISDA Fallback Rate**" means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark for the applicable tenor excluding the applicable ISDA Fallback Adjustment;

"**Reference Time**" with respect to any determination of the Benchmark means (i) if the Benchmark is Compounded SOFR, the SOFR Determination Time, and (ii) if the Benchmark is not Compounded SOFR, the time determined by the Issuer or the Independent Adviser, as the case may be, after giving effect to the Benchmark Replacement Conforming Changes;

"**Relevant Governmental Body**" means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto; and

"**Unadjusted Benchmark Replacement**" means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

(iii) Any Benchmark Replacement, Benchmark Replacement Adjustment and the specific terms of any Benchmark Replacement Conforming Changes, determined under Condition 5.2(f)(ii) above will be notified promptly, but in any event no later than the Determination Cut-off Date (as defined below), by the Issuer to the Trustee, the Paying Agents and, in accordance with Condition 13 (*Notices*), the Noteholders. Such notice shall be irrevocable and shall specify the effective date on which such changes take effect.

No later than notifying the Trustee and the Paying Agents of the same, the Issuer shall deliver to the Trustee and the Paying Agents a certificate signed by two Authorised Signatories of the Issuer:

(A) confirming (x) that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred, (y) the relevant Benchmark Replacement and, (z) where applicable, any Benchmark Replacement Adjustment and/or the specific terms of any relevant Benchmark Replacement Conforming Changes, in each case as determined in accordance with the provisions of this Condition 5.2(f)(ii); and

(B) certifying that the relevant Benchmark Replacement Conforming Changes are necessary to ensure the proper operation of such Benchmark Replacement and/or Benchmark Replacement Adjustment.

The Trustee and the Paying Agents shall be entitled to rely on such certificate (without enquiry or liability to any person) as sufficient evidence thereof. The Benchmark Replacement and the Benchmark Replacement Conforming Changes (if any) specified in such certificate will (in the absence of manifest error and without prejudice to the Trustee's or the Paying Agent's ability to rely on such certificate as aforesaid) be binding on the Trustee, the Paying Agents and the Noteholders.

------

(iv) If the Rate of Interest cannot be determined in accordance with the foregoing provisions of this Condition 5.2(f) (*Interest – Floating Rate Notes referencing SOFR*), the Issuer shall give notice thereof to the Agents, the Trustee and the Noteholders in accordance with Condition 13 (*Notices*) no later than the Determination Cut-off Date and the Rate of Interest shall be (A) that determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period) or (B) if there is no such preceding Interest Determination Date, the initial Rate of Interest which would have been applicable to the Notes for the first Interest Period had the Notes been in issue for a period equal in duration to the scheduled first Interest Period but ending on (and excluding) the Interest Commencement Date (but applying the Margin applicable to the first Interest Period).

(g) *Interest – Floating Rate Notes referencing €STR*

(i) This Condition 5.2(g) (*Interest – Floating Rate Notes referencing €STR*) is applicable to the Notes only if the Floating Rate Note Provisions are specified in the relevant Final Terms as being applicable and the "Reference Rate" is specified in the relevant Final Terms as being "€STR". Where "€STR" is specified as the Reference Rate in the Final Terms, the Rate of Interest for each Interest Period will, subject as provided below, be Compounded Daily €STR plus or minus (as specified in the relevant Final Terms) the Margin, all as determined by the Calculation Agent on each Interest Determination Date.

For the purposes of this Condition 5.2(g) (*Interest – Floating Rate Notes referencing €STR*):

"**Compounded Daily €STR**" means, with respect to any Interest Period, the rate of return of a daily compound interest investment (with the daily euro short-term rate as reference rate for the calculation of interest) as calculated by the Calculation Agent as at the relevant Interest Determination Date in accordance with the following formula (and the resulting percentage will be rounded if necessary to the nearest fifth decimal place, with 0.000005 being rounded upwards):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *do* |  |  |  |  |  |
| ∏ | 1+ | €STR*i* x *ni* | -1 | x | D |
| ∏ | 1+ | D | -1 | x | *d* |
| *i*=1 |  |  |  |  |  |

---

where:

"**d**" means the number of calendar days in:

(i) where "Lag" is specified as the Observation Method in the relevant Final Terms, the relevant Interest Period; or

(ii) where "Observation Shift" is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period;

"**D**" means the number specified as such in the relevant Final Terms (or, if no such number is specified, 360);

"**do**" means the number of TARGET Settlement Days in:

(i) where "Lag" is specified as the Observation Method in the relevant Final Terms, the relevant Interest Period; or

(ii) where "Observation Shift" is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period;

the "**€STR reference rate**", in respect of any TARGET Settlement Day, is a reference rate equal to the daily euro short-term rate ("**€STR**") for such TARGET Settlement Day as provided by the European Central Bank as the administrator of €STR (or any successor administrator of such rate) on the website of the European Central Bank (or, if no longer published on its website, as otherwise published by it or provided by it to authorised distributors and as then published on the Relevant Screen Page or, if the Relevant Screen Page is unavailable, as otherwise published by such authorised distributors) on the TARGET Settlement Day immediately following such TARGET Settlement Day (in each case, at the time specified by, or determined in accordance with, the applicable methodology, policies or guidelines, of the European Central Bank or the successor administrator of such rate);

"**€STRi**" means the €STR reference rate for:

(i) where "*Lag*" is specified as the Observation Method in the relevant Final Terms, the TARGET Settlement Day falling "*p*" TARGET Settlement Days prior to the relevant TARGET Settlement Day "***i****"*; or

(ii) where "*Observation Shift*" is specified as the Observation Method in the relevant Final Terms, the relevant TARGET Settlement Day "***i****"*.

"***i***" is a series of whole numbers from one to "*do*", each representing the relevant TARGET Settlement Day in chronological order from, and including, the first TARGET Settlement Day in:

(i) where "*Lag*" is specified as the Observation Method in the relevant Final Terms, the relevant Interest Period; or

(ii) where "*Observation Shift*" is specified as the Observation Method in the relevant Final Terms, the relevant Observation Period;

to, and including, the last TARGET Settlement Day in such period;

"***ni***" for any TARGET Settlement Day "*i*" in the relevant Interest Period or Observation Period (as applicable), means the number of calendar days from (and including) such TARGET Settlement Day "*i*" up to (but excluding) the following TARGET Settlement Day;

------

"**Observation Period**" means, in respect of any Interest Period, the period from (and including) the date falling "*p*" TARGET Settlement Days prior to the first day of the relevant Interest Period (and the final Interest Period shall begin on and include the Interest Commencement Date) to (but excluding) the date falling "*p*" TARGET Settlement Days prior to (A) (in the case of an Interest Period) the Interest Payment Date for such Interest Period or (B) such earlier date, if any, on which the Notes become due and payable;

"**p**" for any latest Interest Period or Observation Period (as applicable), means the number of TARGET Settlement Days specified as the "Lag Period" or the "Observation Shift Period" (as applicable) in the relevant Final Terms; and

"**Target Settlement Day**" means a day on which T2, is operating credit or transfer instructions in respect of payments in euro.

(ii) Subject to Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser)*), if, where any Rate of Interest is to be calculated pursuant to the foregoing provisions of this Condition 5.2(g) (*Interest – Floating Rate Notes referencing €STR*), in respect of any TARGET Settlement Day in respect of which an applicable €STR reference rate is required to be determined, such €STR reference rate is not made available on the Relevant Screen Page or has not otherwise been published by the relevant authorised distributors, then the €STR reference rate in respect of such TARGET Settlement Day shall be the €STR reference rate for the first preceding TARGET Settlement Day in respect of which €STR reference rate was published by the European Central Bank on its website, as determined by the Calculation Agent.

(iii) Subject to Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser)*), if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this Condition 5.2(g) (*Interest – Floating Rate Notes referencing €STR*), the Rate of Interest shall be (A) that determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period) or (B) if there is no such preceding Interest Determination Date, the initial Rate of Interest which would have been applicable to the Notes for the first Interest Period had the Notes been in issue for a period equal in duration to the scheduled first Interest Period but ending on (and excluding) the Interest Commencement Date (but applying the Margin applicable to the first Interest Period).

(h) *Maximum or Minimum Rate of Interest*

If any Maximum Rate of Interest or Minimum Rate of Interest is specified in the relevant Final Terms, then the Rate of Interest shall in no event be greater than the maximum or be less than the minimum so specified.

(i) *Calculation of Interest Amount*

The Calculation Agent will, as soon as practicable after the time at which the Rate of Interest is to be determined in relation to each Interest Period, calculate the Interest Amount payable in respect of each Note for such Interest Period by applying the Rate of Interest to:

(A) in the case of Notes which are represented by a Global Note, the aggregate outstanding principal amount of the Notes represented by such Global Note; or

(B) in the case of Notes in definitive form, the Calculation Amount;

and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest Sub-Unit of the relevant Specified Currency, half of any such Sub- Unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Note in definitive form is a multiple of the Calculation Amount, the Interest Amount payable in respect of such Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding.

(j) *Calculation of other amounts*

If the relevant Final Terms specifies that any other amount is to be calculated by the Calculation Agent, the Calculation Agent will, as soon as practicable after the time or times at which any such amount is to be determined, calculate the relevant amount. The relevant amount will be calculated by the Calculation Agent in the manner specified in the relevant Final Terms.

For the avoidance of doubt, in no event shall the Calculation Agent be responsible for determining any Successor Rate, Alternative Reference Rate, Adjustment Spread, Benchmark Replacement, Benchmark Replacement Adjustment or any Benchmark Replacement Conforming Changes. The Calculation Agent will be entitled to conclusively rely on any determinations made by the Issuer or the Independent Adviser and in the absence of fraud, negligence or bad faith, will have no liability for such actions taken at the direction of the Issuer or the Independent Adviser.

(k) *Publication*

Subject to Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser)*), the Calculation Agent will cause each Rate of Interest and Interest Amount determined by it, together with the relevant Interest Payment Date, and any other amount(s) required to be determined by it together with any relevant payment date(s) to be notified to the Paying Agents and each listing authority and stock exchange (if any) by which the Notes have then been admitted to listing and/or trading as soon as practicable after such determination but (in the case of each Rate of Interest, Interest Amount and Interest Payment Date) in any event not later than the first day of the relevant Interest Period. Notice thereof shall also promptly be given to the Noteholders. The Calculation Agent will be entitled to recalculate any Interest Amount (on the basis of the foregoing provisions) without notice in the event of an extension or shortening of the relevant Interest Period.

(l) *Notifications* 

------

All notifications, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition 5.2 (*Floating Rate Note Provisions*) by the Calculation Agent will (in the absence of manifest error) be binding on the Issuer, the Trustee, the Paying Agents, the Noteholders and the Couponholders and no liability to any such Person will attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions for such purposes.

(m) *Benchmark Discontinuation (Independent Adviser)*

Notwithstanding the provisions of Condition 5.2 (*Floating Rate Note Provisions*) above, and other than in the case of a U.S. dollar-denominated floating rate Note for which the Reference Rate is specified in the relevant Final Terms as being "SOFR", if the Issuer determines that a Benchmark Event has occurred when any Rate of Interest (or the relevant component part thereof) remains to be determined by such Reference Rate (the "**Original Reference Rate**"), then the following provisions shall apply:

(i) the Issuer shall notify the Calculation Agent and shall use reasonable endeavours to select and appoint, as soon as reasonably practicable, an Independent Adviser to determine (acting in good faith and in a commercially reasonable manner), no later than 5 Business Days prior to the relevant Interest Determination Date relating to the next succeeding Interest Period (the "**Determination Cut-off Date**"), a Successor Rate (as defined below) or, alternatively, if there is no Successor Rate, an Alternative Reference Rate (as defined below) for purposes of determining the Rate of Interest (or the relevant component part thereof) applicable to the Notes;

(ii) if a Successor Rate or, failing which, an Alternative Reference Rate (as applicable) is determined in accordance with the preceding provisions, such Successor Rate or, failing which, an Alternative Reference Rate (as applicable) shall be the Reference Rate for each of the future Interest Periods (subject to the subsequent operation of, and to adjustment as provided in, this Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser*)); **provided, however, that** if the Independent Adviser is unable to or does not determine a Successor Rate or an Alternative Reference Rate prior to the relevant Interest Determination Date, the Rate of Interest applicable to the next succeeding Interest Period shall be equal to the Rate of Interest last determined in relation to the Notes in respect of the preceding Interest Period (or alternatively, if there has not been a first Interest Payment Date, the rate of interest shall be the initial Rate of Interest) (subject, where applicable, to substituting the Margin or Maximum or Minimum Rate of Interest that applied to such preceding Interest Period for the Margin or Maximum or Minimum Rate of Interest that is to be applied to the relevant Interest Period); for the avoidance of doubt, the proviso in this sub-paragraph (ii) shall apply to the relevant Interest Period only and any subsequent Interest Periods are subject to the subsequent operation of, and to adjustment as provided in, this Condition 2(m) (*Benchmark Discontinuation (Independent Adviser*));

(iii) if the Independent Adviser (in consultation with the Issuer) determines (acting in good faith and in a commercially reasonable manner) that an Adjustment Spread (as defined below) is required to be applied to the Successor Rate or the Alternative Reference Rate (as applicable) and determines the quantum of, or a formula or methodology for determining, such Adjustment Spread, then such Adjustment Spread shall be applied to the Successor Rate or the Alternative Reference Rate (as applicable). If the Independent Adviser is unable to determine the quantum of, or a formula or methodology for determining, such Adjustment Spread, then such Successor Rate or Alternative Reference Rate (as applicable) will apply without an Adjustment Spread;

(iv) if the Independent Adviser (in consultation with the Issuer) determines (acting in good faith and in a commercially reasonable manner) a Successor Rate or an Alternative Reference Rate (as applicable) and/or an Adjustment Spread in accordance with the above provisions, the Independent Adviser, may (acting in good faith and in a commercially reasonable manner) also specify changes to these Conditions, the Trust Deed, and/or the Agency Agreement, including but not limited to the Day Count Fraction, Relevant Screen Page, Business Day Convention, Business Days, Interest Determination Date, and/or the definition of Reference Rate applicable to the Notes, and the method for determining the fallback rate in relation to the Notes, which are necessary in order to ensure the proper operation of such Successor Rate or the Alternative Reference Rate (as applicable) and/or Adjustment Spread, which changes shall apply to the Notes for all future Interest Periods (subject to the subsequent operation of, and to adjustment as provided in, this Condition 2(m) (*Benchmark Discontinuation (Independent Adviser*)) (each of the changes described above, a "**Benchmark Amendment**" and together, the "**Benchmark Amendments**"). For the avoidance of doubt, at the request and expense of the Issuer and subject to receipt by the Trustee and the Paying Agents of a certificate signed by two Authorised Signatories of the Issuer pursuant to sub-paragraph (v) below, the Trustee, without any requirement for the consent or approval of the Noteholders, and the Paying Agents shall concur with the Issuer in effecting any Benchmark Amendments to the Trust Deed, the Agency Agreement and these Conditions as the Issuer determines and certifies to the Trustee and the Paying Agents are required to be made in order to give effect to this Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser*)) regardless of whether or not giving effect to such Benchmark Amendments would constitute a Basic Terms Modification (as defined in the Trust Deed) or one or more provisos under Condition 14 (*Meetings of Noteholders, Modification, Waiver, Authorisation and Determination, Substitution*), **provided, however,** that neither the Trustee nor the Paying Agents (as applicable) shall be obliged so to concur if in the opinion of the Trustee and/or the Paying Agents (as applicable), doing so would (i) impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce or amend the protective provisions afforded to the Trustee and/or the Paying Agents (as applicable) in these Conditions, the Trust Deed (including, for the avoidance of doubt, any supplemental trust deed) or the Agency Agreement or (ii) expose the Trustee and/or the Paying Agents (as applicable) to any additional liabilities against which it has not been indemnified and/or secured and/or prefunded to its satisfaction. Noteholder approval or consent shall not be required in connection with effecting the Successor Rate or Alternative Reference Rate (as applicable), any Adjustment Spread or such other changes, including for the execution of any documents or other steps by the Trustee or Paying Agents (if required);

(v) the Issuer shall promptly, but in any event no later than the Determination Cut-Off Date, following the determination of any Successor Rate or Alternative Reference Rate (as applicable) or Adjustment Spread, give notice thereof and of any changes pursuant to sub-paragraph (iv) above to the Trustee, the Paying Agents and the Noteholders in accordance with Condition 13 (*Notices*), which shall specify the effective date(s) for such Successor Rate or Alternative Reference Rate or Adjustment Spread (as applicable) and any Benchmark Amendments required to be made to these Conditions, the Trust Deed and/or the Agency Agreement. No later than notifying the Trustee and the Paying Agents of the same, which shall not be less than the Determination Cut-Off Date, the Issuer shall deliver to the Trustee and the Paying Agent a certificate signed by two Authorised Signatories (as defined in the Trust Deed) of the Issuer:

------

(A) confirming (i) that a Benchmark Event has occurred, (ii) the Successor Rate or, as the case may be, Alternative Reference Rate and (iii) where applicable, any Adjustment Spread and/or the specific terms of any Benchmark Amendments, in each case as determined in accordance with the provision of this Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser*)); and

(B) certifying that the Benchmark Amendments are necessary to ensure the proper operation of such Successor Rate, Alternative Reference Rate, and/or any Adjustment Spread, as the case may be.

The Trustee and the Paying Agents shall be entitled to rely on such certificate (without liability to any person) as sufficient evidence thereof. The Successor Rate or Alternative Reference Rate (as applicable), the Adjustment Spread (if any), and the Benchmark Amendments (if any) determined in accordance with this Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser*)) and specified in such certificate will (in the absence of manifest error or negligence in the determination of the Successor Rate or Alternative Reference Rate (as applicable), the Adjustment Spread (if any) and the Benchmark Amendments (if any) and without prejudice to the Trustee's and/or the Principal Paying Agent's ability to rely on such certificate as aforesaid) be binding on the Issuer, the Trustee, the Paying Agents and the Noteholders;

(vi) an Independent Adviser appointed pursuant to this Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser*)) shall act in good faith and in a commercially reasonable manner and in consultation with the Issuer and (in the absence of bad faith, fraud or negligence) shall have no liability whatsoever to the Trustee, the Paying Agents or the Noteholders for any determination made by it pursuant to this Condition 2(m) (*Benchmark Discontinuation (Independent Adviser*)); and

(vii) *Calculation Agent:* notwithstanding any other provision of this Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser*)), if following the determination of any Successor Rate, Alternative Reference Rate, Adjustment Spread or Benchmark Amendments, in the Calculation Agent's opinion there is any uncertainty between two or more alternative courses of action in making any determination or calculation under this Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser*)), the Calculation Agent shall promptly notify the Issuer thereof and the Issuer shall direct the Calculation Agent in writing as to which alternative course of action to If the Calculation Agent is not promptly provided with such direction, or is otherwise unable (other than due to its own gross negligence, wilful default, or fraud) to make such calculation or determination for any reason it shall notify the Issuer thereof and the Calculation Agent shall be under no obligation to make such calculation or determination and (in the absence of such gross negligence, wilful default, or fraud) shall not incur any liability for not doing so.

For the purposes of this Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser*)):

"**Adjustment Spread**" means a spread (which may be positive or negative) or formula or methodology for calculating a spread, which the Independent Adviser (in consultation with the Issuer), determines (acting in good faith and in a commercially reasonable manner) is required to be applied to the relevant Successor Rate or the relevant Alternative Reference Rate (as applicable) in order to reduce or eliminate, to the extent reasonably practicable in the circumstances, any economic prejudice or benefit (as the case may be) to Noteholders and Couponholders as a result of the replacement of the Reference Rate with the Successor Rate or the Alternative Reference Rate (as applicable) and is the spread, formula or methodology which:

(i) in the case of a Successor Rate, is formally recommended in relation to the replacement of the Reference Rate with the Successor Rate by any Relevant Nominating Body; or

(ii) in the case of a Successor Rate for which no such recommendation has been made or in the case of an Alternative Reference Rate, the Independent Adviser (in consultation with the Issuer) determines (acting in good faith and in a commercially reasonable manner) is recognised or acknowledged as being in customary market usage in international debt capital markets transactions which reference the Reference Rate where such rate has been replaced by the Successor Rate or the Alternative Reference Rate (as applicable); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (iii) if no such customary market usage is recognised or acknowledged, the Independent Adviser (in consultation with the Issuer) in its discretion determines (acting in good faith and in a commercially reasonable manner) to be appropriate;

"**Alternative Reference Rate**" means the rate (and related alternative screen page or source, if available) that the Independent Adviser determines in accordance with this Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser*)) has replaced the Original Reference Rate in customary market usage in the international debt capital markets for the purposes of determining rates of interest (or the relevant component part thereof) in respect of notes denominated in the Specified Currency and of a comparable duration to the relevant Interest Period or, if the Independent Adviser determines that there is no such rate, such other rate as the Independent Adviser determines in its discretion (acting in good faith and in a commercially reasonable manner) is most comparable to the Original Reference Rate;

"**Benchmark Event**" means:

(i) the Original Reference Rate ceasing to be published on the Relevant Screen Page for a period of at least 5 Business Days or ceasing to exist; or

(ii) a public statement by the administrator of the Original Reference Rate that it will, by a specified date within the following six months, cease publishing the Original Reference Rate permanently or indefinitely (in circumstances where no successor administrator has been appointed that will continue publication of the Original Reference Rate); or

(iii) a public statement by the supervisor of the administrator of the Original Reference Rate that the Original Reference Rate has been or will, by a specified date within the following six months, be permanently or indefinitely discontinued; or

(iv) a public statement by the supervisor of the administrator of the Original Reference Rate as a consequence of which the Original Reference Rate will be prohibited from being used or that its use will be subject to restrictions or adverse consequences, in each case by a specified date within the following six months; or

------

(v) a public statement by the supervisor of the administrator of the Original Reference Rate that, in the view of such supervisor, the Original Reference Rate is no longer representative of an underlying market; or

(vi) it has become unlawful for the Calculation Agent or the Issuer to calculate any payments due to be made to any Noteholder using the Original Reference Rate.

in each case, as determined by the Issuer or, in the case of sub-paragraph (vi) above, the relevant party, and notwithstanding the sub-paragraphs above, where the relevant Benchmark Event is a public statement within sub-paragraphs (ii), (iii) or (iv) above and the specified date in the public statement is more than six months after the date of that public statement, the Benchmark Event shall not be deemed to occur until the date falling six months prior to such specified date.

"**Independent Adviser**" means an independent financial institution of international repute or other independent financial adviser with appropriate expertise in the international debt capital markets, in each case selected and appointed by the Issuer at its own expense;

"**Relevant Nominating Body**" means, in respect of a reference rate or screen rate (as applicable):

(a) the central bank, reserve bank, monetary authority or any similar institution for the currency to which the reference rate or screen page (as applicable) relates, or any central bank or other supervisory authority which is responsible for supervising the administrator of the reference rate or screen page (as applicable); or

(b) any working group or committee sponsored by, chaired or co-chaired by or constituted at the request of

(i) the central bank, reserve bank, monetary authority or any similar institution for the currency to which the reference rate or screen rate (as applicable) relates,

(ii) any central bank or other supervisory authority which is responsible for supervising the administrator of the reference rate or screen rate (as applicable),

(iii) a group of the aforementioned central banks or other supervisory authorities, or

(iv) the International Swaps and Derivatives Association, or any part thereof, or

(v) the Financial Stability Board or any part thereof; and

"**Successor Rate**" means the rate (and related alternative screen page or source, if available) that the Independent Adviser determines is a successor to or replacement of the Reference Rate which is formally recommended by any Relevant Nominating Body.

**5.3 Zero Coupon Note Provisions**

(a) *Application*

This Condition 5.3 (*Zero Coupon Note Provisions*) is applicable to the Notes only if the Zero Coupon Note Provisions are specified in the relevant Final Terms as being applicable.

(b) *Late payment on Zero Coupon Notes*

If the Redemption Amount payable in respect of any Zero Coupon Note is improperly withheld or refused, the Redemption Amount shall thereafter be an amount equal to the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Principal Paying Agent or as the case may be the Trustee has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

**5.4 Sustainability-Linked Notes:**

This Condition 5.4 (*Sustainability-Linked Notes*) applies to Notes in respect of which the relevant Final Terms indicate that the Sustainability-Linked Note provisions are applicable, in which case the relevant Final Terms shall specify whether a Step Up Option, a Step Down Option and/or a Redemption Premium Option is applicable (the "**Sustainability-Linked Notes**").

(a) *Step Up Option*

Where the Step Up Option is specified as being applicable in the relevant Final Terms and a Step Up Trigger Event occurs, the Rate of Interest or the applicable Margin, in the case of Floating Rate Notes, shall be increased by the Step Up Margin(s) specified in the relevant Final Terms (the Rate of Interest or, in the case of Floating Rate Notes, the applicable Margin as so adjusted, the "**Adjusted Rate of Interest**").

The Adjusted Rate of Interest shall apply as from (and including) the first day of the Interest Period commencing immediately following the date of occurrence of the relevant Step Up Trigger Event until the earlier of (a) the first day of the Interest Period commencing immediately following the occurrence of a Step Down Trigger Event (provided in Condition 5.4(b) below), if any, or (b) the date of redemption of the Sustainability-Linked Notes.

------

For the avoidance of doubt, an increase in the Rate of Interest (or the applicable Margin, in the case of Floating Rate Notes) may occur no more than once in respect of any Series of Sustainability- Linked Notes as a result of the relevant Step Up Trigger Event specified in the Final Terms. However, if so specified in the relevant Final Terms, a Series of Sustainability-Linked Notes may have one or more additional Step Up Margin(s) where more than one Step Up Trigger Event is specified in the Final Terms, in which case the Rate of Interest (or the applicable Margin, in the case of Floating Rate Notes) may be increased more than once during the term of the Sustainability- Linked Notes.

(b) *Step Down Option*

Where the Step Down Option is specified as being applicable in the relevant Final Terms and a Step Down Trigger Event occurs following the corresponding Step Up Trigger Event, the Adjusted Rate of Interest shall be decreased by the Step Down Margin(s) specified in the relevant Final Terms and such decrease shall apply as from (and including) the first day of the Interest Period commencing immediately following the date of occurrence of the relevant Step Down Trigger Event and until the earlier of (a) the first day of the Interest Period commencing immediately following the date of occurrence of a new Step Up Trigger Event, if any, or (b) the date of redemption of the Sustainability-Linked Notes.

For the avoidance of doubt, the Step Down Trigger Event will correspond to the equivalent Step Up Trigger Event specified in the relevant Final Terms and any decrease to the Adjusted Rate of Interest may occur no more than once in respect of any Series of Sustainability-Linked Notes as a result of the relevant Step Down Trigger Event specified in the Final Terms. However, if a Series of Sustainability-Linked Notes has more than one Step Up Trigger Event specified in the relevant Final Terms, the relevant Final Terms may also specify more than one Step Down Trigger Event, in which case the Adjusted Rate of Interest may be decreased by the applicable Step Down Margin more than once during the term of the Sustainability-Linked Notes, provided that any such Adjusted Rate of Interest applicable in respect of any Interest Period shall not be lower than the Initial Rate of Interest (or the initial Margin, in the case of Floating Rate Notes) for such Series of Sustainability-Linked Notes.

(c) *Redemption Premium Option*

Where the Redemption Premium Option is specified as being applicable in the relevant Final Terms, if a Redemption Premium Trigger Event occurs, the Sustainability-Linked Notes shall be redeemed on their Maturity Date or, as the case may be, early redeemed in accordance with Conditions 7.2 (*Redemption for Taxation Reasons*), 7.3 (*Redemption at the option of the Issuer*), 7.5 (*Redemption at the option of the Holders upon a Change of Control Put Event*) or 10 (*Events of Default*) on the date set for redemption, at their Adjusted Final Redemption Amount.

The "**Adjusted Final Redemption Amount**" will be equal to the sum of the Final Redemption Amount (or, as the case may be, the Redemption Amount), and the applicable Redemption Premium Amount, in each case as specified in the relevant Final Terms.

In the case where a Series of Sustainability-Linked Notes has more than one Redemption Premium Trigger Event, as specified in the Final Terms, the Final Redemption Amount (or as the case may be, the Redemption Amount) may include more than one Redemption Premium Amount.

(d) *Notification of Step Up Trigger Event, Step Down Trigger Event or Redemption Premium Trigger Event*

If a Step Up Trigger Event, a Step Down Trigger Event or a Redemption Premium Trigger Event occurs, the Issuer shall give notice of such Step Up Trigger Event, Step Down Trigger Event or Redemption Premium Trigger Event and the applicable Step Up Margin (in the case of a Step Up Trigger Event), the applicable Step Down Margin (in the case of a Step Down Trigger Event) and/or any applicable Redemption Premium Amount to the Trustee, the Principal Paying Agent and, in accordance with Condition 13 (*Notices*), the Noteholders as soon as reasonably practicable after the occurrence of such Step Up Trigger Event, Step Down Trigger Event or Redemption Premium Trigger Event, as the case may be, and in no event later than the date falling fifteen (15) Business Days prior to the Interest Payment Date following the relevant Target Observation Date, unless the Step Up Trigger Event, Step Down Trigger Event or Redemption Premium Trigger Event occurs within fifteen (15) Business Days prior to the Interest Payment Date in which case the notification will be made as soon as reasonably practicable after the occurrence of such Step Up Trigger Event, Step Down Trigger Event or Redemption Premium Trigger Event.

Neither the Trustee nor the Principal Paying Agent shall be obliged to monitor or inquire as to whether a Step Up Trigger Event, Step Down Trigger Event or Redemption Premium Trigger Event has occurred or have any liability in respect thereof and the Trustee and the Principal Paying Agent shall be entitled to rely absolutely on any notice given to it by the Issuer pursuant to this Condition 5.4(d) (*Notification of Step Up Trigger Event, Step Down Trigger Event or Redemption Premium Trigger Event*) without further enquiry or liability.

(e) *Sustainability Reporting*

(i) In respect of each Financial Year following the Issue Date of any Sustainability-Linked Notes and so long as any of the Sustainability-Linked Notes remain outstanding, the Issuer shall include in a dedicated section of its integrated annual report or publish on its website as a separate report or document:

(1) up-to-date information on the performance of the relevant Key Performance Indicator(s), including the Baseline where relevant to those Key Performance Indicators applicable to the outstanding Sustainability-Linked Notes (the "**Sustainability-Linked Notes Progress Report**");

(2) an explanation of any Recalculation Event and any recalculation, redefinition, revision or replacement of the relevant Key Performance Indicator(s), the relevant Sustainability Performance Targets and/or the relevant Baseline resulting from such Recalculation Event, if applicable, together with the External Verifier Confirmation. Any such explanation of a Recalculation Event and External Verifier Confirmation may be included in the relevant Sustainability-Linked Notes Progress Report or published separately; and

------

(3) an assurance report issued by the External Verifier confirming the performance of the relevant Key Performance Indicator(s) included in the Sustainability- Linked Notes Progress Report (the "**Assurance Report**").

The Sustainability-Linked Notes Progress Report, the explanation of any Recalculation Event and External Verifier Confirmation, where applicable, and the Assurance Report in respect of each Financial Year shall be published no later than the date of publication of the Issuer's integrated annual report in respect of such Financial Year (where applicable) otherwise no later than the first anniversary of the Issue Date of the relevant Series of Sustainability-Linked Notes and thereafter on each subsequent anniversary of the Issue Date of the relevant Series of Sustainability-Linked Notes.

(ii) Following a Target Observation Date, the Issuer shall publish on its website a certificate issued by the External Verifier confirming whether or not the Issuer has achieved the relevant Sustainability Performance Target(s) as at such Target Observation Date (the "**SPT Verification Assurance Certificate**").

The SPT Verification Assurance Certificate shall be published no later than the date falling six (6) months after such Target Observation Date.

(f) *Absence of Event of Default*

The occurrence of any Step Up Trigger Event, Step Down Trigger Event, Redemption Premium Trigger Event or the failure by the Issuer to publish any Sustainability-Linked Notes Progress Report, External Verifier Confirmation, Assurance Report or SPT Verification Assurance Certificate in accordance with Condition 5.4(e) (*Sustainability Reporting*) shall not constitute an Event of Default or a breach of the Issuer's obligations under the Sustainability-Linked Notes.

(g) *Recalculation*

In the event of the occurrence of any of the following events between the Issue Date of a Series of Sustainability-Linked Notes and the relevant Target Observation Date(s) for that Series of Sustainability-Linked Notes:

(i) any change in the perimeter of the Group due to an acquisition, merger or demerger or other restructuring, an amalgamation, consolidation or other form of reorganisation with similar effect, a spin-off, a disposal or a sale of assets;

(ii) any change in, or any amendment to, any applicable laws, regulations, rules, guidelines and policies relating to the business of the Group, including any transition plan disclosure regulation;

(iii) any change to the methodology for calculation of any Key Performance Indicator(s) (including as outlined in the Issuer's Corporate Emission and Accounting Methodology Scope 1 & 2, the Issuer's Corporate Emission and Accounting Methodology Scope 3 and the Issuer's Calculating Lives Improved Methodology, as well as any other relevant methodologies included on the Issuer's website under the heading "Methodologies" at https://www.philips.com/a-w/about/environmental-social-governance/downloads.html) or Baseline(s) applicable to that Series of Sustainability-Linked Notes to reflect changes in the market practice, relevant market standards, updated assumptions or calculation methods or updated emissions factors; or

(iv) any change in the Issuer's ability and autonomy to calculate any Key Performance Indicator(s), Sustainability Performance Target(s) and/or Baseline(s), including without limitation as a result of data accessibility, data quality, data error or a number of cumulative errors that together are significant; or where the use of a proxy may be required such as, but without limitation an extrapolation of earlier reported emissions if a supplier is not providing the figures in time,

which, individually or in aggregate, has a significant impact on the calculation of any Key Performance Indicator(s), Sustainability Performance Target(s) and/or Baseline(s) applicable to the relevant Series of Sustainability-Linked Notes (each, a "**Recalculation Event**" and the date of occurrence of such event, the "**Recalculation Date**"), the relevant Key Performance Indicator(s), Sustainability Performance Target(s) and/or Baseline(s) for that Series of Sustainability-Linked Notes may be recalculated, revised, redefined or replaced in good faith by the Issuer to reflect such change, provided that the External Verifier has independently confirmed (the "**External Verifier Confirmation**") that the proposed revision is consistent with the Issuer's sustainability strategy as described in the Sustainable Finance Framework, and in line with, or more ambitious than, the applicable level of ambition of the relevant Key Performance Indicator, Sustainability Performance Target or Baseline, taking into account the Recalculation Event.

As at the Recalculation Date, the updated Key Performance Indicator(s), Sustainability Performance Target(s) and/or Baseline(s) shall replace the original Key Performance Indicator(s), Sustainability Performance Target(s) and/or Baseline(s) and any reference to the original Key Performance Indicator(s), Sustainability Performance Target(s) and/or Baseline(s) shall be deemed to be a reference to the updated Key Performance Indicator(s), Sustainability Performance Target(s) and/or Baseline(s), it being understood that in the absence of the External Verifier Certificate the original Key Performance Indicator(s), Sustainability Performance Target(s) and/or Baseline(s) shall continue to apply.

By subscribing or acquiring the Sustainability-Linked Notes, each Noteholder accepts and agrees not to be consulted in respect of any such changes made to Key Performance Indicator(s), Sustainability Performance Target(s) and/or Baseline(s) applicable to the relevant Series of Sustainability-Linked Notes and shall be deemed to have consented and to have irrevocably authorised the Issuer to make any such change without the prior consent of Noteholders. Any such change pursuant to this Condition 5.4(g) (*Recalculation*) shall be communicated as soon as reasonably practicable by the Issuer to the Trustee and the Principal Paying Agent and notified to the relevant Noteholders in accordance with Condition 13 (*Notices*).

(h) *Definitions*

In this Condition 5.4 (*Sustainability-Linked Notes*):

"**Adjusted Final Redemption Amount**" has the meaning given to it in Condition 5.4(c) (*Redemption Premium Option*);

------

"**Adjusted Rate of Interest**" has the meaning given to it in Condition 5.4(a) (*Step Up Option*); "**Assurance Report**" has the meaning given to it in Condition 5.4(e) (*Sustainability Reporting*);

"**Baseline**" means KPI 1 Absolute Scope 1 and 2 GHG Emissions Baseline, KPI 2 Absolute Scope 3 GHG Emissions Baseline, KPI 3 Circular Revenues Baseline, KPI 4 Lives Improved Baseline and/or KPI 5 Female Leadership Baseline;

"**External Verifier**" means the external verifier specified as such in the relevant Final Terms, or any other independent accounting or appraisal firm or other independent expert of internationally recognised standing appointed by the Issuer, in each case with the expertise necessary to perform the functions required to be performed by the External Verifier under these Conditions, as determined by the Issuer;

"**External Verifier Confirmation**" has the meaning given to it Condition 5.4(g) (*Recalculation*);

"**Financial Year**" means the period beginning on 1 January and ending on 31 December of each year;

"**GHG**" means greenhouse gases, being gases which absorb and emit radiation in the atmosphere contributing to the greenhouse effect including, among others, carbon dioxide (CO2) and methane (CH4);

"**GHG Protocol**" means the document titled "The Greenhouse Gas Protocol, A Corporate Accounting and Reporting Standard (Revised Edition)" published by the World Business Council for Sustainable Development and the World Resources Institute, as such document may be amended, supplemented or replaced at the relevant time;

"**Initial Rate of Interest**" means the initial Rate of Interest at the Issue Date, as specified in the Final Terms;

"**Key Performance Indicator(s)**" means KPI 1 Absolute Scope 1 and 2 GHG Emissions, KPI 2 Absolute Scope 3 GHG Emissions, KPI 3 Circular Revenues, KPI 4 Lives Improved and/or KPI 5 Female Leadership, as specified in the relevant Final Terms;

"**KPI 1 Absolute Scope 1 and 2 GHG Emissions**" means, in tonnes of carbon dioxide equivalent (tCO2e), the sum of:

(a) the direct greenhouse gas emissions from the Group's own operations ("**Scope 1 Emissions**"), as defined by the GHG Protocol; and

(b) the indirect greenhouse gas emissions from the consumption of purchased electricity, heat, steam and cooling of the Group used in the Group's operations ("**Scope 2 Emissions**"), as defined by the GHG Protocol,

and as further described in the Sustainable Finance Framework, in each case in respect of any given Financial Year, calculated in good faith by the Issuer, reported by the Issuer and verified by an External Verifier in an Assurance Report published by the Issuer in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 1 Absolute Scope 1 and 2 GHG Emissions Baseline**" means 134,171 tCO2e, being the KPI 1 Absolute Scope 1 and 2 GHG Emissions for the Financial Year ended 31 December 2015, as may be amended from time to time upon the occurrence of a Recalculation Event and, if so amended, as published by the Issuer in the Sustainability-Linked Notes Progress Report published in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 1 Absolute Scope 1 and 2 GHG Emissions Condition**" means the condition that the KPI 1 Absolute Scope 1 and 2 GHG Emissions Reduction Percentage calculated at the relevant Target Observation Date, as shown in the Sustainability-Linked Notes Progress Report, is equal to or greater than the KPI 1 Absolute Scope 1 and 2 GHG Emissions Reduction Threshold;

"**KPI 1 Absolute Scope 1 and 2 GHG Emissions Step Down Trigger Event**" occurs if the KPI 1 Absolute Scope 1 and 2 GHG Emissions Condition is satisfied;

"**KPI 1 Absolute Scope 1 and 2 GHG Emissions Step Up Trigger Event**" occurs if the KPI 1 Absolute Scope 1 and 2 GHG Emissions Condition is not satisfied;

"**KPI 1 Absolute Scope 1 and 2 GHG Emissions Redemption Premium Trigger Event**" occurs if the KPI 1 Absolute Scope 1 and 2 GHG Emissions Condition is not satisfied;

"**KPI 1 Absolute Scope 1 and 2 GHG Emissions Reduction Percentage**" means, in respect of any Financial Year, the percentage (rounded up to the nearest whole number, with 0.5 rounded upwards) by which the KPI 1 Absolute Scope 1 and 2 GHG Emissions for such Financial Year have reduced in comparison to the KPI 1 Absolute Scope 1 and 2 GHG Emissions Baseline, as calculated in good faith by the Issuer and published by the Issuer in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 1 Absolute Scope 1 and 2 GHG Emissions Reduction Threshold**" means the threshold (expressed as a percentage) specified in the relevant Final Terms as being the KPI 1 Absolute Scope 1 and 2 GHG Emissions Reduction Threshold, as may be amended from time to time upon the occurrence of a Recalculation Event and, if so amended, as published by the Issuer in the Sustainability-Linked Notes Progress Report published in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 2 Absolute Scope 3 GHG Emissions**" means, in tonnes of carbon dioxide equivalent (tCO2e), the indirect greenhouse gas emissions from energy consumption from purchased goods and services, upstream and downstream transportation and distribution for all products of the Group, business travel by employees and the use phase of sold products of the Group, calculated in accordance with the GHG Protocol and as further described in the Sustainable Finance Framework, in respect of any given Financial Year, calculated in good faith by the Issuer, reported by the Issuer and verified by an External Verifier in an Assurance Report published by the Issuer in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 2 Absolute Scope 3 GHG Emissions Baseline**" means 485,000 tCO2e, being the KPI 2 Absolute Scope 3 GHG Emissions for the Financial Year ended 31 December 2020, as may be amended from time to time upon the occurrence of a Recalculation Event and, if so amended, as published by the Issuer in the Sustainability-Linked Notes Progress Report published in accordance with Condition 5.4(e) (*Sustainability Reporting*);

------

"**KPI 2 Absolute Scope 3 GHG Emissions Condition**" means the condition that the KPI 2 Absolute Scope 3 GHG Emissions Reduction Percentage calculated at the relevant Target Observation Date, as shown in the Sustainability-Linked Notes Progress Report, is equal to or greater than the KPI 2 Absolute Scope 3 GHG Emissions Reduction Threshold;

"**KPI 2 Absolute Scope 3 GHG Emissions Step Down Trigger Event**" occurs if the KPI 2 Absolute Scope 3 GHG Emissions Condition is satisfied;

"**KPI 2 Absolute Scope 3 GHG Emissions Step Up Trigger Event**" occurs if the KPI 2 Absolute Scope 3 GHG Emissions Condition is not satisfied;

"**KPI 2 Absolute Scope 3 GHG Emissions Redemption Premium Trigger Event**" occurs if the KPI 2 Absolute Scope 3 GHG Emissions Condition is not satisfied;

"**KPI 2 Absolute Scope 3 GHG Emissions Reduction Percentage**" means, in respect of any Financial Year, the percentage (rounded up to the nearest whole number, with 0.5 rounded upwards) by which the KPI 2 Absolute Scope 3 GHG Emissions for such Financial Year have reduced in comparison to the KPI 2 Absolute Scope 3 GHG Emissions Baseline, as calculated in good faith by the Issuer and published by the Issuer in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 2 Absolute Scope 3 GHG Emissions Reduction Threshold**" means the threshold (expressed as a percentage) specified in the relevant Final Terms as being the KPI 2 Absolute Scope 3 GHG Emissions Reduction Threshold, as may be amended from time to time upon the occurrence of a Recalculation Event and, if so amended, as published by the Issuer in the Sustainability-Linked Notes Progress Report published in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 3 Circular Revenues**" means revenues (as a percentage of the total revenues of the Group) generated through products, services and solutions that contribute to circular practices, including among others, products with a 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, as further described in the Sustainable Finance Framework, in respect of any given Financial Year, calculated in good faith by the Issuer, reported by the Issuer and verified by an External Verifier in an Assurance Report published by the Issuer in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 3 Circular Revenues Baseline**" means 15 per cent. of sales, being the KPI 3 Circular Revenues for the Financial Year ended 31 December 2020, as may be amended from time to time upon the occurrence of a Recalculation Event and, if so amended, as published by the Issuer in the Sustainability-Linked Notes Progress Report published in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 3 Circular Revenues Condition**" means the condition that the KPI 3 Circular Revenues Percentage calculated at the relevant Target Observation Date, as shown in the Sustainability-Linked Notes Progress Report, is equal to or greater than the KPI 3 Circular Revenues Threshold;

"**KPI 3 Circular Revenues Step Down Trigger Event**" occurs if the KPI 3 Circular Revenues Condition is satisfied;

"**KPI 3 Circular Revenues Step Up Trigger Event**" occurs if the KPI 3 Circular Revenues Condition is not satisfied;

"**KPI 3 Circular Revenues Redemption Premium Trigger Event**" occurs if the KPI 3 Circular Revenues Condition is not satisfied;

"**KPI 3 Circular Revenues Percentage**" means, in respect of any Financial Year, the percentage (rounded up to the nearest whole number, with 0.5 rounded upwards) by which the KPI 3 Circular Revenues for such Financial Year have increased in comparison to the KPI 3 Circular Revenues Baseline, as calculated in good faith by the Issuer and published by the Issuer in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 3 Circular Revenues Threshold**" means the threshold (expressed as a percentage) specified in the relevant Final Terms as being the KPI 3 Circular Revenues Threshold, as may be amended from time to time upon the occurrence of a Recalculation Event and, if so amended, as published by the Issuer in the Sustainability-Linked Notes Progress Report published in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 4 Lives Improved**" means the number of lives that have been improved through the Issuer's products or solutions that support people's health and well-being, calculated in good faith by the Issuer as the number of individual interactions for each product sold (based on market intelligence and statistical data) multiplied by the number of those products delivered in a Financial Year, as further described in the Sustainable Finance Framework, in respect of any given Financial Year, calculated in good faith by the Issuer, reported by the Issuer and verified by an External Verifier in an Assurance Report published by the Issuer in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 4 Lives Improved Baseline**" means 1.53 billion people (of which 127 million people are in underserved communities), being the number of KPI 4 Lives Improved for the Financial Year ended 31 December 2020, as may be amended from time to time upon the occurrence of a Recalculation Event and, if so amended, as published by the Issuer in the Sustainability-Linked Notes Progress Report published in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 4 Lives Improved Condition**" means the condition that the KPI 4 Lives Improved Amount calculated at the relevant Target Observation Date, as shown in the Sustainability-Linked Notes Progress Report, is equal to or greater than the KPI 4 Lives Improved Target;

"**KPI 4 Lives Improved Step Down Trigger Event**" occurs if the KPI 4 Lives Improved Condition is satisfied;

"**KPI 4 Lives Improved Step Up Trigger Event**" occurs if the KPI 4 Lives Improved Condition is not satisfied;

"**KPI 4 Lives Improved Redemption Premium Trigger Event**" occurs if the KPI 4 Lives Improved Condition is not satisfied;

------

"**KPI 4 Lives Improved Amount**" means, in respect of any Financial Year, the amount by which the KPI 4 Lives Improved for such Financial Year have increased in comparison to the KPI 4 Lives Improved Baseline, as calculated in good faith by the Issuer and published by the Issuer in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 4 Lives Improved Target**" means the target (expressed as a number) specified in the relevant Final Terms as being the KPI 4 Lives Improved Target, as may be amended from time to time upon the occurrence of a Recalculation Event and, if so amended, as published by the Issuer in the Sustainability-Linked Notes Progress Report published in accordance with Condition 5.4(e) (*Sustainability Reporting)*;

"**KPI 5 Female Leadership**" means the percentage of Senior Management Positions held by women compared to the total number of employees in Senior Management Positions, as further described in the Sustainable Finance Framework, in respect of any given Financial Year, calculated in good faith by the Issuer, reported by the Issuer and verified by an External Verifier in an Assurance Report published by the Issuer in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 5 Female Leadership Baseline**" means 27 per cent., being the KPI 5 Female Leadership for the Financial Year ended 31 December 2020, as may be amended from time to time upon the occurrence of a Recalculation Event and, if so amended, as published by the Issuer in the Sustainability-Linked Notes Progress Report published in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 5 Female Leadership Condition**" means the condition that the KPI 5 Female Leadership Percentage calculated at the relevant Target Observation Date, as shown in the Sustainability-Linked Notes Progress Report, is equal to or greater than the KPI 5 Female Leadership Threshold;

"**KPI 5 Female Leadership Step Down Trigger Event**" occurs if the KPI 5 Female Leadership Condition is satisfied;

"**KPI 5 Female Leadership Step Up Trigger Event**" occurs if the KPI 5 Female Leadership Condition is not satisfied;

"**KPI 5 Female Leadership Redemption Premium Trigger Event**" occurs if the KPI 5 Female Leadership Condition is not satisfied;

"**KPI 5 Female Leadership Percentage**" means, in respect of any Financial Year, the percentage by which the KPI 5 Female Leadership for such Financial Year has increased in comparison to the KPI 5 Female Leadership Baseline, as calculated in good faith by the Issuer and published by the Issuer in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**KPI 5 Female Leadership Target**" means the target (expressed as a percentage) specified in the relevant Final Terms as being the KPI 5 Female Leadership Target, as may be amended from time to time upon the occurrence of a Recalculation Event and, if so amended, as published by the Issuer in the Sustainability-Linked Notes Progress Report published in accordance with Condition 5.4(e) (*Sustainability Reporting*);

"**Recalculation Date**" has the meaning given to it in Condition 5.4(g) (*Recalculation*);

"**Recalculation Event**" has the meaning given to it in Condition 5.4(g) (*Recalculation*);

"**Redemption Premium Amount**" means, as specified in the relevant Final Terms, the premium amount payable on redemption;

"**Redemption Premium Option**" means the applicability or non-applicability of a Redemption Premium Trigger Event, as specified in the Final Terms;

"**Redemption Premium Trigger Event**" means, in relation to Sustainability-Linked Notes for which the Redemption Premium Option is specified to be applicable in the relevant Final Terms, one or more of the following, as specified in the Final Terms: (i) KPI 1 Absolute Scope 1 and 2 GHG Emissions Redemption Premium Trigger Event, (ii) KPI 2 Absolute Scope 3 GHG Emissions Redemption Premium Trigger Event, (iii) KPI 3 Circular Revenues Redemption Premium Trigger Event, (iv) KPI 4 Lives Improved Redemption Premium Trigger Event, and/or (v) KPI 5 Female Leadership Redemption Premium Trigger Event;

"**SPT Verification Assurance Certificate**" has the meaning given to it in Condition 5.4(e) (*Sustainability Reporting*);

"**Senior Management Positions**" means a position in the Group with the designation of Corporate Grade 90 or above, assessed according to the Group's internal classification, including for the avoidance of doubt members of the Board of Management;

"**Step Down Margin(s)**" means the percentage(s) specified in the relevant Final Terms as being the Step Down Margin(s) with respect to the relevant Key Performance Indicator(s) relating to the specified Target Observation Date(s);

"**Step Down Option**" means the applicability or non-applicability of a Step Down Trigger Event, as specified in the relevant Final Terms;

"**Step Down Trigger Event**" means, in relation to Sustainability-Linked Notes for which the Step Down Option is specified to be applicable in the relevant Final Terms and following the occurrence of the corresponding Step Up Trigger Event, one or more of the following, as specified in the Final Terms: (i) KPI 1 Absolute Scope 1 and 2 GHG Emissions Step Down Trigger Event, (ii) KPI 2 Absolute Scope 3 GHG Emissions Step Down Trigger Event, (iii) KPI 3 Circular Revenues Step Down Trigger Event, (iv) KPI 4 Lives Improved Step Down Trigger Event, and/or (v) KPI 5 Female Leadership Step Down Trigger Event;

"**Step Up Margin(s)**" means the percentage(s) specified in the relevant Final Terms as being the Step Up Margin(s) with respect to the relevant Key Performance Indicator(s) relating to the specified Target Observation Date(s);

"**Step Up Option**" means the applicability or the non-applicability of a Step Up Trigger Event, as specified in the relevant Final Terms;

"**Step Up Trigger Event**" means, in relation to Sustainability-Linked Notes for which the Step Up Option is specified to be applicable in the relevant Final Terms, one or more of the following, as specified in the Final Terms: (i) KPI 1 Absolute Scope 1 and 2 GHG Emissions Step Up Trigger Event, (ii) KPI 2 Absolute Scope 3 GHG Emissions Step Up Trigger Event, (iii) KPI 3 Circular Revenues Step Up Trigger Event, (iv) KPI 4 Lives Improved Step Up Trigger Event, and/or (v) KPI 5 Female Leadership Step Up Trigger Event;

------

"**Sustainable Finance Framework**" means the Issuer's sustainable finance framework (as amended, supplemented and/or replaced from time to time) available on the Issuer's website;

"**Sustainability-Linked Notes Progress Report**" has the meaning given to it in Condition 5.4(e) (*Sustainability Reporting*);

"**Sustainability Performance Target**" means one or more of the following: KPI 1 Absolute Scope 1 and 2 GHG Emissions Reduction Threshold, KPI 2 Absolute Scope 3 GHG Emissions Reduction Threshold, KPI 3 Circular Revenues Threshold, KPI 4 Lives Improved Target and KPI 5 Female Leadership Target, as specified in the applicable Final Terms, being the threshold or objective set for any given Key Performance Indicator to be observed on any corresponding Target Observation Date, if relevant compared to the performance of the relevant Baseline; and

"**Target Observation Date(s)**" means any of the date(s) specified as such in the relevant Final Terms.

**6. Payments**

**6.1 Principal**

Payments of principal in respect of definitive Notes shall be made only against presentation and (**provided that** payment is made in full) surrender of definitive Notes at the specified office of any Paying Agent outside the United States by cheque drawn in the currency in which the payment is due on, or by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in London). Payments of principal in respect of Notes represented by any Global Note will be made in the manner specified in relation to definitive Notes or otherwise in the manner specified in the relevant Global Note, where applicable, against presentation or surrender, as the case may be, of such Global Note at the specified office of any Paying Agent outside the United States. A record of each payment made, distinguishing between any payment of principal and any payment of interest, will be made either on such Global Note by the Paying Agent to which it was presented or in the records of Euroclear and Clearstream, Luxembourg, as applicable.

**6.2 Interest**

Payments of interest in respect of definitive Notes shall, subject to Condition 6.7 (*Unmatured coupons void*) below, be made only against presentation and (**provided that** payment is made in full) surrender of the appropriate Coupons at the specified office of any Paying Agent outside the United States in the manner described in Condition 6.1 (*Principal*) above. Payments of interest (if any) in respect of Notes represented by any Global Note will be made in the manner specified in relation to definitive Notes or otherwise in the manner specified in the relevant Global Note, where applicable, against presentation or surrender, as the case may be, of such Global Note at the specified office of any Paying Agent outside the United States. A record of each payment made, distinguishing between any payment of principal and any payment of interest, will be made either on such Global Note by the Paying Agent to which it was presented or in the records of Euroclear and Clearstream, Luxembourg, as applicable.

**6.3 General provisions applicable to payments**

The holder of a Global Note shall be the only person entitled to receive payments in respect of Notes represented by such Global Note and the Issuer will be discharged by payment to, or to the order of, the holder of such Global Note in respect of each amount so paid. Each of the persons shown in the records of Euroclear or Clearstream, Luxembourg as the beneficial holder of a particular principal amount of Notes represented by such Global Note must look solely to Euroclear or Clearstream, Luxembourg, as the case may be, for his share of each payment so made by the Issuer or to the order of, the holder of such Global Note.

**6.4 Payments in New York**

Payments of principal or interest may be made at the specified office of a Paying Agent in New York if (i) the Issuer has appointed Paying Agents outside the United States with the reasonable expectation that such Paying Agents will be able to make payment of the full amount of the interest on the Notes in the currency in which the payment is due when due, (ii) payment of the full amount of such interest at the offices of all such Paying Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law.

**6.5 Payments subject to fiscal laws**

All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 8 (*Taxation*). No commissions or expenses shall be charged to the Noteholders or Couponholders in respect of such payments. For the avoidance of doubt, any amounts to be paid in respect of the Notes will be paid net of any deduction or withholding imposed or required pursuant to sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the "**Code**"), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such sections of the Code (any such deduction or withholding, "**FATCA Withholding**"), and no additional amounts will be required to be paid on account of any FATCA Withholding.

**6.6 Deductions for unmatured Coupons**

In the case of definitive Notes, if the relevant Final Terms specify that the Fixed Rate Note Provisions are applicable and a Note is presented without all unmatured Coupons relating thereto:

------

(i) if the aggregate amount of the missing Coupons is less than or equal to the amount of principal due for payment, a sum equal to the aggregate amount of the missing Coupons will be deducted from the amount of principal due for payment; **provided, however, that** if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of such missing Coupons which the gross amount actually available for payment bears to the amount of principal due for payment;

(ii) if the aggregate amount of the missing Coupons is greater than the amount of principal due for payment:

(A) so many of such missing Coupons shall become void (in inverse order of maturity) as will result in the aggregate amount of the remainder of such missing Coupons (the "**Relevant Coupons**") being equal to the amount of principal due for payment; **provided, however, that** where this sub- paragraph (ii) would otherwise require a fraction of a missing Coupon to become void, such missing Coupon shall become void in its entirety; and

(B) a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the amount of principal due for payment) will be deducted from the amount of principal due for payment; **provided, however, that**, if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of the Relevant Coupons (or, as the case may be, the amount of principal due for payment) which the gross amount actually available for payment bears to the amount of principal due for payment.

Each sum of principal so deducted shall be paid in the manner provided in Condition 6.1 (*Principal*) above against presentation and (**provided that** payment is made in full) surrender of the relevant missing Coupons within a period of ten years from the Relevant Date for the payment of such principal.

**6.7 Unmatured Coupons void**

In the case of definitive Notes, if the relevant Final Terms specify that the Floating Rate Note Provisions are applicable, on the due date for final redemption of any Note or early redemption of such Note pursuant to Condition 7.2 (*Redemption for Taxation Reasons*), Condition 7.3 (*Redemption at the option of the Issuer*), Condition 7.5 (*Redemption at the option of the Holders upon a Change of Control Put Event*) or Condition 10 (*Events of Default*), all unmatured Coupons relating thereto (whether or not still attached) shall become void and no payment will be made in respect thereof.

**6.8 Payments on business days**

If the due date for payment of any amount in respect of any Note or Coupon is not a Payment Business Day in the place of presentation, the holder shall not be entitled to payment in such place of the amount due until the next succeeding Payment Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.

**6.9 Payments other than in respect of matured Coupons**

Payments of interest other than in respect of matured Coupons shall be made only against presentation of the relevant Notes at the specified office of any Paying Agent outside the United States (or in New York if permitted by Condition 6.4 (*Payments in New York*) above).

**6.10 Partial payments**

If a Paying Agent makes a partial payment in respect of any Note or Coupon presented to it for payment, such Paying Agent will endorse thereon a statement indicating the amount and date of such payment.

**6.11 Exchange of Talons**

On or after the maturity date of the final Coupon which is (or was at the time of issue) part of a Coupon Sheet relating to the Notes, the Talon forming part of such Coupon Sheet may be exchanged at the specified office of the Principal Paying Agent for a further Coupon Sheet (including, if appropriate, a further Talon) but excluding any Coupons in respect of which claims have already become void pursuant to Condition 9 (*Prescription*). Upon the due date for redemption of any Note, any unexchanged Talon relating to such Note shall become void and no Coupon will be delivered in respect of such Talon.

**7. REDEMPTION AND PURCHASE**

**7.1 Redemption at Maturity**

Unless previously redeemed or purchased and cancelled as provided below, the Issuer will redeem the Notes at their Final Redemption Amount specified in the applicable Final Terms on the Maturity Date.

**7.2 Redemption for Taxation Reasons**

The Issuer may at its option, subject to giving notice to the Trustee in accordance with this Condition 7.2 (*Redemption for Taxation Reasons*), and on giving not less than 30 nor more than 60 days' notice to the Noteholders in accordance with Condition 13 (*Notices*) (which notice shall be irrevocable and specify the date fixed for redemption), redeem all the Notes, but not some only:

(i) at any time (if the Floating Rate Note Provisions are not specified in the relevant Final Terms as being applicable); or

(ii) on any Interest Payment Date (if the Floating Rate Note Provisions are specified in the relevant Final Terms as being applicable),

at their principal amount together with interest accrued to but excluding the date of redemption, if:

(a) as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction, or any change in the application or official interpretation of the laws or regulations of a Relevant Jurisdiction, which change or amendment becomes effective after the date of the agreement to issue

------

the first Tranche of the Notes, on the next Interest Payment Date, the Issuer would be required to pay additional amounts as provided or referred to in Condition 8 (*Taxation*); and

(b) the requirement cannot be avoided by the Issuer taking reasonable measures available to it,

provided that no such notice of redemption shall be given earlier than 90 days (or, if the Floating Rate Note Provisions are specified in the relevant Final Terms as being applicable, a number of days which is equal to the aggregate of the number of days falling within the then current interest period applicable to such Notes plus 60 days) prior to the earliest date on which the Issuer would be obliged to pay such additional amounts, were a payment in respect of the relevant Notes then due.

Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee (i) a certificate signed by two Authorised Signatories (as defined in the Trust Deed) of the Issuer stating that the Issuer is entitled to effect such redemption, and setting forth a statement of facts showing that the conditions precedent as set out in this Condition 7.2 (*Redemption for Taxation Reasons*) to the right of the Issuer so to redeem have occurred and (ii) an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of the change or amendment referred to above. The Trustee shall be entitled to accept the certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set out in paragraphs (a) and (b) above, in which event they shall be conclusive and binding on the Noteholders and the Couponholders and the Trustee shall be entitled to rely on such certificate and opinion without further enquiry and without liability to any person.

7.3 Redemption at the option of the Issuer

*Issuer Maturity Par Call*

If the Issuer Maturity Par Call is specified as being applicable in the relevant Final Terms, the Issuer may at its option, having given not less than 10 nor more than 30 days' notice (or such other period of notice as is specified in the relevant Final Terms) to the Noteholders in accordance with Condition 13 (*Notices*) (which notice shall be irrevocable and shall specify the date fixed for redemption and, for the avoidance of doubt, may be subject to one or more conditions precedent), redeem the Notes then outstanding in whole, but not in part, at any time during the period commencing on (and including) the Par Call Commencement Date (as specified in the relevant Final Terms) to (but excluding) the Maturity Date at their Final Redemption Amount specified in the applicable Final Terms, together (if appropriate) with interest accrued but unpaid to (but excluding) the date fixed for redemption.

*Make-Whole Redemption by the Issuer*

If so specified in the relevant Final Terms, the Issuer may at its option, subject to compliance with all relevant laws, regulations and directives and on giving not less than 10 nor more than thirty (30) days' notice (or such other period of notice as is specified in the relevant Final Terms) to the Noteholders in accordance with Condition 13 (*Notices*) (which notice shall be irrevocable and specify the date fixed for redemption, and, for the avoidance of doubt, may be subject to one or more conditions precedent), redeem in whole or in part the Notes at any time prior to the Maturity Date (the "**Make-Whole Redemption Date**") at the Make-Whole Redemption Amount.

The "**Make-Whole Redemption Amount**" will be calculated by the Make-Whole Calculation Agent and will be an amount in the Specified Currency rounded to the nearest Sub-Unit (with half a Sub-Unit rounded upwards) and equal to the greater of:

(a) 100 per of the principal amount of the Note; or

(b) the sum of the then current values of the remaining scheduled payments of principal and interest (including, with respect to Sustainability-Linked Notes for which the Final Terms indicate that the Step Up Option is applicable, the applicable Step Up Margin from (and including) the Interest Payment Date immediately following the occurrence of a Step Up Trigger Event, on the assumption that the relevant Step Up Trigger Event will occur, unless the relevant Sustainability Performance Target has been achieved for the applicable Target Observation Date prior to the notice of Make- Whole Redemption for which an Assurance Report is available (as set out in such Assurance Report and as confirmed by an SPT Verification Assurance Certificate), in which case if the Sustainability Performance Target specified in the relevant Final Terms has been satisfied, no Step Up Margin shall be taken into account) on such Note to the Maturity Date (or, if a Par Call Commencement Date is specified in the relevant Final Terms, to the Par Call Commencement Date) (not including any interest accrued on the Note to, but excluding, the Make-Whole Redemption Date) discounted to the relevant Make-Whole Redemption Date on an annual basis at the Make-Whole Redemption Rate (as specified in the relevant Final Terms and as determined three Business Days prior to the Make-Whole Redemption Date) plus a Make-Whole Redemption Margin (as specified in the relevant Final Terms), plus in each case, any interest accrued on the Notes to, but excluding, the Make-Whole Redemption Date.

In respect of Sustainability-Linked Notes where the Redemption Premium Option is specified as applicable in the relevant Final Terms, if a Redemption Premium Trigger Event(s) has/have occurred prior to the Make- Whole Redemption Date, the Make-Whole Redemption Amount shall be increased by the applicable Redemption Premium Amount or, in the case of a partial redemption of the Notes, by the corresponding part of the applicable Redemption Premium Amount.

"**Make-Whole Calculation Agent**" means the international credit institutions or financial services institution or any other competent entity of recognised standing with appropriate expertise appointed by the Issuer prior to the giving of any notice referred to above in connection with the exercise of the Make-Whole Redemption in accordance with this Condition 7.3 (*Redemption at the option of the Issuer—Make-Whole Redemption by the Issuer*).

*Issuer Residual Call*

------

If Issuer Residual Call is specified as being applicable in the applicable Final Terms and, at any time, the outstanding aggregate nominal amount of the Notes is 25 per cent. or less of the aggregate nominal amount of the Series issued (other than as a result of the exercise by the Issuer of its redemption right under this Condition 7.3 (*Redemption at the option of the Issuer*) to redeem some but not all of the Notes at the Make- Whole Redemption Amount), the Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time (if the Floating Rate Note Provisions are specified in the relevant Final Terms as not being applicable) or on any Interest Payment Date (if the Floating Rate Note Provisions are specified in the relevant Final Terms as being applicable), on giving not less than 10 nor more than 30 days' notice (or such other period of notice as is specified in the relevant Final Terms) to the Noteholders in accordance with Condition 13 (*Notices*) (which notice shall be irrevocable and shall specify the date fixed for redemption) at the Residual Call Early Redemption Amount together, if appropriate, with interest accrued to (but excluding) the date of redemption.

**7.4 Partial Redemption**

If the Notes are to be redeemed in part only on any date in accordance with Condition 7.3 (*Redemption at the option of the Issuer*) , the Notes to be redeemed shall be selected:

(a) (if the Notes are in definitive form) by the drawing of lots in such place as the Trustee approves and in such manner as the Trustee considers appropriate, subject to compliance with applicable law, the rules of each competent authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation and the notice to Noteholders referred to in Condition 7.3 (*Redemption at the option of the Issuer*) shall specify the serial numbers of the Notes so to be redeemed; or

(b) (if the Notes are in global form) in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduction in principal amount, at their discretion).

If any Maximum Redemption Amount or Minimum Redemption Amount is specified in the relevant Final Terms, then the Make-Whole Redemption Amount shall in no event be greater than the maximum or be less than the minimum so specified.

**7.5 Redemption at the option of the Holders upon a Change of Control Put Event**

If Change of Control Put is specified as being applicable in the relevant Final Terms, upon the occurrence of a Change of Control Put Event, unless the Issuer has exercised its right to redeem the Notes in accordance with Condition 7.2 (*Redemption for Taxation Reasons*) or Condition 7.3 (*Redemption at the option of the Issuer*), each Noteholder shall have the option to require the Issuer to redeem or, at the Issuer's option, purchase (or procure the purchase of) that Note on the Put Date (as defined below) at its principal amount together with interest accrued to but excluding the Put Date.

Within 60 days following the date upon which the Change of Control Put Event has occurred, the Issuer shall give notice to the Noteholders in accordance with Condition 13 (*Notices*) of the occurrence of a Change of Control Put Event and shall, in the notice, specify a date being not less than 30 nor more than 60 days after the date on which the notice was given as the "**Put Date**".

To exercise such option, the Noteholder must deliver such Note to be redeemed or purchased, together with all Coupons relating to it maturing after the Put Date, to the specified office of the Principal Paying Agent at any time during normal business hours together with a duly completed notice of exercise in the form obtainable from the specified office of the Principal Paying Agent (a "**Change of Control Put Notice**"), not less than 15 nor more than 30 days before the Put Date. If the Notes are in global form, the Noteholder must specify in the Change of Control Put Notice the principal amount of Notes in respect of which such option is being exercised. A Change of Control Put Notice, once given, shall be irrevocable.

If 75 per cent. or more in aggregate principal amount of the Notes then outstanding have been redeemed or purchased pursuant to the foregoing provisions of this Condition 7.5 (*Redemption at the option of the Holders upon a Change of Control Put Event*), the Issuer may, having given not less than 30 nor more than 60 days' notice to the Noteholders (such notice being given within 30 days after the Put Date) in accordance with Condition 13 (*Notices*), redeem or purchase (or procure the purchase of), at its option, all (but not some only) of the remaining Notes at their principal amount together with interest accrued to but excluding the date fixed for such redemption or purchase.

In this Condition 7.5 (*Redemption at the option of the Holders upon a Change of Control Put Event*):

A "**Change of Control**" means the occurrence of any one of the following: (i) Control is acquired or held by any Person or any Persons acting in concert ("acting in concert" to be within the meaning of Section 5:45, subsection 5 of the Dutch Act on financial supervision (*Wet op het financieel toezicht*)) as to the exercise of Voting Shares or (ii) the Issuer consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Issuer, in any such event pursuant to a transaction in which any of the outstanding Voting Shares of the Issuer or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Shares of the Issuer outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Shares of the surviving Person immediately after giving effect to such transaction, provided that a Change of Control shall be deemed not to occur (i) solely as a result of the issuance or transfer, with the co-operation of the Issuer's Supervisory Board, Board of Management or the Issuer's general meeting of shareholders, as applicable, and, in each case, if required, of any preference shares in the Issuer's share capital to the foundation Stichting Preferente Aandelen Philips or its successor; or (ii) if the event which would otherwise have constituted a Change of Control occurs or is carried on terms previously approved by the Trustee or by an Extraordinary Resolution.

------

"**Change of Control Put Event**" means the Notes are rated below Investment Grade by each of the Rating Agencies on any date during the period (the "**Change of Control Period**") commencing on the date of the first public announcement by the Issuer of any Change of Control (or pending Change of Control) and ending 60 days following consummation of such Change of Control (which Change of Control Period will be extended following consummation of a Change of Control for so long as any of the Rating Agencies has publicly announced that it is considering a possible ratings downgrade) and are not, within the Change of Control Period, subsequently upgraded to an Investment Grade rating provided that a Change of Control Put Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and shall not be deemed a Change of Control Put Event) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Change of Control Put Event). Notwithstanding the foregoing, no Change of Control Put Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.

"**Control**" means the ownership of such a number of Voting Shares carrying more than 50 per cent. of the voting rights of the Issuer.

"**Investment Grade**" means a rating of Baa3 or better by Moody's (or its equivalent under any successor rating category of Moody's); a rating of BBB- or better by S&P (or its equivalent under any successor rating category of S&P); a rating of BBB- or better by Fitch (or its equivalent under any successor rating category of Fitch) or the equivalent investment grade credit rating from any replacement Rating Agency of equivalent international standing.

"**Person**" means any individual, company, corporation, firm, partnership, joint venture, undertaking, association, organisation, trust, state or agency of a state (in each case whether or not being a separate legal entity).

"**Rating Agency**" means each of Moody's Deutschland GmbH ("**Moody's**"), Fitch Ratings Ltd ("**Fitch**") and S&P Global Ratings Europe Limited ("**S&P**") and their respective successors.

"**Voting Shares**" means shares in the issued share capital of the Issuer carrying voting rights.

**7.6 Early redemption of Zero Coupon Notes**

Unless otherwise specified in the relevant Final Terms, the Redemption Amount payable on redemption of a Zero Coupon Note at any time before the Maturity Date shall be an amount equal to the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which the Note becomes due and payable.

Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of such Day Count Fraction as may be specified in the Final Terms for the purposes of this Condition 7.6 (*Early redemption of Zero Coupon Notes*) or, if none is so specified, a Day Count Fraction of 30E/360.

**7.7 Purchases**

The Issuer or any of its Subsidiaries may at any time purchase Notes (provided that all unmatured Coupons appertaining to the Notes are purchased with the Notes) in any manner and at any price.

**7.8 Cancellations**

All Notes which are (a) redeemed or (b) purchased by or on behalf of the Issuer or any of its Subsidiaries may be cancelled, together with all relative unmatured Coupons attached to the Notes or surrendered with the Notes or may be reissued or resold.

**7.9 Notices Final**

Upon the expiry of any notice as is referred to in Condition 7.2 (*RedemptionforTaxationReasons*), Condition

7.3 (*Redemption at the option of the Issuer*) or Condition 7.5 (*Redemption at the option of the Holders upon a Change of Control Put Event*) above the Issuer shall be bound to redeem the Notes to which the notice refers in accordance with the terms of such paragraph.

**8. TAXATION**

**8.1 Payment without Withholding**

All payments in respect of the Notes and the Coupons by or on behalf of the Issuer shall be made free and clear of, and without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature ("**Taxes**"), unless the withholding or deduction of the Taxes is required by law. In the event of Tax imposed or levied by or on behalf of any Relevant Jurisdiction, the Issuer will pay such additional amounts as may be necessary in order that any amount received by the Noteholders or Couponholders after the withholding or deduction is equal to the amount that would have been received in respect of the Notes or, as the case may be, Coupons, in the absence of the withholding or deduction; except that no additional amounts shall be payable in relation to any payment in respect of any Note or Coupon:

(a) the holder or beneficial owner (for the purposes of the relevant Tax) of which is liable for Tax in respect of such Note or Coupon by reason of having or having had a present or former connection with the Relevant Jurisdiction other than a mere holding of the Notes or Coupons; or

(b) presented for payment in the Netherlands where such withholding or deduction would not have been required had such Note or Coupon not been presented in the Netherlands; or

------

(c) presented for payment more than 30 days after the Relevant Date except to the extent that a holder would have been entitled to additional amounts on presenting the same for payment on the last day of the period of 30 days assuming that day to have been a Payment Business Day; or

(d) presented for payment by, or on behalf of, a holder where the holder or the beneficial owner for the purpose of the relevant Tax is entitled to avoid such withholding or deduction in respect of such Note or Coupon by making a declaration or any other statement to the relevant tax authority, including, but not limited to, a declaration of residence or non-residence or other similar claim for exemption; or

(e) where such withholding or deduction is required pursuant to the application of the Dutch Withholding Tax Act 2021 (*Wet bronbelasting 2021*); or

(f) payable due to any combination of items (a) to (e).

Notwithstanding any other provisions contained herein, the Issuer shall be permitted to withhold or deduct any amounts required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code (the "**Code**") or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any amended or successor provisions), any regulations or agreements thereunder, official interpretations thereof, or any law implementing an intergovernmental approach thereto ("**FATCA Withholding**"). The Issuer will have no obligation to pay additional amounts or otherwise indemnify an investor for any such FATCA Withholding deducted or withheld by the Issuer, any Paying Agent or any other party.

For the avoidance of doubt, the obligation of the Issuer to pay additional amounts in respect of Taxes will not apply to (i) any estate, inheritance, gift, sales, transfer, personal property or any similar tax, duty, assessment or other governmental charge or (ii) any Taxes payable otherwise than by deduction or withholding from payments of principal of, or interest on, the Notes or, as the case may be, Coupons.

**8.2 Additional Amounts**

Any reference in these Conditions to any amounts in respect of the Notes shall be deemed also to refer to any additional amounts which may be payable under this Condition 8 (*Taxation*) or under any undertakings given in addition to, or in substitution for, this Condition pursuant to the Trust Deed.

**9. PRESCRIPTION**

Notes and Coupons will become void unless presented for payment within periods of 10 years (in the case of principal) and 5 years (in the case of interest) from the Relevant Date in respect of the Notes or, as the case may be, the Coupons, subject to the provisions of Condition 6 (*Payments*).

**10. EVENTS OF DEFAULT**

If any of the following events (each an "**Event of Default**") occurs and is continuing, the Trustee at its discretion may and, if so requested in writing by holders of at least one-quarter in principal amount of the Notes then outstanding or, if so directed by an Extraordinary Resolution, shall (subject, in the case of the happening of any of the events mentioned in paragraphs (b) to (g) (other than (d) below), to the Trustee having certified in writing that the happening of such events is in its opinion materially prejudicial to the interests of the Noteholders) subject in all cases, to the Trustee having been indemnified and/or secured and/or prefunded to its satisfaction) give written notice to the Issuer declaring the Notes to be immediately due and payable, whereupon they shall become immediately due and payable at their principal amount together with accrued interest without further action or formality:

(a) **Non-payment:** the Issuer fails to pay any amount of principal or interest due in respect of the Notes, and that failure to pay continues for more than 14 days after the due date for payment; or

(b) **Breach of other obligations:** the Issuer defaults in the performance or observance of any one or more other obligations under or in respect of the Notes or the Trust Deed required to be performed or observed by the Issuer and such default is either:

(i) in the opinion of the Trustee, incapable of remedy, in which case no notice referred to in (ii) below will be required; or

(ii) in the opinion of the Trustee, capable of remedy and the default remains unremedied for 30 days (or such longer period as the Trustee may agree) after the Trustee has given written notice to the Issuer specifying the default and requiring that default to be remedied; or

(c) **Cross-acceleration:** (i) the repayment of any indebtedness for borrowed money owing by the Issuer or any of its Material Subsidiaries is accelerated by reason of default (however expressed) and such acceleration has not been rescinded, waived, cancelled or annulled, or (ii) the Issuer or any of its Material Subsidiaries is in default (after the expiry of any originally applicable grace period) in any payment when due of such indebtedness for borrowed money; provided that no such event shall constitute an Event of Default (A) if it is being contested in good faith by, in the reasonable opinion of the Issuer, appropriate proceedings; or (B) unless the aggregate outstanding amount of such accelerated or unpaid indebtedness for borrowed money, whether alone or when aggregated with all other such outstanding accelerated or unpaid indebtedness for borrowed money, exceeds €100 million (or its equivalent in another currency or currencies); or

(d) **Winding-up:** any final order is made by any competent court or other authority, or an effective resolution is passed for the liquidation, dissolution or winding-up of the Issuer or any of its Material Subsidiaries otherwise than (i) for the purposes of a Permitted Reorganisation; or (ii) on terms previously approved by the Trustee or by an Extraordinary Resolution; or

------

(e) **Insolvency, :** (i) the Issuer or any of its Material Subsidiaries admits in writing that it is insolvent or unable to pay its debts as they fall due, (ii) an administrator or liquidator is appointed (or application for any such appointment is made) in respect of the Issuer or any of its Material Subsidiaries or the whole or substantially all of the undertaking, assets and revenues of the Issuer or any of its Material Subsidiaries, (iii) the Issuer or any of its Material Subsidiaries makes a general assignment or an arrangement or composition with or for the benefit of its creditors or declares a moratorium in respect of any of its indebtedness or any guarantee of any indebtedness given by it or (iv) the Issuer or any of its Material Subsidiaries ceases or threatens to cease to carry on all or substantially all of its business otherwise, in each of (i) to (iv), than (i) for the purposes of a Permitted Reorganisation; or (ii) on terms previously approved by the Trustee or by an Extraordinary Resolution;

**(f) Security enforced:** a secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or substantially all of the undertaking, assets and revenues of the Issuer or any of its Material Subsidiaries; or

(g) **Analogous Event**: if any event occurs which, under the laws of any Relevant Jurisdiction, has or may have an analogous effect to any of the events referred to in subparagraphs (d) to (f) above.

**11. ENFORCEMENT**

**11.1 Enforcement by the Trustee**

The Trustee may at any time, at its discretion and without notice, take such proceedings and/or other steps or action (including lodging an appeal in any proceedings) against or in relation to the Issuer as it may think fit to enforce the provisions of the Trust Deed, the Notes and the Coupons or otherwise, but it shall not be bound to take any such proceedings or other steps or action unless (a) it has been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by the holders of at least one-quarter in principal amount of the Notes then outstanding and (b) it has been indemnified and/or secured and/or pre-funded to its satisfaction against all liabilities to which it may thereby render itself liable or which it may incur by so doing and provided that the Trustee shall not be liable for the consequences of taking any such action and may take such action without having regard to the effect of such actions on individual Noteholders or Couponholders.

**11.2 Limitation on Trustee actions**

The Trustee may refrain from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion based upon legal advice in the relevant jurisdiction, be contrary to any law of that jurisdiction. Furthermore, the Trustee may also refrain from taking such action if it would otherwise render it liable to any person in that jurisdiction or if, in its opinion based upon such legal advice, it would not have the power to do the relevant thing in that jurisdiction by virtue of any applicable law in that jurisdiction or if it is determined by any court or other competent authority in that jurisdiction that it does not have such power.

**11.3 Enforcement by the Noteholders**

No Noteholder or Couponholder shall be entitled to (i) take any steps or action against the Issuer to enforce the performance of any of the provisions of the Trust Deed, the Notes or the Coupons or (ii) take any other proceedings (including lodging an appeal in any proceedings) in respect of or concerning the Issuer, in each case unless the Trustee, having become bound so to take any such action, steps or proceedings, fails so to do within a reasonable period and such failure shall be continuing.

**12. REPLACEMENT OF NOTES AND COUPONS**

Should any Note or Coupon be lost, stolen, mutilated, defaced or destroyed it may be replaced subject to applicable laws, regulations and stock exchange or other relevant authority regulations, at the specified office of the Principal Paying Agent upon payment by the claimant of the expenses incurred in connection with the replacement and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued.

**13. NOTICES**

**13.1 Notices to the Noteholders**

All notices to the Noteholders will be valid if published in a leading English language daily newspaper published in London and, so long as the Notes are admitted to listing on the Official List and to trading on the regulated market of the Luxembourg Stock Exchange and the rules of that exchange so require, a daily newspaper of general circulation in Luxembourg or the website of the Luxembourg Stock Exchange (at https://www.luxse.com/). It is expected that publication in a newspaper will normally be made in the *Financial Times* in London and the *Luxemburger Wort* in Luxembourg. Any such notice will be deemed to have been given on the date of the first publication or, where required to be published in more than one newspaper, on the date of the first publication in all required newspapers. If publication as provided above is not practicable, notice will be given in such other manner, and shall be deemed to have been given on such date, as the Trustee may approve. Couponholders will be deemed for all purposes to have notice of the contents of any notice given to the Noteholders in accordance with this paragraph.

Until such time as any definitive Notes are issued, there may, so long as any Global Notes representing the Notes are held in their entirety on behalf of Euroclear and/or Clearstream, Luxembourg, be substituted for such publication in such newspaper(s) the delivery of the relevant Notice to Euroclear and/or Clearstream, Luxembourg for communication by them to the holders of the Notes and, in addition, for so long as any Notes are listed on a stock exchange or are admitted to trading by another relevant authority and the rules of that stock exchange or relevant authority so require, such notice will be published in a daily newspaper of general circulation in the place or places required by those rules. Any such notice shall be deemed to have been given to the holders of the Notes on the day after the day on which the said notice was given to Euroclear and/or Clearstream, Luxembourg.

**13.2 Notices from the Noteholders**

------

Notices to be given by any Noteholder shall be in writing and given by lodging the same, together with the relative Note or Notes, with the Principal Paying Agent or, if the Notes are held in a clearing system, may be given through the clearing system in accordance with its standard rules and procedures.

**14. MEETINGS OF NOTEHOLDERS, MODIFICATION, WAIVER, AUTHORISATION AND DETERMINATION, SUBSTITUTION**

**14.1 Meetings of Noteholders**

The Trust Deed contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the modification of any of these Conditions or any of the provisions of the Trust Deed. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer or the Trustee and shall be convened by the Trustee (subject to it being indemnified and/or secured and/or prefunded to its satisfaction) upon the request in writing of the Noteholders holding not less than one-quarter of the aggregate principal amount of the outstanding Notes.

The quorum at any meeting convened to vote on an Extraordinary Resolution will be one or more persons present holding or representing more than 50 per cent. in principal amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more persons present whatever the principal amount of the Notes held or represented by him or them, except that, at any meeting the business of which includes any matter defined in the Trust Deed as a Basic Terms Modification, including the modification of certain of the provisions of these Conditions and certain of the provisions of the Trust Deed (including the date of maturity of the Notes or any date for payment of interest thereon, reducing or cancelling the amount of principal or interest payable in respect of the Notes, altering the currency of payment of the Notes, altering the method of calculating the amount of any payment in respect of the Notes or changing the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution), the necessary quorum required to pass an Extraordinary Resolution will be one or more persons present holding or representing not less than two-thirds, or at any adjourned such meeting not less than one-third, of the principal amount of the Notes for the time being outstanding.

In addition, the Trust Deed provides that a resolution in writing signed by or on behalf of the holders of not less than two-thirds in principal amount of the Notes for the time being outstanding or consent given by way of electronic consents through the relevant clearing system(s) by or on behalf of the holders of not less than two-thirds in principal amount of the Notes for the time being outstanding, shall, in each case, be effective as an Extraordinary Resolution of the Noteholders. An Extraordinary Resolution passed by the Noteholders will be binding on all Noteholders whether or not they are present at any meeting and whether or not they voted on the resolution, and on all Couponholders.

**14.2 Modification, Waiver, Authorisation and Determination**

The Trustee may agree, without the consent of the Noteholders or Couponholders (i) (other than in relation to any Basic Terms Modification (as defined in the Trust Deed)) to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of these Conditions or any of the provisions of the Trust Deed or the Agency Agreement, or determine, without any such consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated as such (provided that, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders), or (ii) to any modification which, in its opinion, is of a formal, minor or technical nature or to correct a manifest error or an error which is, in the opinion of the Trustee, proven or to comply with mandatory provisions of law. In addition, the parties to the Agency Agreement may agree to modify any provision thereof, save the Trustee shall only agree without the consent of the Noteholders to such modification if, in the opinion of the Trustee, such modification is not materially prejudicial to the interests of the Noteholders. Any such modification, authorisation, determination or waiver shall be binding on the Noteholders and Couponholders.

Additionally, the Issuer may, subject to Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser)*) and Condition 5.2(f) (*Interest – Floating Rate Notes referencing SOFR*), vary or amend these Conditions, the Trust Deed and/or the Agency Agreement to give effect to certain amendments without any requirement for the consent or approval of Noteholders of the relevant Notes or Coupons, as described in Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser*)) and the Trustee and the Paying Agents shall concur to such Benchmark Amendments and/or Benchmark Replacement Conforming Changes (as applicable) on the basis set out in Condition 5.2(m) (*Benchmark Discontinuation (Independent Adviser)*) and Condition 5.2(f) (*Interest – Floating Rate Notes referencing SOFR*).

**14.3 Trustee to have Regard to Interests of Noteholders as a Class**

In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation or determination), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except to the extent already provided for in Condition 8 (*Taxation*) and/or any undertaking given in addition to, or in substitution for, Condition 8 (*Taxation*) pursuant to the Trust Deed.

**14.4 Notification to the Noteholders**

Any modification, abrogation, waiver, authorisation or determination shall be binding on the Noteholders and the Couponholders and, unless the Trustee agrees otherwise, any modification shall be notified by the Issuer to the Noteholders as soon as practicable thereafter in accordance with Condition 13 (*Notices*).

**14.5 Substitution**

------

The Trustee may agree, without the consent of the Noteholders or the Couponholders, to the substitution of (i) any Subsidiary of the Issuer or (ii) any company which directly or indirectly owns 100 per cent. of the shares or other equity interests (as the case may be) carrying the right to vote in the Issuer in place of the Issuer as issuer and principal debtor under the Trust Deed, the Notes and the Coupons; provided that the Notes are unconditionally and irrevocably guaranteed by the Issuer and certain other conditions specified in the Trust Deed are fulfilled. Any such substitution shall be binding on the Noteholders and Couponholders and shall be notified to the Noteholders within 14 days thereafter.

**15. INDEMNIFICATION AND PROTECTION OF THE TRUSTEE AND ITS CONTRACTING WITH THE ISSUER**

**15.1 Indemnification and protection of the Trustee**

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility and liability towards the Issuer, the Noteholders and the Couponholders, including (i) provisions relieving it from taking action unless indemnified and/or secured and/or pre-funded to its satisfaction and (ii) provisions limiting or excluding its liability in certain circumstances.

**15.2 Trustee Contracting with the Issuer**

The Trust Deed also contains provisions pursuant to which the Trustee is entitled, *inter alia*, (a) to enter into business transactions with the Issuer and/or any of the Issuer's Subsidiaries and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or any of the Issuer's Subsidiaries, (b) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders or Couponholders, and (c) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.

**16. FURTHER ISSUES**

The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further notes, having terms and conditions the same as those of the Notes, or the same except for the amount and date of the first payment of interest, which may be consolidated and form a single series with the outstanding Notes. Any further notes or bonds which are to form a single series with the outstanding notes or bonds of any series (including the Notes) constituted by the Trust Deed or any supplemental deed shall, and any other further notes or bonds may (with the consent of the Trustee), be constituted by a deed supplemental to the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of notes or bonds of other series in certain circumstances where the Trustee so decides.

**17. GOVERNING LAW AND SUBMISSION TO JURISDICTION**

**17.1 Governing Law**

The Trust Deed, the Notes and the Coupons and any non-contractual obligations arising out of or in connection with the Trust Deed, the Notes and the Coupons are governed by, and construed in accordance with, English law.

**17.2 Submission to Jurisdiction**

(a) Subject to Condition 17.2(c) below, the English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with the Trust Deed, the Notes or the Coupons, including any dispute as to their existence, validity, interpretation, performance, breach or termination or the consequences of their nullity and any dispute relating to any non-contractual obligations arising out of or in connection with the Trust Deed, the Notes or the Coupons (a "**Dispute**") and each of the Issuer, the Trustee and any Noteholders or Couponholders in relation to any Dispute submits to the exclusive jurisdiction of the English courts.

(b) For the purposes of this Condition 2 (*Submission to Jurisdiction*), the Issuer waives any objection to the English courts on the grounds that they are an inconvenient or inappropriate forum to settle any Dispute.

(c) To the extent allowed by law, the Issuer, the Trustee, the Noteholders and the Couponholders may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction and (ii) concurrent proceedings in any number of jurisdictions.

**17.3 Appointment of Process Agent**

The Issuer irrevocably appoints Philips Electronics UK Limited (Attention: Company Secretary), Ascent 1 Aerospace Boulevard, Farnborough, England, GU14 6XW as its agent for service of process in any proceedings before the English courts in relation to any Dispute and agrees that, in the event of Philips Electronics UK Limited being unable or unwilling for any reason so to act, it will immediately appoint another person approved by the Trustee as its agent for service of process in England in respect of any Dispute. The Issuer agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing in this Condition 17.3 (*Appointment of Process Agent*) shall affect the right to serve process in any other manner permitted by law.

**17.4 Other Documents**

The Issuer has in the Agency Agreement and the Trust Deed submitted to the jurisdiction of the English courts and appointed an agent in England for service of process, in terms substantially similar to those set out above.

**18. RIGHTS OF THIRD PARTIES**

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Note, but this does not affect any right or remedy of any person which exists or is available apart from that Act.

**SCHEDULE 2**

**FORMS OF THE NOTES**

------

**PART AFORM OF TEMPORARY GLOBAL NOTE**

**Series Number: [ ]**

**Serial Number: [ ]**

**[Tranche Number: [ ]]**

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.]<sup>[1]</sup>

**KONINKLIJKE PHILIPS N.V.**

**EURO MEDIUM TERM NOTE PROGRAMME**

**TEMPORARY GLOBAL NOTE**

representing up to

[***Aggregate principal amount of tranche***]

[***Title of Notes*** ]

**€10,000,000,000**

**Euro Medium Term Note Programme**

This global Note is a Temporary Global Note without interest coupons issued in respect of an issue of [*aggregate principal amount of Tranche*] in aggregate principal amount of [*title of Notes*] (the "**Notes**") by Koninklijke Philips N.V. a public limited liability company (*naamloze vennootschap*) incorporated under the law of the Netherlands registered at the Dutch Chamber of Commerce with number 17001910 (the "**Issuer**").

This Temporary Global Note is issued subject to and in accordance with the Conditions and a trust deed dated 8 March 2024 (as amended and/or supplemented and/or restated from time to time, the "**Trust Deed**") between, amongst others, the Issuer and Citicorp Trustee Company Limited as Trustee (the "**Trustee**", which expression includes all persons for the time being appointed Trustee or Trustees under the Trust Deed) and is subject to an agency agreement dated 8 March 2024 (as amended and/or supplemented and/or restated from time to time, the "**Agency Agreement**") between the Issuer, amongst others, Citibank, N.A., London Branch, the Trustee and certain other financial institutions names therein. References herein to the "**Conditions**" shall be to the terms and conditions of the Notes as set out in Schedule 1 to the Trust Deed as completed by the final terms applicable to the Notes (the "**Final Terms**") but, in the event of any conflict between the provisions of the Conditions and the information in the Final Terms, the Final Terms will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Temporary Global Note.

<sup>[1]</sup> Legend to appear on every Temporary Global Note representing Notes with a maturity of more than one year.

1. **PROMISE TO PAY**

1.1 **Pay to bearer**

The Issuer, for value received, promises to pay to the bearer of this Temporary Global Note, in respect of each Note represented by this Temporary Global Note, the Redemption Amount on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Final Terms), and to pay interest on each such Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions; ***provided, however, that*** such interest shall be payable only:

(a) *Before the Exchange Date*: in the case of interest falling due before the Exchange Date (as defined below), to the extent that a certificate or certificates issued by Euroclear Bank SA/NV ("**Euroclear**") and/or Clearstream Banking S.A. ("**Clearstream, Luxembourg**", together with Euroclear, the international central securities depositaries or "**ICSDs**") and/or any other relevant clearing system dated not earlier than the date on which such interest falls due and in substantially the form set out in 0 (*Form of Euroclear/Clearstream, Luxembourg Certification*) hereto is/are delivered to the Specified Office of the Principal Paying Agent; or

(b) *Failure to exchange*: in the case of interest falling due at any time, to the extent that the Issuer has failed to procure the exchange for a permanent global note of that portion of this Temporary Global Note in respect of which such interest has accrued.

1.2 **NGN Principal Amount**

If the Final Terms specify that the New Global Note form is applicable, this Temporary Global Note shall be a "**New Global Note**" or "**NGN**" and the principal amount of Notes represented by this Temporary Global Note shall be the aggregate amount from time to time entered in the records of both ICSDs. The records of the ICSDs (which expression in this Temporary Global Note means the records that each ICSD holds for its customers which reflect the amount of such customers' interests in the Notes (but excluding any interest in any Notes of one ICSD shown in the records of another ICSD)) shall be conclusive evidence of the principal amount of Notes represented by this Temporary Global Note and, for these purposes, a statement issued by an ICSD (which statement shall be made available to the bearer upon request) stating the principal amount of Notes represented by this Temporary Global Note at any time shall be conclusive evidence of the records of the ICSD at that time.

1.3 **CGN Principal Amount**

------

If the Final Terms specify that the New Global Note form is not applicable, this Temporary Global Note shall be a "**Classic Global Note**" or "**CGN**" and the principal amount of Notes represented by this Temporary Global Note shall be the amount stated in the Final Terms or, if lower, the principal amount most recently entered by or on behalf of the Issuer in the relevant column in 0 (*Payments, Exchange and Cancellation of Notes*).

2. **NEGOTIABILITY**

This Temporary Global Note is negotiable and, accordingly, title to this Temporary Global Note shall pass by delivery.

3. **EXCHANGE**

3.1 **Permanent Global Note**

If the Final Terms specify the form of Notes as being "Temporary Global Note exchangeable for a Permanent Global Note", then on or after the day following the expiry of 40 days after the date of issue of this Temporary Global Note (the "**Exchange Date**"), the Issuer shall procure (in the case of first exchange) the delivery of a Permanent Global Note (which expression has the meaning given in the Trust Deed) in accordance with the Agency Agreement to the bearer of this Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of the Permanent Global Note in accordance with its terms against:

(a) *Presentation and surrender*: presentation and (in the case of final exchange) presentation and surrender of this Temporary Global Note to or to the order of the Principal Paying Agent; and

(b) *Certification*: receipt by the Principal Paying Agent of a certificate or certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system dated not earlier than the Exchange Date and in substantially the form set out in 0 (*Form of Euroclear/Clearstream, Luxembourg Certification*) hereto.

The principal amount of Notes represented by the Permanent Global Note shall be equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and received by the Principal Paying Agent; **provided, however, that** in no circumstances shall the principal amount of Notes represented by the Permanent Global Note exceed the initial principal amount of Notes represented by this Temporary Global Note.

3.2 **Definitive Notes; Not D Rules**

If the Final Terms specify the form of Notes as being "Temporary Global Note exchangeable for Definitive Notes" and also specify that the C Rules are applicable or that neither the C Rules nor the D Rules are applicable, then on or after the day following the expiry of 40 days after the date of issue of this Temporary Global Note (the "**Exchange Date**"), the Issuer shall procure the delivery of Definitive Notes (which expression has the meaning given in the Agency Agreement) in accordance with the Agency Agreement with Coupons and Talons (if so specified in the Final Terms) attached and in an aggregate principal amount equal to the principal amount of Notes represented by this Temporary Global Note to the bearer of this Temporary Global Note against presentation and surrender of this Temporary Global Note to or to the order of the Principal Paying Agent.

3.3 **Definitive Notes; D Rules**

If the Final Terms specify the form of Notes as being "**Temporary Global Note exchangeable for Definitive Notes**" and also specifies that the D Rules are applicable, then on or after the day following the expiry of 40 days after the date of issue of this Global Note (the "**Exchange Date**"), the Issuer shall procure the delivery of Definitive Notes (which expression has the meaning given in the Agency Agreement) in accordance with the Agency Agreement with Coupons and Talons (if so specified in the Final Terms) attached against:

(a) *Presentation and surrender*: presentation and (in the case of final exchange) surrender of this Temporary Global Note to or to the order of the Principal Paying Agent; and

(b) *Certification*: receipt by the Principal Paying Agent of a certificate or certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system dated not earlier than the Exchange Date and in substantially the form set out in 0 (*Form of Euroclear/Clearstream, Luxembourg Certification*) hereto.

The Definitive Notes so delivered from time to time shall be in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and received by the Principal Paying Agent; **provided, however, that** in no circumstances shall the aggregate principal amount of Definitive Notes so delivered exceed the initial principal amount of Notes represented by this Temporary Global Note.

4. **DELIVERY OF PERMANENT GLOBAL OR DEFINITIVE NOTES**

4.1 **Permanent Global Note**

Whenever any interest in this Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure (in the case of first exchange) the prompt delivery (free of charge to the bearer) of such Permanent Global Note, duly authenticated, to the bearer of this Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of Notes represented by such Permanent Global Note in accordance with its terms, in each case in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and received by the Principal Paying Agent against presentation and (in the case of final exchange) surrender of this Temporary Global Note to or to the order of the Principal Paying Agent within 7 days of the bearer requesting such exchange.

4.2 **Definitive Notes**

------

Whenever this Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the Final Terms), in an aggregate principal amount equal to the principal amount of Notes represented by this Temporary Global Note to the bearer of this Temporary Global Note against the surrender of this Temporary Global Note to or to the order of the Principal Paying Agent within 30 days of the bearer requesting such exchange.

5. **WRITING DOWN**

On each occasion on which:

(a) *Permanent Global Note*: the Permanent Global Note is delivered or the principal amount of Notes represented thereby is increased in accordance with its terms in exchange for a further portion of this Temporary Global Note; or

(b) *Definitive Notes*: Definitive Notes are delivered in exchange for this Temporary Global Note; or

(c) *Cancellation*: Notes represented by this Temporary Global Note are to be cancelled in accordance with Condition 7.8 (*Redemption and Purchase - Cancellations*),

the Issuer shall procure that:

(i) if the Final Terms specify that the New Global Note form is not applicable, (i) the principal amount of Notes represented by the Permanent Global Note, the principal amount of such increase or (as the case may be) the aggregate principal amount of such Notes and (ii) the remaining principal amount of Notes represented by this Temporary Global Note (which shall be the previous principal amount of Notes represented by this Temporary Global Note *less* the aggregate of the amounts referred to in (i)) are entered in 0 (*Payments, Exchange and Cancellation of Notes*) hereto, whereupon the principal amount of Notes represented by this Temporary Global Note shall for all purposes be as most recently so entered; and

(ii) if the Final Terms specify that the New Global Note form is applicable, details of the exchange or cancellation shall be entered *pro rata* in the records of the ICSDs.

6. **PAYMENTS**

6.1 **Recording of Payments**

Upon any payment being made in respect of the Notes represented by this Temporary Global Note, the Issuer shall procure that:

(a) *CGN*: if the Final Terms specify that the New Global Note form is not applicable, details of such payment shall be entered in 0 (*Payments, Exchange and Cancellation of Notes*) hereto and, in the case of any payment of principal, the principal amount of the Notes represented by this Temporary Global Note shall be reduced by the principal amount so paid; and

(b) *NGN*: if the Final Terms specify that the New Global Note form is applicable, details of such payment shall be entered *pro rata* in the records of the ICSDs and, in the case of any payment of principal, the principal amount of the Notes entered in the records of ICSDs and represented by this Temporary Global Note shall be reduced by the principal amount so paid.

6.2 **Discharge of Issuer's obligations**

Payments due in respect of Notes for the time being represented by this Temporary Global Note shall be made to the bearer of this Temporary Global Note and each payment so made will discharge the Issuer's obligations in respect thereof. Any failure to make the entries referred to above shall not affect such discharge.

7. **CONDITIONS APPLY**

Until this Temporary Global Note has been exchanged as provided herein or cancelled in accordance with the Agency Agreement, the bearer of this Temporary Global Note shall be subject to the Conditions and, subject as otherwise provided herein, shall be entitled to the same rights and benefits under the Conditions as if the bearer were the holder of Definitive Notes and any related Coupons and Talons in the smallest Specified Denomination and in an aggregate principal amount equal to the principal amount of the Notes represented by this Temporary Global Note.

8. **AUTHENTICATION**

This Temporary Global Note shall not be valid or enforceable for any purpose unless and until it has been authenticated for and on behalf of Citibank, N.A., London Branch as principal paying agent.

9. **EFFECTUATION**

If the Final Terms specify that the New Global Note form is applicable, this Temporary Global Note shall not be valid or enforceable for any purpose unless and until it has been effectuated for and on behalf of the entity appointed as common safekeeper by the ICSDs.

10. **CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999**

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Temporary Global Note, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.

11. **NOTICES**

Any notice or demand to the Issuer or the Trustee to be given, made or served for any purposes under this Temporary Global Note shall be given, made or served by sending the same by pre-paid post (first class if inland, first class airmail if overseas), email (if applicable), facsimile transmission (if applicable) or by delivering it by hand as follows:

to the Issuer: Koninklijke Philips N.V.

------

Philips Center HBT 12

Amstelplein 2

1096 BC Amsterdam

The Netherlands

Attention: Group Treasury

Email: treasury.middleoffice@philips.com

to the Trustee: Citicorp Trustee Company Limited

Citigroup Centre

Canada Square

London E14 5LB

England

Email: emea.at.debt@citi.comAttention: Agency & Trust

or to such other address or email address (if applicable) as shall have been notified (in accordance with this Clause 11) to the other party hereto and any notice or demand sent by post as aforesaid shall be deemed to have been given, made or served two days in the case of inland post or seven days in the case of overseas post after despatch, any notice or demand sent by email as aforesaid shall be deemed to have been given, made or served at the time of despatch and any notice or demand given by facsimile, when a transmission report showing the successful transmission of the facsimile is received by the sender **provided that** in the case of a notice or demand given by email a delivery receipt is received by the sending party confirming the email has been delivered to the recipient's correct email address.

12. **GOVERNING LAW**

This Temporary Global Note and any non-contractual obligations arising out of or in connection with it are governed by English law.

**AS WITNESS** the [manual/facsimile] signature of a duly authorised person on behalf of the Issuer.

**KONINKLIJKE PHILIPS N.V.**

By: ………………………………..

[*manual or facsimile signature*]

(*duly authorised*)

Name: ……………………………

Title: Authorised Signatory

**ISSUED** on the Issue Date

**AUTHENTICATED** for and on behalf of

**CITIBANK, N.A., LONDON BRANCH**

as principal paying agent without recourse, warranty or liability

By: ………………………………..

[*manual signature*]

(*duly authorised*)

**EFFECTUATED** for and on behalf of

as common safekeeper without

recourse, warranty or liability

By: ………………………………..

[*manual signature*]

(*duly authorised*)

**Schedule 1Payments, Exchange and Cancellation of Notes**<sup>[2]</sup>

2019 - 2021

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Date of payment, delivery or cancellation** | **Amount of interest then paid** | **Principal amount of Permanent Global Note then delivered or by which Permanent Global Note then increased or aggregate principal amount of Definitive Notes then delivered** | **Aggregate principal amount of Notes then cancelled** | **Remaining principal amount of this Temporary Global Note** | **Authorised Signature** |

---

------

<sup>[2]</sup> 0 should only be completed where the Final Terms specify that the New Global Note form is not applicable.

**Schedule 2Form of Accountholder's Certification**

**KONINKLIJKE PHILIPS N.V.**

**EURO MEDIUM TERM NOTE PROGRAMME**

This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (a) are owned by persons that are not citizens or residents of the United States, United States partnerships, United States corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("**United States persons**"), (b) are owned by United States person(s) that (i) are foreign branches of a United States financial institution (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv)) ("**financial institutions**") purchasing for their own account or for resale, or (ii) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (i) or (ii), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the issuer or the issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (c) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a United States or foreign financial institution described in clause (c) (whether or not also described in clause (a) or (b)) this is to further certify that such financial institution has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

As used herein, "**United States**" means the United States of America (including the States and the District of Columbia); and its "**possessions**" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We undertake to advise you promptly by tested telex on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date.

[This certification excepts and does not relate to [*currency*] [*amount*] of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.]

We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

Dated: [ ]

**[*name of account holder*]**

**as, or as agent for, the beneficial owner(s) of the Securities**

------

**to which this certificate relates.**

By:................................................................

*Authorised signatory*

**Schedule 3Form of Euroclear/Clearstream, Luxembourg Certification**

**KONINKLIJKE PHILIPS N.V.**

**EURO MEDIUM TERM NOTE PROGRAMME**

This is to certify that, based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our "**Member Organisations**") substantially to the effect set forth in the temporary global note issued in respect of the securities, as of the date hereof, [*currency*] [*amount*] principal amount of the above-captioned Securities (a) is owned by persons that are not citizens or residents of the United States, United States partnerships, United States corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("**United States persons**"), (b) is owned by United States persons that (i) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165- 12(c)(1)(iv)) ("**financial institutions**") purchasing for their own account or for resale, or (ii) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (i) or (ii), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (c) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (c) (whether or not also described in clause (a) or (b)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

We further certify (1) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global security excepted in such certifications and (2) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof.

We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

Dated: [ ]

**Euroclear Bank SA/NV**

***or***

**Clearstream Banking S.A.**

By:................................................................

*Authorised signatory*

**FORM OF PERMANENT GLOBAL NOTE**

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]<sup>[3]</sup>

<sup>[3]</sup> Legend to appear on every Permanent Global Note representing Notes with a maturity of more than one year.

**KONINKLIJKE PHILIPS N.V.**

**EURO MEDIUM TERM NOTE PROGRAMME**

**PERMANENT GLOBAL NOTE**

representing up to

[***Aggregate principal amount of Tranche***]

[***Title of Notes***]

**€10,000,000,000**

**Euro Medium Term Note Programme**

This global Note is a Permanent Global Note without interest coupons issued in respect of an issue of [*aggregate principal amount of Tranche*] in aggregate principal amount of [*title of Notes*] (the "**Notes**") by Koninklijke Philips N.V. a public limited liability company (*naamloze vennootschap*) incorporated under the law of the Netherlands registered at the Dutch Chamber of Commerce with number 17001910 (the "**Issuer**").

------

This Permanent Global Note is issued subject to and in accordance with the Conditions and a trust deed dated 8 March 2024 (as amended and/or supplemented and/or restated from time to time, the "**Trust Deed**") between, amongst others, the Issuer and Citicorp Trustee Company Limited as trustee (the "**Trustee**", which expression includes all persons for the time being appointed Trustee or Trustees under the Trust Deed) and is subject to an agency agreement dated 8 March 2024 (as amended and/or supplemented and/or restated from time to time, the "**Agency Agreement**") between the Issuer, amongst others, Citibank, N.A., London Branch, the Trustee and certain other financial institutions names therein. References herein to the "**Conditions**" shall be to the terms and conditions of the Notes as set out in Schedule 1 to the Trust Deed as completed by the final terms applicable to the Notes (the "**Final Terms**") attached hereto but, in the event of any conflict between the provisions of the Conditions and the information in the Final Terms, the Final Terms will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Permanent Global Note.

1. **PROMISE TO PAY**

1.1 **Pay to bearer**

The Issuer, for value received, promises to pay to the bearer of this Global Note, in respect of each Note represented by this Global Note, the Redemption Amount on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Final Terms), and to pay interest on each such Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.

1.2 **NGN Principal Amount**

If the Final Terms specify that the New Global Note form is applicable, this Global Note shall be a "**New Global Note**" or "**NGN**" and the principal amount of Notes represented by this Global Note shall be the aggregate amount from time to time entered in the records of both Euroclear Bank SA/NV ("**Euroclear**") and/or Clearstream Banking S.A. ("**Clearstream, Luxembourg**", together with Euroclear, the international central securities depositaries or "**ICSDs**"). The records of the ICSDs (which expression in this Global Note means the records that each ICSD holds for its customers which reflect the amount of such customers' interests in the Notes (but excluding any interest in any Notes of one ICSD shown in the records of another ICSD)) shall be conclusive evidence of the principal amount of Notes represented by this Global Note and, for these purposes, a statement issued by an ICSD (which statement shall be made available to the bearer upon request) stating the principal amount of Notes represented by this Global Note at any time shall be conclusive evidence of the records of the ICSD at that time.

1.3 **CGN Principal Amount**

If the Final Terms specify that the New Global Note form is not applicable, this Global Note shall be a "**Classic Global Note**" or "**CGN**" and the principal amount of Notes represented by this Global Note shall be the amount stated in the Final Terms or, if lower, the principal amount most recently entered by or on behalf of the Issuer in the relevant column in 0 (*Payments, Exchange and Cancellation of Notes*).

2. **NEGOTIABILITY**

This Global Note is negotiable and, accordingly, title to this Global Note shall pass by delivery.

3. **EXCHANGE**

Upon the occurrence of an Exchange Event (as further described below), this Global Note will become exchangeable, in whole but not in part only and at the request of the bearer of this Global Note, for Definitive Notes (which expression has the meaning given in the Trust Deed) in accordance with the Agency Agreement.

An Exchange Event will occur:

(a) upon the happening of any of the events defined as an "Event of Default" in Condition 10 (*Events of Default*); or

(b) if the Issuer has been notified that both Euroclear Bank SA/NV ("**Euroclear**") and Clearstream Banking, S.A. ("**Clearstream**, **Luxembourg**" and, together with Euroclear, the "**relevant Clearing Systems**") have announced an intention permanently to cease business or have in fact done so and no successor clearing system satisfactory to the Trustee is available; or

(c) if the Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes in definitive form and a certificate to such effect signed by an Authorised Signatory (as defined in the Trust Deed) of the Issuer is given to the Trustee.

4. **DELIVERY OF DEFINITIVE NOTES**

Whenever this Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the Final Terms), in an aggregate principal amount equal to the principal amount of Notes represented by this Global Note to the bearer of this Global Note against the surrender of this Global Note to or to the order of the Principal Paying Agent within 30 days of the bearer requesting such exchange.

5. **WRITING DOWN**

On each occasion on which:

(a) *Payment of principal*: a payment of principal is made in respect of this Global Note;

(b) *Definitive Notes*: Definitive Notes are delivered; or

(c) *Cancellation*: Notes represented by this Global Note are to be cancelled in accordance with Condition 7.8 (*Redemption and Purchase - Cancellations*),

------

the Issuer shall procure that:

(i) if the Final Terms specify that the New Global Note form is not applicable, (i) the amount of such payment and the aggregate principal amount of such Notes; and (ii) the remaining principal amount of Notes represented by this Global Note (which shall be the previous principal amount hereof *less* the aggregate of the amounts referred to in (i) above) are entered in Schedule 1 (*Payments, Exchanges against Temporary Global Note, Delivery of Definitive Notes and Cancellation of Notes*) hereto, whereupon the principal amount of Notes represented by this Global Note shall for all purposes be as most recently so entered; and

(ii) if the Final Terms specify that the New Global Note form is applicable, details of the exchange or cancellation shall be entered *pro rata* in the records of the ICSDs.

6. **WRITING UP**

6.1 **Initial Exchange**

If this Global Note was originally issued in exchange for part only of a temporary global note representing the Notes, then all references in this Global Note to the principal amount of Notes represented by this Global Note shall be construed as references to the principal amount of Notes represented by the part of the temporary global note in exchange for which this Global Note was originally issued which the Issuer shall procure:

(a) *CGN*: if the Final Terms specify that the New Global Note form is not applicable, is entered in Schedule 1 (*Payments, Exchanges against Temporary Global Note, Delivery of Definitive Notes and Cancellation of Notes*) hereto, whereupon the principal amount of Notes represented by this Global Note shall for all purposes be as most recently so entered; and

(b) *NGN*: if the Final Terms specify that the New Global Note form is applicable, is entered by the ICSDs in their records.

6.2 **Subsequent Exchange**

If at any subsequent time any further portion of such temporary global note is exchanged for an interest in this Global Note, the principal amount of Notes represented by this Global Note shall be increased by the amount of such further portion, and the Issuer shall procure that the principal amount of Notes represented by this Global Note (which shall be the previous principal amount of Notes represented by this Global Note *plus* the amount of such further portion) is:

(a) *CGN*: if the Final Terms specify that the New Global Note form is not applicable, entered in Schedule 1 (*Payments, Exchanges against Temporary Global Note, Delivery of Definitive Notes and Cancellation of Notes*) hereto, whereupon the principal amount of this Global Note shall for all purposes be as most recently so entered; and

(b) *NGN*: if the Final Terms specify that the New Global Note form is applicable, entered by the ICSDs in their records.

7**. PAYMENTS**

7.1 **Recording of Payments**

Upon any payment being made in respect of the Notes represented by this Global Note, the Issuer shall procure that:

(a) *CGN*: if the Final Terms specify that the New Global Note form is not applicable, details of such payment shall be entered in 0 (*Payments, Exchange and Cancellation of Notes*) hereto and, in the case of any payment of principal, the principal amount of the Notes represented by this Global Note shall be reduced by the principal amount so paid; and

(b) *NGN*: if the Final Terms specify that the New Global Note form is applicable, details of such payment shall be entered *pro rata* in the records of the ICSDs and, in the case of any payment of principal, the principal amount of the Notes entered in the records of ICSDs and represented by this Global Note shall be reduced by the principal amount so paid.

7.2 Discharge of Issuer's obligations

Payments due in respect of Notes for the time being represented by this Global Note shall be made to the bearer of this Global Note and each payment so made will discharge the Issuer's obligations in respect thereof. Any failure to make the entries referred to above shall not affect such discharge.

8. **CONDITIONS APPLY**

Until this Global Note has been exchanged as provided herein or cancelled in accordance with the Agency Agreement, the bearer of this Global Note shall be subject to the Conditions and, subject as otherwise provided herein, shall be entitled to the same rights and benefits under the Conditions as if the bearer were the Holder of Definitive Notes and any related Coupons and Talons in the smallest Specified Denomination and in an aggregate principal amount equal to the principal amount of Notes represented by this Global Note.

9. **AUTHENTICATION**

This Global Note shall not be valid or enforceable for any purpose unless and until it has been authenticated for and on behalf of Citibank, N.A., London Branch as principal paying agent.

10. **EFFECTUATION**

If the Final Terms specify that the New Global Note form is applicable, this Permanent Global Note shall not be valid or enforceable for any purpose unless and until it has been effectuated for and on behalf of the entity appointed as common safekeeper by the ICSDs.

11. **CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999**

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Global Note, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.

------

12. **NOTICES**

Any notice or demand to the Issuer or the Trustee to be given, made or served for any purposes under this Global Note shall be given, made or served by sending the same by pre-paid post (first class if inland, first class airmail if overseas), email (if applicable), facsimile transmission (if applicable) or by delivering it by hand as follows:

to the Issuer: Koninklijke Philips N.V.

Philips Center HBT 12

Amstelplein 2

1096 BC Amsterdam

The Netherlands

Attention: Group Treasury

Email: treasury.middleoffice@philips.com

to the Trustee: Citicorp Trustee Company Limited

Citigroup Centre

Canada Square

London E14 5LB

England

Email: emea.at.debt@citi.comAttention: Agency & Trust

or to such other address or email address (if applicable) as shall have been notified (in accordance with this Clause 12) to the other party hereto and any notice or demand sent by post as aforesaid shall be deemed to have been given, made or served two days in the case of inland post or seven days in the case of overseas post after despatch, any notice or demand sent by email as aforesaid shall be deemed to have been given, made or served at the time of despatch and any notice or demand given by facsimile, when a transmission report showing the successful transmission of the facsimile is received by the sender **provided that** in the case of a notice or demand given by email a delivery receipt is received by the sending party confirming the email has been delivered to the recipient's correct email address.

13. **GOVERNING LAW**

This Global Note and any non-contractual obligations arising out of or in connection with it are governed by English law.

**AS WITNESS** the [manual/facsimile] signature of a duly authorised person on behalf of the Issuer.

**KONINKLIJKE PHILIPS N.V.**

By: ………………………………..

[*manual or facsimile signature*]

(*duly authorised*)

Name: ……………………………

Title: Authorised Signatory

**ISSUED** on the Issue Date

**AUTHENTICATED** for and on behalf of

**CITIBANK, N.A., LONDON BRANCH** as principal paying agent without recourse, warranty or liability

By:................................................................

[*manual signature*]

(*duly authorised*)

**EFFECTUATED** for and on behalf of

as common safekeeper without

recourse, warranty or liability

By:................................................................

[*manual signature*]

(*duly authorised*)

**SCHEDULE 1PAYMENTS, EXCHANGES AGAINST TEMPORARY GLOBAL NOTE, DELIVERY OF DEFINITIVE NOTES AND CANCELLATION OF NOTES**<sup>[4]</sup>

------

2019 - 2021

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Date of payment, exchange delivery or cancellation** | **Amount of interest then paid** | **Amount of principal then paid** | **Principal amount of Temporary Global Note then exchanged** | **Aggregate principal amount of Definitive Notes then delivered** | **Aggregate principal amount of Notes then cancelled** | **New principal amount of this Global Note** | **Authorised Signature** |

---

<sup>[4]</sup> 0 should only be completed where the Final Terms specify that the New Global Note form is not applicable.

**PART CFORM OF DEFINITIVE BEARER NOTE**

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.]<sup>[5]</sup>

[Pursuant to the Dutch Savings Certificates Act (*Wet inzake spaarbewijzen*), each transfer and acceptance of this Note within, from or into The Netherlands (other than between individuals who do not act in the conduct of a profession or trade):

(a) must be made through the mediation of either the Issuer or a member of Euronext Amsterdam N.V.; and

(b) if it involves its physical delivery, must be recorded in a transaction note which includes the name and address of each party, the nature of the transaction and the number and serial numbers of the Notes transferred.]<sup>[6]</sup>

[Pursuant to the Dutch Savings Certificates Act (*Wet inzake spaarbewijzen*), each transfer and acceptance of this Note within, from or into The Netherlands (other than between individuals who do not act in the conduct of a profession or trade):

(c) must be made through the mediation of either the Issuer or a member of Euronext Amsterdam N.V.; and

(d) unless it is made between a professional borrower and a professional lender, if it involves its physical delivery, must be recorded in a transaction note which includes the name and address of each party, the nature of the transaction and the number and serial numbers of the Notes transferred.]<sup>[7]</sup>

[On the face of the Note:]

Series Number: [ ]

Serial Number: [ ]

[Tranche Number: [ ]]

[*Denomination*]

<sup>[5]</sup> Legend to appear on every Note with a maturity of more than one year.

------

<sup>[6]</sup> This legend should be placed on Notes on which interest does not become due during their tenor or other Notes which qualify as savings certificates as defined in the Dutch Savings Certificates Act and which are (a) not admitted to trading on Eurolist by Euronext Amsterdam N.V.'s stock market, (b) issued within The Netherlands, or issued outside The Netherlands but distributed within The Netherlands in the course of initial distribution or immediately thereafter and (c) do not qualify as commercial paper or certificates of deposit.

<sup>[7]</sup>This legend should be placed on Notes on which interest does not become due during their tenor or other Notes which qualify as savings certificates as defined in the Dutch Savings Certificates Act and which are (a) not admitted to trading on Eurolist by Euronext Amsterdam N.V.'s stock market, (b) issued within The Netherlands, or issued outside The Netherlands but distributed within The Netherlands in the course of initial distribution or immediately thereafter and (c) qualify as commercial paper or certificates of deposit.

**KONINKLIJKE PHILIPS N.V.**

**EURO MEDIUM TERM NOTE PROGRAMME**

***[Aggregate principal amount of Tranche]***

***[Title of Notes]***

**KONINKLIJKE PHILIPS N.V.** (the "**Issuer**"), subject to and in accordance with the Conditions [endorsed hereon/set out in Schedule 1 to the Trust Deed (as defined below) which shall be incorporated by reference herein and have effect as if set out herein] (the "**Conditions**") as completed by the relevant information appearing in the final terms (the "**Final Terms**") and a trust deed dated 8 March 2024 (as modified and/or supplemented and/or restated from time to time, the "**Trust Deed**") and made between, amongst others, the Issuer and Citicorp Trustee Company Limited as trustee for the holders of the Notes (the "**Trustee**", which expression includes all persons for the time being appointed Trustee or Trustees under the Trust Deed) and an agency agreement dated 8 March 2024 (as amended and/or supplemented and/or restated from time to time, the "**Agency Agreement**") between, amongst others, the Issuer, Citibank, N.A., London Branch, the Trustee and certain other financial institutions named therein, for value received promises to pay to the bearer hereof on the Maturity Date, or on such earlier date as this Note may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable on redemption of this Note, and to pay interest (if any) on the principal amount of this Note calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.

In the event of any conflict between the provisions of the Conditions and such information set out in the Final Terms, such information set out in the Final Terms will prevail.

[This Note shall not/Neither this Note nor any of the interest coupons [or talons] appertaining hereto shall] be valid for any purpose until this Note has been authenticated by or on behalf of Citibank, N.A., London Branch as Principal Paying Agent.

This Note and any non-contractual obligations arising out of or in connection with it are governed by English law.

**IN WITNESS WHEREOF** the Issuer has caused this Note to be signed in facsimile on its behalf.

**KONINKLIJKE PHILIPS N.V.**

By: ………………………………..

(*duly authorised*)

Name: ……………………………

Title: Authorised Signatory

**ISSUED** in London as of [ ] 20 [•]

**AUTHENTICATED** for and on behalf of

**CITIBANK, N.A., LONDON BRANCH**,

as Principal Paying Agent without recourse,

warranty or liability

By:................................................................

(*duly authorised*)

[On the reverse of the Notes:]

**TERMS AND CONDITIONS**

[Conditions to be as set out in Schedule 1 to the Trust Deed or such other form as may be agreed between the Issuer, the Principal Paying Agent, the Trustee and the relevant Dealer(s), but shall not be endorsed if not required by the relevant Stock Exchange]

**FINAL TERMS**

[Here to be set out the relevant information completing the Conditions which appears in the Final Terms relating to the Notes]

[At the foot of the Terms and Conditions:]

**PRINCIPAL PAYING AGENT**

Citibank, N.A., London Branch

------

Citigroup Centre

Canada Square

Canary Wharf

London E14 5LB

England

**PART DFORM OF COUPON**

[*On the face of the Coupon*:]

Series No: [ ]

Serial Number of Note: [ ]

[Tranche No: [ ]]

**KONINKLIJKE PHILIPS N.V.** a public limited liability company (*naamloze vennootschap*) incorporated under the law of The Netherlands registered at the Dutch Chamber of Commerce with number 17001910

**Euro Medium Term Note Programme**

**[Amount and title of Notes]**

Coupon for [set out the amount due] due on [date]

Such amount is payable, subject to the terms and conditions (the "**Conditions**") endorsed on the Note to which this Coupon relates (which are binding on the holder of this Coupon whether or not it is for the time being attached to such Note), against presentation and surrender of this Coupon at the specified office for the time being of any of the agents shown on the reverse of this Coupon (or any successor or additional agents appointed from time to time in accordance with the Conditions).

**IN WITNESS WHEREOF** the Issuer has caused this Coupon to be signed in facsimile on its behalf.

**KONINKLIJKE PHILIPS N.V.**

By: ………………………………..

(*duly authorised*)

Name: ……………………………

Title: Authorised Signatory

**KONINKLIJKE PHILIPS N.V.**

**Euro Medium Term Note Programme**

**[Amount and title of Notes]**

Coupon for the amount of interest due on the Interest Payment Date falling in [month and year].

Such amount is payable, subject to the terms and conditions (the "**Conditions**") endorsed on the Note to which this Coupon relates (which are binding on the holder of this Coupon whether or not it is for the time being attached to such Note), against presentation and surrender of this Coupon at the specified office for the time being of any of the agents shown on the reverse of this Coupon (or any successor or additional agents appointed from time to time in accordance with the Conditions).

The Note to which this Coupon relates may, in certain circumstances specified in the Conditions, fall due for redemption before the maturity date of this Coupon. In such event, this Coupon shall become void and no payment will be made in respect hereof.

**IN WITNESS WHEREOF** the Issuer has caused this Coupon to be signed in facsimile on its behalf.

**KONINKLIJKE PHILIPS N.V.**

By: ………………………………..

(*duly authorised*)

Name: ……………………………

Title: Authorised Signatory

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]<sup>[8]</sup>

[On the reverse of the Coupon:]

**PRINCIPAL PAYING AGENT:**

Citibank, N.A., London Branch, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, England

<sup>[8]</sup> Legend to appear on every Coupon relating to a Note with a maturity of more than one year.

------

**PART EFORM OF TALON**

[On the face of the Talon]

Series No: [ ]

Serial Number of Note: [ ]

[Tranche No: [ ]]

**KONINKLIJKE PHILIPS N.V.** a public limited company (*naamloze vennootschap*) incorporated under the law of The Netherlands registered at the Dutch Chamber of Commerce with number 17001910

**Euro Medium Term Note Programme**

**[*Amount and title of Notes*]**

On or after the maturity date of the final Coupon which is (or was at the time of issue) part of the Coupon Sheet to which this Talon is (or was at the time of issue) attached, this Talon may be exchanged at the specified office for the time being of the principal paying agent shown on the reverse of this Talon (or any successor principal paying agent appointed from time to time in accordance with the terms and conditions (the "**Conditions**") of the Notes to which this Talon relates) for a further Coupon Sheet (including a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to the Conditions).

The Note to which this Talon relates may, in certain circumstances specified in the Conditions, fall due for redemption before the maturity date of such final Coupon. In such event, this Talon shall become void and no Coupon will be delivered in respect hereof.

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.][9]

*[On the reverse of the Talon:]*

**PRINCIPAL PAYING AGENT:**

Citibank, N.A., London Branch, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, England

[9] Legend to appear on every Talon relating to a Note with a maturity of more than one year.

**SCHEDULE 3PROVISIONS FOR MEETINGS OF NOTEHOLDERS**

1. (a) As used in this Schedule the following expressions shall have the following meanings unless the context otherwise requires:

(i) "**voting certificate**" shall mean an English language certificate issued by the Principal Paying Agent and dated in which it is stated:

(A) that on the date thereof Notes (whether in definitive form or represented by a Global Note and not being Notes in respect of which a block voting instruction has been issued and is outstanding in respect of the meeting specified in such voting certificate or any adjourned such meeting) were deposited with the Principal Paying Agent or (to the satisfaction of the Principal Paying Agent) were held to its order or under its control or blocked in an account with Euroclear, Clearstream, Luxembourg or any other relevant clearing system and that no such Notes will cease to be so deposited, held or blocked until the first to occur of:

(1) the conclusion of the meeting specified in such certificate or, if applicable, of any adjourned such meeting; and

(2) the surrender of the certificate to the Principal Paying Agent who issued the same; and

(B) that the bearer thereof is entitled to attend and vote at such meeting and any adjourned such meeting in respect of the Notes represented by such certificate;

(ii) "**block voting instruction**" shall mean an English language document issued by the Principal Paying Agent and dated in which:

(A) it is certified that Notes (whether in definitive form or represented by a Global Note and not being Notes in respect of which a voting certificate has been issued and is outstanding in respect of the meeting specified in such block voting instruction and any adjourned such meeting) have been deposited with the Principal Paying Agent or (to the satisfaction of the Principal Paying Agent) were held to its order or under its control or blocked in an account with Euroclear, Clearstream, Luxembourg or any other relevant clearing system and that no such Notes will cease to be so deposited, held or blocked until the first to occur of:

(1) the conclusion of the meeting specified in such document or, if applicable, of any adjourned such meeting; and

(2) the surrender to the Principal Paying Agent not less than 48 hours before the time for which such meeting or any adjourned such meeting is convened of the receipt issued by the Principal Paying Agent in respect of each such deposited or blocked Note which is to be released or (as the case may require) the Note or Notes ceasing with the agreement of the Principal Paying Agent to be held to its order or under its control and the giving of notice by the Principal Paying Agent to the Issuer in accordance with paragraph A hereof of the necessary amendment to the block voting instruction;

(B) it is certified that each holder of such Notes has instructed the Principal Paying Agent that the vote(s) attributable to the Note or Notes so deposited, held or blocked should be cast in a particular way in relation to the resolution or resolutions to be put to such meeting or any adjourned such meeting and that all such instructions are during the period commencing 48 hours prior to the time for which such meeting or any adjourned such meeting is convened and ending at the conclusion or adjournment thereof neither revocable nor capable of amendment;

------

(C) the aggregate principal amount of the Notes so deposited, held or blocked are listed distinguishing with regard to each such resolution between those in respect of which instructions have been given as aforesaid that the votes attributable thereto should be cast in favour of the resolution and those in respect of which instructions have been so given that the votes attributable thereto should be cast against the resolution; and

(D) one or more persons named in such document (each hereinafter called a "**proxy**") is or are authorised and instructed by the Principal Paying Agent to cast the votes attributable to the Notes so listed in accordance with the instructions referred to in (B) above as set out in such document;

(iii) "**24 hours**" shall mean a period of 24 hours including all or part of a day upon which banks are open for business in both the place where the relevant meeting is to be held and in each of the places where the Principal Paying Agent have their specified offices (disregarding for this purpose the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more periods of 24 hours until there is included as aforesaid all or part of a day upon which banks are open for business in all of the places as aforesaid; and

(iv) "**48 hours**" means two consecutive periods of 24 hours.

(b) A holder of a Note (whether in definitive form or represented by a Global Note) may obtain a voting certificate in respect of such Note from the Principal Paying Agent or require the Principal Paying Agent to issue a block voting instruction in respect of such Note by depositing such Note with the Principal Paying Agent or (to the satisfaction of the Principal Paying Agent) by such Note being held to its order or under its control or blocked in an account with Euroclear, Clearstream, Luxembourg or any other relevant clearing system, in each case not less than 48 hours before the time fixed for the relevant meeting and on the terms set out in subparagraph (a)(i)(A) or (a)(ii)(A) above (as the case may be), and (in the case of a block voting instruction) instructing the Principal Paying Agent to the effect set out in subparagraph (a)(ii)(C) above. The holder of any voting certificate or the proxies named in any block voting instruction shall for all purposes in connection with the relevant meeting or adjourned meeting of Noteholders be deemed to be the holder of the Notes to which such voting certificate or block voting instruction relates.

2. The Issuer or the Trustee may at any time and the Trustee shall (subject to it being indemnified and/or secured and/or prefunded to its satisfaction) upon a requisition in writing signed by the holders of not less than one-quarter in aggregate principal amount of the Notes for the time being outstanding convene a meeting of the Noteholders. Every such meeting shall be held at such time and place as the Trustee may appoint or approve in writing.

3. At least 21 days' notice (exclusive of the day on which the notice is given and the day on which the meeting is to be held) specifying the place, day and hour of meeting shall be given to the Noteholders, prior to any meeting of the Noteholders, in the manner provided by Condition 13.1 (*Notices – Notices to the Noteholders*). Such notice, which shall be in the English language, shall state generally the nature of the business to be transacted at the meeting thereby convened but (except for an Extraordinary Resolution) it shall not be necessary to specify in such notice the terms of any resolution to be proposed. Such notice shall state that Notes may, not less than 48 hours before the time fixed for the meeting, be deposited the Principal Paying Agent or (to its satisfaction) held to their order or under their control for the purpose of obtaining voting certificates or appointing proxies. A copy of the notice shall be sent to the Trustee (unless the meeting is convened by the Trustee) and to the Issuer (unless the meeting is convened by the Issuer).

4. A person (who may, but need not be, a Noteholder) nominated in writing by the Trustee shall be entitled to take the chair at the relevant meeting or adjourned meeting but if no such nomination is made or if at any meeting or adjourned meeting the person nominated shall not be present within 15 minutes after the time appointed for holding the meeting or adjourned meeting the Noteholders present shall choose one of their number to be Chairperson, failing which the Issuer may appoint a Chairperson. The Chairperson of an adjourned meeting need not be the same person as was Chairperson of the meeting from which the adjournment took place.

5. The quorum at any such meeting for passing an Extraordinary Resolution shall (subject as provided below) be one or more persons present holding Notes in definitive form or voting certificates or being proxies and holding or representing in the aggregate more than 50 per cent. in aggregate principal amount of the Notes for the time being outstanding **provided that** at any meeting the business of which includes a Basic Terms Modification (each of which shall, subject only to Clause 7.2.2 of the Trust Deed, only be capable of being effected after having been approved by Extraordinary Resolution) the quorum for passing the requisite Extraordinary Resolution shall be one or more persons present holding Notes in definitive form or voting certificates or being proxies and holding or representing in the aggregate not less than two-thirds of the aggregate principal amount of the Notes for the time being outstanding.

------

6. If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairperson may decide) after the time appointed for any such meeting a quorum is not present for the transaction of any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the meeting shall if convened upon the requisition of Noteholders be dissolved. In any other case it shall stand adjourned to the same day in the next week (or if such day is a public holiday the next succeeding business day) at the same time and place (except in the case of a meeting at which an Extraordinary Resolution is to be proposed in which case it shall stand adjourned for such period, being not less than 13 clear days nor more than 42 clear days, and to such place as may be appointed by the Chairperson either at or subsequent to such meeting and approved by the Trustee). If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairperson may decide) after the time appointed for any such adjourned meeting a quorum is not present for the transaction of any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the Chairperson may either (with the approval of the Trustee) dissolve such meeting or adjourn the same for such period, being not less than 13 clear days (but without any maximum number of clear days), and to such place as may be appointed by the Chairperson either at or subsequent to such adjourned meeting and approved by the Trustee, and the provisions of this sentence shall apply to all further adjourned such meetings. At any such adjourned meeting one or more persons present holding Notes in definitive form or voting certificates or being proxies (whatever the aggregate principal amount of the Notes so held or represented by them) shall (subject as provided below) form a quorum and shall (subject as provided below) have power to pass any Extraordinary Resolution or other resolution and to decide upon all matters which could properly have been dealt with at the meeting from which the adjournment took place had the requisite quorum been present **provided that** at any such adjourned meeting the quorum for the transaction of business comprising any of the matters specified in the proviso to paragraph 5 above shall be one or more persons present holding Notes in definitive form or voting certificates or being proxies and holding or representing in the aggregate not less than one-third of the aggregate principal amount of the Notes for the time being outstanding.

7. Notice of any adjourned meeting at which an Extraordinary Resolution is to be submitted shall be given in the same manner as notice of an original meeting but as if 10 were substituted for 21 in paragraph 3 above and such notice shall state the relevant quorum requirements that apply to the adjourned meeting. Subject as aforesaid it shall not be necessary to give any notice of an adjourned meeting.

8. Every question submitted to a meeting shall be decided in the first instance by a show of hands and in case of equality of votes the Chairperson shall both on a show of hands and on a poll have a casting vote in addition to the vote or votes (if any) to which such person may be entitled as a Noteholder or as a holder of a voting certificate or as a proxy.

9. At any meeting unless a poll is (before or on the declaration of the result of the show of hands) demanded by the Chairperson, the Issuer, the Trustee or any person present holding a Note in definitive form or a voting certificate or being a proxy (whatever the aggregate principal amount of the Notes so held or represented by such person) a declaration by the Chairperson that a resolution has been carried or carried by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.

10. Subject to paragraph 12 below, if at any such meeting a poll is so demanded it shall be taken in such manner and subject as hereinafter provided either at once or after an adjournment as the Chairperson directs and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of the taking of the poll. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the motion on which the poll has been demanded.

11. The Chairperson may with the consent of (and shall if directed by) any such meeting adjourn the same from time to time and from place to place but no business shall be transacted at any adjourned meeting except business which might lawfully (but for lack of required quorum) have been transacted at the meeting from which the adjournment took place.

12. Any poll demanded at any such meeting on the election of a Chairperson or on any question of adjournment shall be taken at the meeting without adjournment.

13. The Trustee and its lawyers and any director, officer or employee of a corporation being a trustee of this Trust Deed and any director or officer of the Issuer and its lawyers and any other person authorised so to do by the Trustee may attend and speak at any meeting. Save as aforesaid, but without prejudice to the proviso to the definition of "**outstanding**" in Clause 1 (*Definitions and Interpretation*) of the Trust Deed, no person shall be entitled to attend and speak nor shall any person be entitled to vote at any meeting of the Noteholders or join with others in requesting the convening of such a meeting or to exercise the rights conferred on the Noteholders by Conditions 10 (*Events of Default*) and 11.1 (*Enforcement – Enforcement by the Trustee*) unless they either produce the Note or Notes in definitive form of which they are the holder or a voting certificate or is a proxy. No person shall be entitled to vote at any meeting in respect of Notes which are deemed to be not outstanding by virtue of the proviso to the definition of "outstanding" in Clause 1 (*Definitions and Interpretation*) of the Trust Deed. Nothing herein shall prevent any of the proxies named in any block voting instruction or form of proxy from being a director, officer or representative of or otherwise connected with the Issuer.

14. Subject as provided in paragraph 13 hereof at any meeting:

(a) on a show of hands every person who is present in person and produces a Note in definitive form or voting certificate or is a proxy shall have one vote; and

(b) on a poll every person who is so present shall have one vote in respect of each

€1,000 in aggregate principal amount of the outstanding Notes so produced in definitive form or represented by the voting certificate so produced or in respect of which they are a proxy or in respect of which (being in definitive form) they are the holder. Without prejudice to the obligations of the proxies named in any block voting instruction any person entitled to more than one vote need not use all their votes or cast all the votes to which they are entitled in the same way.

15. The proxies named in any block voting instruction need not be Noteholders.

------

16. Each block voting instruction together (if so requested by the Trustee) with proof satisfactory to the Trustee of its due execution on behalf of the Principal Paying Agent shall be deposited by the Principal Paying Agent at such place as the Trustee shall approve not less than 24 hours before the time appointed for holding the meeting or adjourned meeting at which the proxies named in the block voting instruction propose to vote and in default the block voting instruction shall not be treated as valid unless the Chairperson of the meeting decides otherwise before such meeting or adjourned meeting proceeds to business. A copy of each block voting instruction shall be deposited with the Trustee before the commencement of the meeting or adjourned meeting but the Trustee not thereby be obliged to investigate or be concerned with the validity of or the authority of the proxies named in any such block voting instruction.

17. Any vote given in accordance with the terms of a block voting instruction shall be valid notwithstanding the previous revocation or amendment of the block voting instruction or of any of the Noteholders' instructions pursuant to which it was executed **provided that** no intimation in writing of such revocation or amendment shall have been received from the Principal Paying Agent by the Issuer at its registered office (or such other place as may have been required or approved by the Trustee for the purpose) by the time being 24 hours and 48 hours respectively before the time appointed for holding the meeting or adjourned meeting at which the block voting instruction is to be used.

18. A meeting of the Noteholders shall in addition to the powers hereinbefore given have the following powers exercisable only by Extraordinary Resolution (subject to the provisions relating to quorum contained in paragraphs 5 and 6 above) namely:

(a) Approve any Basic Terms Modification.

(b) Power to sanction any compromise or arrangement proposed to be made between the Issuer, the Trustee, any Appointee and the Noteholders and Couponholders or any of them.

(c) Power to sanction any abrogation, modification, compromise or arrangement in respect of the rights of the Trustee, any Appointee, the Noteholders, the Couponholders or the Issuer against any other or others of them or against any of their property whether such rights shall arise under this Trust Deed or otherwise.

(d) Power to assent to any modification of the provisions of this Trust Deed which shall be proposed by the Issuer or the Trustee.

(e) Power to give any authority or sanction which under the provisions of this Trust Deed is required to be given by Extraordinary Resolution.

(f) Power to appoint any persons (whether Noteholders or not) as a committee or committees to represent the interests of the Noteholders and to confer upon such committee or committees any powers or discretions which the Noteholders could themselves exercise by Extraordinary Resolution.

(g) Power to approve of a person to be appointed a trustee and power to remove any trustee or trustees for the time being of this Trust Deed.

(h) Power to discharge or exonerate the Trustee and/or any Appointee from all Liability in respect of any act or omission for which the Trustee and/or such Appointee may have become or may become responsible under this Trust Deed.

(i) Power to authorise the Trustee and/or any Appointee (subject to it being indemnified and/or secured and/or prefunded to its satisfaction) to concur in and execute and do all such deeds, instruments, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution.

(j) Power to sanction any scheme or proposal for the exchange or sale of the Notes for or the conversion of the Notes into or the cancellation of the Notes in consideration of shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities of the Issuer or any other company formed or to be formed, or for or into or in consideration of cash, or partly for or into or in consideration of such shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities as aforesaid and partly for or into or in consideration of cash.

(k) (Other than as permitted under Clause 7.3 (*Substitution*) of the Trust Deed), power to approve the substitution of any entity for the Issuer (or any previous substitute) as principal debtor under this Trust Deed.

19. Any Extraordinary Resolution (i) passed at a meeting of the holders duly convened and held in accordance with this Trust Deed, (ii) passed as an Extraordinary Resolution in writing in accordance with this Trust Deed or (iii) passed by way of electronic consents communicated through the electronic communications systems of the relevant clearing system(s) to the Trustee in accordance with their operating rules and procedures shall be binding upon all the holders whether or not present or whether or not represented at any meeting and whether or not voting on such Extraordinary Resolution and upon all Couponholders and each of them shall be bound to give effect thereto accordingly and the passing of any such Extraordinary Resolution shall be conclusive evidence that the circumstances justify the passing thereof. Notice of the result of the voting on any Extraordinary Resolution duly considered by the holders shall be published in accordance with Condition 13 (*Notices*) by the Issuer within 14 days of such result being known, **provided that** the non- publication of such notice shall not invalidate such result.

20. The expression "**Extraordinary Resolution**" when used in this Trust Deed means (i) a resolution passed at a meeting duly convened and held in accordance with this Trust Deed by a majority consisting of not less than two thirds of the votes cast on such resolution, (ii) a resolution in writing signed by or on behalf of the holders of not less than two-thirds in principal amount of the Notes for the time being outstanding or (iii) a resolution passed by way of electronic consents communicated through the electronic communications systems of the relevant clearing system(s) to the Trustee in accordance with their operating rules and procedures by or on behalf of the holders of not less than two-thirds in principal amount of the Notes outstanding.

------

21. Minutes of all resolutions and proceedings at every meeting of the Noteholders shall be made and entered in books to be from time to time provided for that purpose by the Issuer and any such Minutes as aforesaid if purporting to be signed by the Chairperson of the meeting at which such resolutions were passed or proceedings transacted shall be conclusive evidence of the matters therein contained and until the contrary is proved every such meeting in respect of the proceedings of which Minutes have been made shall be deemed to have been duly held and convened and all resolutions passed or proceedings transacted thereat to have been duly passed or transacted.

22. Subject to all provisions of this Trust Deed the Trustee may:

(a) without the consent of the Issuer, the Noteholders or the Couponholders prescribe such other or further regulations ("**Further Regulations**") regarding the requisitioning and/or the holding of meetings of Noteholders and attendance and voting thereat as the Trustee may in its sole discretion think fit; or

(b) concur with the Issuer in making Further Regulations if it is of the opinion that to do so is not materially prejudicial to the Noteholders.

**SCHEDULE 4FORM OF AUTHORISED OFFICERS' CERTIFICATE**

[*on Issuer letterhead*]

[*date*]

To: Citicorp Trustee Company Limited (as Trustee)

**KONINKLIJKE PHILIPS N.V.**

**€10,000,000,000Euro Medium Term Note Programme**

This certificate is delivered to you in accordance with Clause 6.7 of the trust deed dated 8 March 2024 (the "**Trust Deed**") and made between the Issuer and Citicorp Trustee Company Limited (the "**Trustee**"). All words and expressions defined in the Trust Deed shall (save as otherwise provided herein or unless the context otherwise requires) have the same meanings herein.

We hereby certify that to the best of our knowledge, information and belief, and having made all reasonable enquiries:

(a) as at the date herewith, no Event of Default or Potential Event of Default existed [other than [●]] and no Event of Default, Potential Event of Default had existed or happened at any time since [*insert date of last certificate delivered*]/[the certification date (as defined in the Trust Deed) of the last certificate delivered under Clause 6.7] [other than [●]]; and

(b) from and including [*insert date of last certificate delivered*]/[the certification date of the last certificate delivered under Clause 6.7] to and including [*date*], the Issuer has complied in all respects with its obligations under this Trust Deed [other than [●]] .

For and on behalf of

**KONINKLIJKE PHILIPS N.V.**

By:……………..Authorised Signatory

By:……………..Authorised Signatory

**SIGNATORIES TO THIS TRUST DEED**

**The Issuer**

**EXECUTED** as a deed by)

**KONINKLIJKE PHILIPS N.V.**))

acting by:)

Title: Authorised Signatory))

in the presence of:)

Witness's Signature:

Witness's Name:

Witness's Address:

**The Trustee**

**EXECUTED** as a deed by)

**CITICORP TRUSTEE**)

**COMPANY LIMITED**)

acting by)

## Ex-4.B

**Exhibit 4 (b)**

**Services contract between the Company and Ms C.M. Hanneman**

The following contract is the services contract of Ms C.M. Hanneman containing terms and conditions for the provision of services and other arrangements that apply with effect from June 1, 2024 as member of the Executive Committee and, subject to appointment by the Annual Meeting of Shareholders, as of October 1, 2024 as member of the Board of Management of Royal Philips ("Koninklijke Philips N.V.", hereinafter also referred to as "**the Company**").

**1. Commencement of Engagement and roles**

a. Subject to the terms and conditions of this contract for the provision of services (the "**Contract**") the Company hereby engages you as independent contractor starting on June 1, 2024 (the "**Commencement Date**").

b. *First period: Incoming CFO and member of the Executive Committee.*

From June 1, 2024, until October 1, 2024, you will act as Incoming CFO and member of the Executive Committee. As a member of the Executive Committee, you will perform your duties and responsibilities attached to that function within the corporate governance framework of the Company. In the capacity of Incoming CFO you will respect the articles of association of the Company and the Rules of Procedure of the Board of Management and Executive Committee in anticipation of your role during the second period described below.

c. *Second period: CFO and member of the Board or Management and Executive Committee* 

Starting on October 1, 2024, you will fulfill the role of member of the Board of Management of the Company as Chief Financial Officer and, in conjunction with such role, of member of the Executive Committee of the Company. As a member of the Executive Committee, you will perform your duties and responsibilities attached to that function within the corporate governance framework of the Company. In your capacity as member of the Board of Management of the Company you will have and observe all rights and obligations pursuant to the articles of association of the Company, the Rules of Procedure of the Board of Management and Executive Committee, and statutory provisions. By signing this Contract, you declare that you have received a copy of the Company's articles of association and abovementioned Rules of Procedure and that you are familiar with their content.

d. By entering into this Contract all prior contracts of employment and/or prior contracts for the provision of services (if any) with other companies are explicitly terminated. Furthermore, the terms and conditions set forth in this Contract and its annexes are an integral part of this Contract.

e. This Contract is a contract for the provision of services, as defined in articles 7:400 and further of the Dutch Civil Code ("**DCC**"). You acknowledge and agree that there is no intention to enter into an employment agreement and that pursuant to article 2:132 section 3 DCC, your relationship with the Company and/or this Contract cannot be regarded an employment agreement as defined in article 7:610 DCC and further.

f. In this Contract the Company and you are together referred to as the "**Parties**" and each of you as a "**Party**".

**2. Duration of the Engagement**

a. The Contract shall be entered into for a fixed period of time. The Contract shall start on the Commencement Date and shall terminate by operation of law, without any prior notice being required, on the last day of the month in which the Annual General Meeting of Shareholders of the Company in the fourth calendar year following the Commencement Date takes place (the "**Contract End Date**").

b. No later than six months before the Contract End Date the Parties will discuss a possible extension of the Contract. The Contract will terminate in any event, without prior notice of termination being required, at the first day of the month following the month in which you have reached the state pension age based on the AOW ("*Algemene Ouderdomswet*") or future legislation amending the state pension age based on the AOW.

c. Both Parties shall have the right to terminate this Contract before the Contract End Date or (if renewed) before any later Contract expiration date against the end of a calendar month by giving written notice of termination. In this respect, the Parties agree to adhere to a notice period of six (6) months. If notice of termination is given by a Party for urgent cause ('*dringende reden*'), no notice period applies for the Party giving notice. For the definition of urgent cause ('*dringendereden*'), reference is made to article 7:678 DCC and further.

d. If you are dismissed by the General Meeting of Shareholders of the Company, or if you resign, as member of the Board of Management of the Company (and, in direct relation thereto, as member of the Executive Committee of the Company) this Contract is terminated by operation of law without any prior notice of termination being required, which termination shall take effect (i) as per the date six (6) months after the end of the calendar month in which the General Meeting of Shareholders has adopted the resolution pursuant to which you are dismissed as member of the Board of Management of the Company, or, as the case may be, (ii) as per the date six (6) months after the end of the calendar month in which you have submitted your written resignation as member of the Board of Management of the Company.

In deviation from the previous sentence, this Contract shall terminate with immediate effect as from the date per which (i) the General Meeting of Shareholders has dismissed you as member of the Board of Management of the Company, or, as the case may be, (ii) you have resigned as member of the Board of Management of the Company, in the event such dismissal or resignation (as the case may be) is given/made for urgent cause ('*dringende reden*'). For the definition of urgent cause ('*dringende reden*'), reference is made to article 7:678 DCC and further.

------

e. In deviation from clause 2 (c), the Company cannot terminate this Contract during the first two (2) years of your sickness or incapacity for work (although it can already give notice of termination), except when notice of termination is given by the Company (i) for urgent cause ('*dringende reden*') or (ii) prior to the first day of your sickness/incapacity for work. In deviation from clause 2 (d), in the event of your dismissal as member of the Board of Management of the Company by the General Meeting of Shareholders during your sickness or incapacity for work other than for urgent cause ('*dringende reden*') and after the first day of your sickness/incapacity for work, this Contract shall terminate at the later of (i) the date which is six (6) months after the end of the calendar month in which the General Meeting of Shareholders has adopted the resolution pursuant to which you are dismissed as member of the Board of Management of the Company, or (ii) the date of your recovery from sickness/incapacity for work, but no later than at the date on which the incapacity for work has lasted for two (2) years. For the definition of urgent cause ('*dringende reden*'), reference is made to article 7:678 DCC and further. The Parties acknowledge and agree that this clause does not prevent the competent body from dismissing you as member of the Board of Management of the Company.

f. If the Contract is terminated at the initiative of the Company (whereby your dismissal by the General Meeting of Shareholders as member of the Board of Management of the Company shall also be deemed a termination "at the initiative of the Company" for the purposes of this clause) or by mutual agreement (at the initiative of the Company) before the Contract End Date, or before any other expiration date if the Contract has been renewed, other than for urgent cause ('*dringende reden*'), you shall be entitled to a one off compensation in the amount of one time your Annual Base Compensation as defined in clause 3 hereof. For the definition of urgent cause ('*dringende reden*'), reference is made to article 7:678 DCC and further. You shall not be entitled to such payment if the Contract is terminated immediately following a period of your long lasting sickness or disability which has lasted two years or longer (periods of incapacity for work that follow one another at intervals of less than four weeks shall be deemed one consecutive period of incapacity for work for the purposes of this clause).

g. If the Company does not elect to renew the Contract (e.g. because you are not re- appointed by the General Meeting of Shareholders of the Company as member of the Board of Management of the Company upon expiration of your term of appointment) you shall not be entitled to the compensation referred to above under f. but shall instead be entitled to a lump sum of one time your Annual Base Compensation divided by 12, times the number of months between the expiration date of the Contract and the date you reach the state pension age based on the AOW ("*Algemene Ouderdomswet*") or future legislation amending the state pension age based on the AOW, with a maximum of one time your Annual Base Compensation.

h. In case of termination of the Contract, you will resign, with effect from a date to be determined by the Company but ultimately per the effective date of such termination, as member of the Board of Management and, in direct relation thereto, as member of the Executive Committee of the Company.

i. The compensation as referred to in clauses f) and g) above, shall be deemed to include any amounts that may be payable to you in connection with the enforcement of the non- competition clause as set forth in the General Terms of Employment that are – mutatis mutandis – applicable to you.

**3. Compensation**

Your annual compensation as of the Commencement Date amounts to EUR 700,000 gross, which amount includes holiday allowances, to be paid in twelve equal monthly installments after deduction of the statutory tax and social security premiums to be withheld by the Company. Annual review and subsequent upwards adjustment, if any, of your annual compensation, will be determined at the discretion of the Supervisory Board of the Company and on the advice of the Remuneration Committee of the Supervisory Board. Only compensation increases determined and approved by the Supervisory Board will replace the compensation amount mentioned above. You will be informed in writing by means of a compensation statement. The annual compensation as may be amended on the basis of this clause from time to time shall be referred to as the **Annual Base Compensation**.

**4. Annual Incentive**

In addition to the Annual Base Compensation, you shall be eligible each year for an annual incentive, subject to certain targets being met. This incentive shall be determined annually by the Supervisory Board. You shall be notified in writing of these annual incentive targets.

The on-target (= 100% score) annual incentive amount to be realized by you is currently set by the Supervisory Board at 80% of your Annual Base Compensation.

The Supervisory Board shall determine in its sole reasonable discretion to what extent the annual incentive targets have been met. In the event that during an applicable notice period you are released from your duties, no annual incentive entitlement shall accrue in respect of such period.

**5. Long Term Incentive Plan**

The Supervisory Board, where relevant within the framework approved by the Company's General Meeting of Shareholders, can decide by discretion to grant Performance Shares under the Global Philips Performance Share Plan and/or other equity related incentives to the members of the Board of Management on a year-to-year basis. As a member of the Board of Management you are in principle eligible to participate in such plan.

The Long-Term Incentive grant value equals 150% of your Annual Base Compensation. The Company will provide you a new hire grant on the first grant date following the Commencement Date. This equals the Long-Term Incentive grant value, pro-rated for time. This new hire grant amounts to EUR 613,934.

To improve Philips' Corporate Governance and to further align the interests of senior Philips Executives with the interests of our shareholders, you are required to hold a certain level of Philips shares equal to 300% of your actual Annual Base Compensation. The Supervisory Board may decide to adapt the Philips Share Ownership Guidelines on an annual basis.

The minimum number of Philips shares required to be held can be accumulated by:

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Shares acquired pursuant to any grants under the Philips Long Term Incentive Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Shares currently owned;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Shares purchased on the stock market or acquired in any other way.

For further details you are referred to the Philips Share Ownership Guidelines Executive Committee in the enclosed Information Package.

On the first grant date following the Commencement Date, the Company will provide you with the following buy-out equity award to partially compensate you for the unvested Long- Term Incentive grants that are forfeited upon resignation from your previous employer:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Performance Shares with a value at grant of EUR 920,000. After three years, the Performance Shares will vest in accordance with the conditions of the Long-Term Incentive Plan.

**6. Claw back**

The Supervisory Board may in its sole discretion but acting in good faith, resolve to recoup some or all of the incentive compensation -including any benefits derived therefrom- in all appropriate cases (taking into account all relevant factors, including whether the assertion of a recoupment claim may in its opinion prejudice the interests of the Company and its group companies in any related proceeding or investigation), granted to you as an Annual Incentive, as Performance Shares grants, as shares acquired by you under such grants, as other equity related incentive or otherwise (hereinafter referred to as '**Incentive Compensation**'), if:

a. The Incentive Compensation has been paid, granted, vested and/or delivered on the basis of incorrect financial or other data; or

b. In assessing the extent to which the relevant performance conditions and/or targets in relation to the payment, grant, vesting and/or delivery of the Incentive Compensation was satisfied, such assessment was based on an error, inaccurate or misleading information or assumptions and that such error, information or assumptions would have resulted or did in fact result either directly or indirectly in that payment, grant, vesting and/or delivery (or being capable thereof) to a greater degree than would have been the case had that error not been made; or

c. There are circumstances which would allow the Company to terminate this Contract for urgent cause ('*dringende reden*') (whereby for the definition of urgent cause ('*dringende reden*') reference is made to article 7:678 DCC and further), where such circumstances arose in, or related to, a period relevant to the date of payment, grant, vesting and/or delivery; or

d. You were involved in, or directly or indirectly responsible for a violation of the Philips General Business Principles or applicable law; or

e. The Company or the business in which you work/worked, or for which you were responsible, suffered a material failure of risk management, or

f. Something which occurred in the period relevant to the payment, grant, vesting and/ or delivery has a sufficiently significant impact on the reputation of the Company or its group members to justify the operation of a recoupment claim.

By accepting a payment, grant, vesting and/or delivery of the Incentive Compensation, you agree to fully co-operate with the Company in order to give effect to this clause.

Furthermore, by accepting any payment, grant, vesting and/or delivery of the Incentive Compensation you provide an irrevocable power of attorney to the Company to transfer any shares held by you in the account administered by the Company's global plan administrator and to perform any other acts necessary or desirable to give effect to this clause. This power of attorney is governed by Dutch law exclusively.

**7. Pension Rights**

As from the Commencement Date, you shall be included in the Pension Regulations of "Stichting Philips Pensioenfonds" applicable to executives, in respect of your pensionable salary up to the current statutory limit of EUR 137,800 which may change from time to time ("**Statutory Pensionable Salary**") if and as soon as you meet the requirements set out in those pension regulations. In respect of your pensionable salary exceeding the Statutory Pensionable Salary, you shall be entitled to the pension allowance applicable to members of the Executive Committee, in accordance with the rules and conditions governing this pension allowance. The level of the pension allowance is and remains at the discretion of the Company. Currently the pension allowance for the part of your Annual Base Compensation exceeding the Statutory Pensionable Salary is set at 25% of your Annual Base Compensation exceeding the Statutory Pensionable Salary.

**8. Car/Mobility Allowance**

You are entitled to a monthly Car/Mobility Allowance amounting to EUR 2,630. The Car/ Mobility allowance can be used for a leasing an electric Vehicle or can be paid out in monthly (gross) installments.

**9. Business Entertainment Expenses Allowance**

With respect to your position within the Company, you may be eligible for a fixed allowance for business entertainment expenses. Currently the tax-free allowance in your case is EUR 6,000 per annum (i.e. EUR 500 per month). This sum is meant to enable you amongst others to cover the expenses you incur in entertaining guests on behalf of the Company.

Parties agree that changes in fiscal legislation could make it necessary or desirable for the Company to change the above arrangement.

**10. Senior Executive Ambassador Program**

You are invited to participate in the Senior Executive Ambassador Program to use Philips products that will be made available to you at your home.

**11. Insurances**

**a. Accident Insurance**

------

You will be covered by a 24-hours accident insurance policy. The maximum sum insured is three times your gross Annual Base Compensation. We refer you to the chapter benefits in the Information Package.

**b. Directors and Officers Liability Insurance**

You will be an Insured Person under the Directors and Officers liability insurance taken out by the Company. Subject to its terms and conditions, the Directors and Officers liability insurance policy protects your personal assets against liabilities and reimburse defense costs that arise based on your acts or omissions in your capacity as member of the Board of Management and Executive Committee. A copy of the Directors and Officers liability insurance policy (or a summary thereof) will be made available upon your request.

**12. Incapacity for work**

The present Company policy for Executive Committee members with regard to incapacity for work or sickness is that for a maximum period of three years from the start of disablement, but at the very latest up to the end of the Contract, the balance between your Annual Base Compensation at the start of the total disability and the aggregate amount of any statutory allowance distributed to you on account of the total disablement together with possible allowances distributed for the same reason by the Philips Pension Fund will - subject to your compliance with the Company's directives - be paid by the Company.

The Company shall not be bound by the aforesaid obligation to the extent you have a claim against third parties in respect of your disablement. Upon surrender to the Company of such claim - in so far as it relates to loss of Annual Base Compensation - an amount equal to the aforesaid balance shall - but for no longer than the period stated in the foregoing clause - be paid by the Company in advance.

This policy is subject to change at the discretion of the Company. No compensation will be paid in case the new policy is less favorable than the present policy.

**13. Holidays**

Your holiday entitlement is 25 working days per calendar year.

**14. General Terms of engagement**

By signing the Contract, you declare to have received, to have read and to agree with the General Terms of Employment of the Company, which apply mutatis mutandis to your engagement and are attached to this Contract as Annex 1. These General Terms of Employment amongst others contain a non-competition clause. You hereby acknowledge and agree that you are fully bound by the restrictions set out in the aforementioned non-competition clause for the duration of such non-competition clause as set out in the clause itself.

**15. Philips rules about corporate governance and corporate citizenship** 

Underpinning Philips' commitment to responsible corporate citizenship, integrity and transparency, the following terms and principles have been set.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• General Business Principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Financial Code of Ethics;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Procurement Code of Ethics;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Rules of Conduct with respect to Inside Information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Rules governing Internal and External Directorships;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Rules of Procedure of the Board of Management and Executive Committee.

These terms and principles apply equally to corporate actions and to the behavior of members of the Executive Committee in conducting Philips' business. By signing this Contract, you declare that you are bound by, and that you shall adhere to and act according to, the terms and principles mentioned above. The Company may alter the terms and principles unilaterally at its discretion. For more information on the terms and principles, we refer you to the Information Package. Any changes will be available on the Philips Global Intranet website.

The Compliance Officer with respect to Inside Information will contact you, as you are designated as "Qualified Insider".

**16. Privacy and data protection**

You acknowledge that Philips may process your personal data for legitimate business purposes, such as human resources and personnel management, business process execution and internal management, internal communications, health safety and security, compliance with legal obligations, exercise or defense of legal claims. The processing of such personal data is further described in the relevant privacy notice(s) which is attached to this agreement or otherwise made available to you. By signing this agreement, you acknowledge to have read and agreed with the processing of your personal data, as described in the relevant privacy notice(s) attached to this agreement or otherwise made available to you.

During your employment with Philips, you agree to comply with all Philips privacy and security related policies, procedures, rules and regulations (including the Philips Privacy Rules), as announced by Philips from time to time or made available to you. At all times, you must maintain the confidentiality of the personal data that you have access to and cannot share, disclose or otherwise transfer personal data to any unauthorized third parties.

**17. Applicable Law and jurisdiction**

a. This Contract is governed by the laws of the Netherlands.

b. All disputes arising from this Contract, including disputes concerning the existence and validity thereof, shall be resolved in accordance with the Arbitration Rules of the Netherlands Arbitration Institute.

## Ex-4.C

**Exhibit 4 (c)**

**Services contract between Koninklijke Philips N.V. and Mr M.J. van Ginneken**

The following contract is the services contract of Mr M.J. van Ginneken, containing terms and conditions for the provision of services and other arrangements that apply with effect from May 8, 2025 (the "Commencement Date"), subject to his <br>re-appointment on such date as member of the Board of Management of Koninklijke Philips N.V. (the "Company").

**1. Commencement of Engagement**

a.Subject to the terms and conditions of this contract for the provision of services (the **"Contract"**) the Company hereby engages you as independent contractor starting on the Commencement Date to fulfill the role of member of the Board of Management and Executive Committee of the Company. As a member of the Executive Committee you will perform your duties and responsibilities attached to that function within the corporate governance framework of the Company. In your capacity as member of the Board of Management of the Company you will have and observe all rights and obligations pursuant to the articles of association of the Company, the Rules of Procedure of the Board of Management and Executive Committee, and statutory provisions. By signing this Contract, you declare that you have received a copy of the Company's articles of association and abovementioned Rules of Procedure and that you are familiar with their content.

b.The terms and conditions set forth in this Contract and its annexes replace the terms and conditions as laid down in any (previous) employment or services agreements and/or other written or verbal understandings you may have (had) with the Company and/or other companies belonging to the Philips Group. By entering into this Contract all prior contracts of employment and/or prior contracts for the provision of services (if any) with the Company and/or other companies belonging to the Philips Group are explicitly terminated.

c.This Contract is a contract for the provision of services, as defined in articles 7:400 and further of the Dutch Civil Code (**"DCC"**). You acknowledge and agree that, pursuant to article 2:132 section 3 DCC, your relationship with the Company and/or this Contract cannot be regarded an employment agreement as defined in article 7:610 DCC and further.

d.In this Contract the Company and you are together referred to as the **"Parties"** and each of you as a **"Party"**.

**2. Duration of the Engagement**

a.The Contract shall be entered into for a fixed period of time. The Contract shall start on the Commencement Date and shall terminate by operation of law, without any prior notice being required, on the last day of the month in which the Annual General Meeting of Shareholders of the Company in the fourth calendar year following the Commencement Date takes place (the **"Contract End Date"**).

b.No later than six months before the Contract End Date the Parties will discuss a possible extension of the Contract. The Contract will terminate in any event, without prior notice of termination being required, at the first day of the month following the month in which you have reached the state pension age based on the AOW ("Algemene Ouderdomswet") or future legislation amending the state pension age based on the AOW.

c.Both Parties shall have the right to terminate this Contract before the Contract End Date or (if renewed) before any later Contract expiration date against the end of a calendar month by giving written notice of termination. In this respect, the Parties agree to adhere to a notice period of six (6) months. If notice of termination is given by a Party for urgent cause ('dringende reden'), no notice period applies for the Party giving notice. For the definition of urgent cause ('dringende reden'), reference is made to article 7:678 DCC and further.

d.If you are dismissed by the General Meeting of Shareholders of the Company, or if you resign, as member of the Board of Management of the Company (and, in direct relation thereto, as member of the Executive Committee of the Company) this Contract is terminated by operation of law without any prior notice of termination being required, which termination shall take effect (i) as per the date six (6) months after the end of the calendar month in which the General Meeting of Shareholders has adopted the resolution pursuant to which you are dismissed as member of the Board of Management of the Company, or, as the case may be, (ii) as per the date six (6) months after the end of the calendar month in which you have submitted your written resignation as member of the Board of Management of the Company.

e.In deviation from the previous sentence, this Contract shall terminate with immediate effect as from the date per which (i) the General Meeting of Shareholders has dismissed you as member of the Board of Management of the Company, or, as the case may be, (ii) you have resigned as member of the Board of Management of the Company, in the event such dismissal or resignation (as the case may be) is given/made for urgent cause ('dringende reden'). For the definition of urgent cause ('dringende reden'), reference is made to article 7:678 DCC and further.

f.In deviation from clause 2 (c), the Company cannot terminate this Contract during the first two (2) years of your sickness or incapacity for work (although it can already give notice of termination), except when notice of termination is given by the Company (i) for urgent cause ('dringende reden') or (ii) prior to the first day of your sickness/incapacity for work. In deviation from clause 2 (d), in the event of your dismissal as member of the Board of Management of the Company by the General Meeting of Shareholders during your sickness or incapacity for work other than for urgent cause ('dringende reden') and after the first day of your sickness/incapacity for work, this Contract shall terminate at the later of (i) the date which is six (6) months after the end of the calendar month in which the General Meeting of Shareholders has adopted the resolution pursuant to which you are dismissed as member of the Board of Management of the Company, or (ii) the date of your recovery from sickness/incapacity for work, but no later than at the date on which the incapacity for work has lasted for two (2) years. For the definition of urgent cause ('dringende reden'), reference is made to article 7:678 DCC and further. The Parties acknowledge and agree that this clause does not prevent the competent body from dismissing you as member of the Board of Management of the Company.

page 1 of 7 \| Services contract between the Company and Mr M.J. van Ginneken (2025)

------

g.If the Contract is terminated at the initiative of the Company (whereby your dismissal by the General Meeting of Shareholders as member of the Board of Management of the Company shall also be deemed a termination "at the initiative of the Company" for the purposes of this clause) or by mutual agreement (at the initiative of the Company) before the Contract End Date, or before any other expiration date if the Contract has been renewed, other than for urgent cause ('dringende reden'), you shall be entitled to a one off compensation in the amount of one time your Annual Base Compensation as defined in clause 3 hereof. For the definition of urgent cause ('dringende reden'), reference is made to article 7:678 DCC and further. You shall not be entitled to such payment if the Contract is terminated immediately following a period of your long-lasting sickness or disability which has lasted two years or longer (periods of incapacity for work that follow one another at intervals of less than four weeks shall be deemed one consecutive period of incapacity for work for the purposes of this clause).

h.If the Company does not elect to renew the Contract (e.g. because you are not re-appointed by the General Meeting of Shareholders of the Company as member of the Board of Management of the Company upon expiration of your term of appointment) you shall not be entitled to the compensation referred to above under f. but shall instead be entitled to a lump sum of one time your Annual Base Compensation divided by 12, times the number of months between the expiration date of the Contract and the date you reach the state pension age based on the AOW ('Algemene Ouderdomswet') or future legislation amending the state pension age based on the AOW, with a maximum of one time your Annual Base Compensation.

i.In case of termination of the Contract, you will resign, with effect from a date to be determined by the Company but ultimately per the effective date of such termination, as member of the Board of Management and, in direct relation thereto, as member of the Executive Committee of the Company.

j.The compensation as referred to in clauses f) and g) above, shall be deemed to include any amounts that may be payable to you in connection with the enforcement of the non-competition clause as set forth in the General Terms of Employment that are – mutatis mutandis – applicable to you.

**3. Compensation**

Your annual compensation as of the Commencement Date amounts to EUR **725,000** gross, which amount includes holiday allowances, to be paid in twelve equal monthly installments after deduction of the statutory tax and social security premiums to be withheld by the Company. Annual review and subsequent upwards adjustment, if any, of your annual compensation, will be determined at the discretion of the Supervisory Board of the Company and on the advice of the Remuneration Committee of the Supervisory Board. Only compensation increases determined and approved by the Supervisory Board will replace the compensation amount mentioned above. You will be informed in writing by means of a compensation statement. The annual compensation as may be amended on the basis of this clause from time to time shall be referred to as the **"Annual Base Compensation"**.

**4. Annual Incentive**

In addition to the Annual Base Compensation, you shall be eligible each year for an annual incentive, subject to certain targets being met. This incentive shall be determined annually by the Supervisory Board. You shall be notified in writing of these annual incentive targets.

The on-target (= 100% score) annual incentive amount to be realized by you is currently set by the Supervisory Board at 80% of your Annual Base Compensation.

The Supervisory Board shall determine in its sole reasonable discretion to what extent the annual incentive targets have been met. In the event that during an applicable notice period you are released from your duties, no annual incentive entitlement shall accrue in respect of such period.

**5. Long Term Incentive Plan**

The Supervisory Board, where relevant within the framework approved by the Company's General Meeting of Shareholders, can decide by discretion to grant Performance Shares under the Global Philips Performance Share Plan and/or other equity related incentives to the members of the Board of Management on a year-to-year basis. As a member of the Board of Management you are in principle eligible to participate in such plan.

The Long Term Incentive grant value currently equals 150% of your Annual Base Compensation.

To improve Philips' Corporate Governance and to further align the interests of senior Philips Executives with the interests of our shareholders, you are required to hold a certain level of Philips shares equal to 300% of your actual Annual Base Compensation. The Supervisory Board may decide to adapt the Philips Share Ownership Guidelines on an annual basis.

The minimum number of Philips shares required to be held can be accumulated by:

• Shares acquired pursuant to any grants under the Philips Long Term Incentive Plan;

• Shares currently owned;

• Shares purchased on the stock market or acquired in any other way.

For further details you are referred to the Philips Share Ownership Guidelines Executive Committee in the enclosed Information Package.

**6. Claw back**

The Supervisory Board may in its sole discretion but acting in good faith, resolve to recoup some or all of the incentive compensation -including any benefits derived therefrom- in all appropriate cases (taking into account all relevant factors, including whether the assertion of a recoupment claim may in its opinion prejudice the interests of the Company and its group companies in any related proceeding or investigation), granted to you as an Annual Incentive, as Performance Shares grants, as shares acquired by you under such grants, as other equity related incentive or otherwise (hereinafter referred to as **"Incentive Compensation"**), if:

a.The Incentive Compensation has been paid, granted, vested and/or delivered on the basis of incorrect financial or other data; or

page 2 of 7 \| Services contract between the Company and Mr M.J. van Ginneken (2025)

------

b.In assessing the extent to which the relevant performance conditions and/or targets in relation to the payment, grant, vesting and/or delivery of the Incentive Compensation was satisfied, such assessment was based on an error, inaccurate or misleading information or assumptions and that such error, information or assumptions would have resulted or did in fact result either directly or indirectly in that payment, grant, vesting and/or delivery (or being capable thereof) to a greater degree than would have been the case had that error not been made; or

c.There are circumstances which would allow the Company to terminate this Contract for urgent cause ('dringende reden') (whereby for the definition of urgent cause ('dringende reden') reference is made to article 7:678 DCC and further), where such circumstances arose in, or related to, a period relevant to the date of payment, grant, vesting and/or delivery; or

d.You were involved in, or directly or indirectly responsible for a violation of the Philips General Business Principles or applicable law; or

e.The Company or the business in which you work/worked, or for which you were responsible, suffered a material failure of risk management, or

f.Something which occurred in the period relevant to the payment, grant, vesting and/or delivery has a sufficiently significant impact on the reputation of the Company or its group members to justify the operation of a recoupment claim.

By accepting a payment, grant, vesting and/or delivery of the Incentive Compensation, you agree to fully co-operate with the Company in order to give effect to this clause.

Furthermore, by accepting any payment, grant, vesting and/or delivery of the Incentive Compensation you provide an irrevocable power of attorney to the Company to transfer any shares held by you in the account administered by the Company's global plan administrator and to perform any other acts necessary or desirable to give effect to this clause. This power of attorney is governed by Dutch law exclusively.

**7. Pension Rights**

As from the Commencement Date, you shall be included in the Pension Regulations of "Stichting Philips Pensioenfonds" applicable to executives, in respect of your pensionable salary up to the current statutory limit of EUR 137,800 which may change from time to time (**"Statutory Pensionable Salary"**) if and as soon as you meet the requirements set out in those pension regulations. In respect of your pensionable salary exceeding the Statutory Pensionable Salary, you shall be entitled to the pension allowance applicable to members of the Executive Committee, in accordance with the rules and conditions governing this pension allowance. The level of the pension allowance is and remains at the discretion of the Company. Currently the pension allowance for the part of your Annual Base Compensation exceeding the Statutory Pensionable Salary is set at 25% of your Annual Base Compensation exceeding the Statutory Pensionable Salary.

**8. Car/Mobility Allowance**

You are entitled to a monthly Car/Mobility Allowance amounting to EUR 2,630. The Car/Mobility allowance can be used for leasing an electric car or can be paid out in monthly (gross) installments.

**9. Business Entertainment Expenses Allowance**

With respect to your position within the Company, you may be eligible for a fixed allowance for business entertainment expenses. Currently the tax-free allowance in your case is EUR 8,640 per annum (i.e. EUR 720 per month). This sum is meant to enable you amongst others to cover the expenses you incur in entertaining guests on behalf of the Company. Parties agree that changes in fiscal legislation could make it necessary or desirable for the Company to change the above arrangement.

**10. Senior Executive Ambassador Program**

You are invited to participate in the Senior Executive Ambassador Program to use Philips products that will be made available to you at your home.

**11. Insurances**

**a.Accident Insurance**

You will be covered by a 24-hours accident insurance policy. The maximum sum insured is three times your gross Annual Base Compensation. We refer you to the chapter benefits in the Information Package.

**b.Directors and Officers Liability Insurance**

You will be an Insured Person under the Directors and Officers liability insurance taken out by the Company. Subject to its terms and conditions, the Directors and Officers liability insurance policy protects your personal assets against liabilities and reimburse defense costs that arise based on your acts or omissions in your capacity as member of the Board of Management and Executive Committee. A copy of the Directors and Officers liability insurance policy (or a summary thereof) will be made available upon your request.

**12. Incapacity for work**

The present Company policy for Executive Committee members with regard to incapacity for work or sickness is that for a maximum period of three years from the start of disablement, but at the very latest up to the end of the Contract, the balance between your Annual Base Compensation at the start of the total disability and the aggregate amount of any statutory allowance distributed to you on account of the total disablement together with possible allowances distributed for the same reason by the Philips Pension Fund will - subject to your compliance with the Company's directives - be paid by the Company.

The Company shall not be bound by the aforesaid obligation to the extent you have a claim against third parties in respect of your disablement. Upon surrender to the Company of such claim - in so far as it relates to loss of Annual Base Compensation - an amount equal to the aforesaid balance shall - but for no longer than the period stated in the foregoing clause - be paid by the Company in advance.

This policy is subject to change at the discretion of the Company. No compensation will be paid in case the new policy is less favorable than the present policy.

page 3 of 7 \| Services contract between the Company and Mr M.J. van Ginneken (2025)

------

**13. Holidays**

Your holiday entitlement is 25 working days per calendar year.

**14. General Terms of engagement**

By signing the Contract, you declare to have received, to have read and to agree with the General Terms of Employment of the Company, which apply mutatis mutandis to your engagement and are attached to this Contract as Annex 1. These General Terms of Employment amongst others contain a non-competition clause. You hereby acknowledge and agree that you are fully bound by the restrictions set out in the aforementioned non-competition clause for the duration of such non-competition clause as set out in the clause itself.

**15. Philips rules about corporate governance and corporate citizenship**

Underpinning Philips' commitment to responsible corporate citizenship, integrity and transparency, the following terms and principles have been set.

• General Business Principles;

• Financial Code of Ethics;

• Procurement Code of Ethics;

• Rules of Conduct with respect to Inside Information;

• Rules governing Internal and External Directorships;

• Rules of Procedure of the Board of Management and Executive Committee.

These terms and principles apply equally to corporate actions and to the behavior of members of the Executive Committee in conducting Philips' business. By signing this Contract, you declare that you are bound by, and that you shall adhere to and act according to, the terms and principles mentioned above. The Company may alter the terms and principles unilaterally at its discretion. For more information on the terms and principles, we refer you to the Information Package. Any changes will be available on the Philips Global Intranet website.

The Compliance Officer with respect to Inside Information will contact you, as you are designated as "Qualified Insider".

**16. Privacy and data protection**

You acknowledge that Philips may process your personal data for legitimate business purposes, such as human resources and personnel management, business process execution and internal management, internal communications, health safety and security, compliance with legal obligations, exercise or defense of legal claims. The processing of such personal data is further described in the relevant privacy notice(s) which is attached to this agreement or otherwise made available to you. By signing this agreement, you acknowledge to have read and agreed with the processing of your personal data, as described in the relevant privacy notice(s) attached to this agreement or otherwise made available to you.

During your employment with Philips, you agree to comply with all Philips privacy and security related policies, procedures, rules and regulations (including the Philips Privacy Rules), as announced by Philips from time to time or made available to you. At all times, you must maintain the confidentiality of the personal data that you have access to and cannot share, disclose or otherwise transfer personal data to any unauthorized third parties.

**17. Applicable Law and jurisdiction**

a.This Contract is governed by the laws of the Netherlands.

b.All disputes arising from this Contract, including disputes concerning the existence and validity thereof, shall be resolved in accordance with the Arbitration Rules of the Netherlands Arbitration Institute.

page 4 of 7 \| Services contract between the Company and Mr M.J. van Ginneken (2025)

------

page 5 of 7 \| Services contract between the Company and Mr M.J. van Ginneken (2025)<br>

## Ex-4.F

**Exhibit 4 (f)**

RELATIONSHIP AGREEMENT

Between **Koninklijke Philips N.V.** and **EXOR N.V.**

Dated 13 August 2023

**Contents**

**Clause**

1 Definitions and construction

2 Terms of Relationship and support

3 Philips Supervisory Board composition

3.1 Appointment and dismissal

3.2 Nomination of the Exor Nominee

3.3 Conflict of interest

3.4 Expiry of nomination right

3.5 Resignation Exor Nominee

3.6 Dismissal Exor Nominee

4 Standstill

5 Non-compete

6 Lock-Up and Sell Down

6.1 General

6.2 Lock-up period

6.3 Post Lock-Up Sell Down

6.4 Intragroup disposal of shares

7 Public Communications

7.1 Non-disparagement

7.2 General communications

7.3 Communication on Permitted Disposals

8 Information Requirements

8.1 Duty to disclose

8.2 No selective disclosure

8.3 Price sensitive information relating to the other party

8.4 Periodical Information Meetings

8.5 Interest disclosure

8.6 Exor information rights

8.7 Confidentiality

9 General Restrictions

9.1 General

9.2 Constitutional documents

10 Duration and termination

10.1 Duration and termination

11 Validity

11.1 Signing

11.2 Invalidity

12 Entire Agreement

13 Amendments and waivers

------

13.1 Amendments and waivers

13.2 No deemed waivers

13.3 Further assurances

14 Third party rights

15 Rescission, errors and suspension

15.1 No rescission; errors

15.2 No suspension

16 No assignment

17 Notices

17.1 Communications in writing

17.2 Addresses

18 Governing law and dispute resolution

18.1 Governing law

18.2 Dispute resolution<br>

**Schedules**

**Schedule 1** Definitions and interpretation

**Schedule 2** Press release

**Schedule 3** Deed of Adherence<br>

**Relationship agreement**

THIS AGREEMENT IS DATED 13 AUGUST 2023 AND MADE BETWEEN:

*(1)* Koninklijke Philips N.V., a public limited liability company, incorporated under the laws of the Netherlands, with seat in Eindhoven, the Netherlands, and address at High Tech Campus 52, Eindhoven, the Netherlands and registered with the Dutch Trade Register under number 17001910 ("**Philips**"); and

*(2)* EXOR N.V., a public limited liability company, incorporated under the laws of the Netherlands, with seat in Amsterdam, the Netherlands, and address at Gustav Mahlerplein 25 A, Amsterdam, The Netherlands and registered with the Dutch Trade Register under number 64236277 ("**Exor**", together with Philips, the "**Parties**" and each a "**Party**").

**BACKGROUND:**

*(A)* Exor has bought fifteen percent (15%) of the issued and outstanding Ordinary Shares and the voting rights in respect thereof ("**15% Threshold Stake**"), with the possibility to further increase the amount of Ordinary Shares and the voting rights in respect thereof legally and/or beneficially held ("**Interest**"), but shall in any event cause its and its Affiliates combined Interest not to exceed twenty percent (20%) of the issued and outstanding Ordinary Shares and the voting rights in respect thereof ("**20% Threshold Stake**").

*(B)* The Parties acknowledge and agree that the relationship is intended to be mutually beneficial and long term.

*(C)* Philips considers this investment from Exor to be beneficial to the overall long-term strategy, including but not limited to its plan to create long-term value with sustainable impact, as announced in January 2023.

*(D)* In turn, Exor intends to support Philips' strategy (including, but not limited to, its plan to create long-term value with sustainable impact, as announced in January 2023) and exercise its voting rights and other shareholder rights and powers to contribute to the long-term multi-stakeholder value creation of Philips and its enterprise.

*(E)* The Parties wish to enter into this relationship agreement (this "**Agreement**") to agree on certain arrangements relating to the governance of Philips and to manage the relationship between Philips and Exor as a shareholder of Philips, all in accordance with the laws and regulations applicable to Philips and Exor as companies listed on Euronext Amsterdam, a regulated market of Euronext Amsterdam N.V., and to Philips as a company listed on the New York Stock Exchange.

*(F)* The Parties agree that this Agreement will be announced and published on the Signing Date and for as long as this Agreement is in effect.

**THE PARTIES AGREE AS FOLLOWS:**

**1 Definitions and construction**

The definitions and provisions of Schedule 1 (*Definitions and interpretation*) shall apply throughout this Agreement.

**2 Terms of Relationship and support**

------

2.1.1 As soon as possible after the Signing Date and in any event prior to the opening of Euronext Amsterdam on the first trading day after the Signing Date, the Parties shall announce their relationship by way of the joint press release in the form attached as Schedule 2 (*Press release*).

**3 Philips Supervisory Board composition**

**3.1 Appointment and dismissal**

3.1.1 The members of the supervisory board of Philips (the "**Philips Supervisory Board**" and the "**Philips Supervisory Board Members**") shall be appointed, suspended and dismissed in accordance with the procedures set out in (i) the Articles of Association, (ii) the Rules of Procedure Supervisory Board, (iii) this Agreement, and (iv) applicable laws and regulations.

**3.2 Nomination of the Exor Nominee**

3.2.1 Notwithstanding Clause 3.1 (*Appointment and dismissal*), Exor shall have the right to nominate one (1) individual to serve as Philips Supervisory Board Member (the "**Exor Nominee**") for appointment by the general meeting of shareholders of Philips ("**General Meeting of Shareholders**"), unless such nomination right has expired in accordance with Clause 3.4 (*Expiry of nomination right*).

3.2.2 For the purpose of Clause 3.2.1, Exor shall only nominate the Exor Nominee after consultation with the CGNS Committee and shall only nominate an individual who (i) has knowledge and experience encompassing one or more of the aspects included in the profile included in the Rules of Procedure Supervisory Board, (ii) does not hold a board position in an entity that undertakes activities that materially compete with the Philips business, (iii) is not subject to any material criminal, administrative or similar investigation by any authority or proceedings, and (iv) is eligible for appointment to the Philips Supervisory Board under Dutch law.

3.2.3 Philips shall amend the Philips Supervisory Board profile to reflect Exor's nomination right as set out herein and to reflect that the Exor Nominee qualifies for the independence exception of principle 2.1.7(iii) of the Dutch Corporate Governance Code. Philips confirms that at the date of this Agreement, the composition of the Supervisory Board shall not restrict the nomination or appointment of the Exor Nominee in light of the diversity quorum of article 2:142b DCC.

3.2.4 Philips shall use its reasonable efforts to cause the Philips Supervisory Board to nominate the Exor Nominee in accordance with the Articles of Association for appointment as member to the Philips Supervisory Board in the next General Meeting of Shareholders after receiving Exor's proposal.

3.2.5 Subject to compliance with applicable rules and regulations in relation to such nominations, if the Exor Nominee must be replaced, or its position is vacant for any reason, Exor may nominate a new Exor Nominee. Philips shall use reasonable efforts to cause the Philips Supervisory Board to nominate the Exor Nominee for appointment in accordance with Clause 3.2.4 and to determine that the relevant designated individual shall temporarily be allowed to attend Supervisory Board meetings until appointment by the General Meeting of Shareholders at the next General Meeting of Shareholders held after Exor has nominated a qualifying individual in writing to the Philips Supervisory Board.

3.2.6 If the General Meeting of Shareholders fails to appoint the Exor Nominee, Exor shall have the right to nominate one (1) other Exor Nominee in accordance with Clause 3.2.1, whereby clauses 3.2.2 through 3.2.5 shall apply *mutatis mutandis*.

3.2.7 If the General Meeting of Shareholders fails to appoint the Exor Nominee during the second General Meeting of Shareholders, the Parties shall discuss and identify a further nomination and the relevant process for appointment, provided that Exor shall be entitled to terminate this Agreement in accordance with Clause 10.1.1(a), provided that the run-off period in respect of Clauses 4.1.1 and 6 (except for Clauses 6.3.2(a) and 6.3.2(b)) will not apply in case no Exor Nominee has ever been appointed to Philips Supervisory Board in accordance with this Agreement.

**3.3 Conflict of interest**

3.3.1 Exor acknowledges and shall procure that the Exor Nominee shall, in fulfilling its role as member of the Philips Supervisory Board, solely be guided by the best interest of Philips and its business, taking into account the interests of all the Philips shareholders and stakeholders of the Philips Group, as also set out in the Dutch Corporate Governance Code.

3.3.2 Exor shall procure that the Exor Nominee shall abstain from participating in the deliberation and decision-making on any matter presented to the Philips Supervisory Board in which it has a conflict of interest, as set out in the Rules of Procedure Supervisory Board, including any transaction, arrangement or agreement between any member of the Philips Group and Exor or any of its Affiliates, or any of the legal entities referred to in article 1.10(2) of the Rules of Procedure Supervisory Board.

3.3.3 No conflict of interest shall be deemed to arise:

(a) by the mere fact that Exor owns Ordinary Shares and the Exor Nominee is also involved in Exor or any of its Affiliates as official, director, shareholder or otherwise;

(b) by the mere fact that the Exor Nominee disagrees with another member of the Philips Supervisory Board;

(c) on matters that affect Philips shareholders generally or require a vote or discussion in the General Meeting of Shareholders; or

(d) on the positioning of the Philips Supervisory Board in relation to potential takeover offers or activist campaigns (unless Exor is in breach of the Standstill (as defined below)).

------

3.3.4 In case the Exor Nominee votes against a proposal by Philips to the General Meeting of Shareholders (i) to change the composition of the Philips Board of Management (the ''**Philips BoM**'') or the Philips Supervisory Board, or (ii) to significantly change the identity or nature of Philips or the enterprise affiliated with it, and Exor has informed Philips, subject to Clause 3.5 that Exor and/or its Affiliates intend to exercise their shareholder rights to vote against the proposal, then Philips can require the Exor Nominee to abstain from the further deliberations and decision-making on the matter until the vote of the General Meeting of Shareholders on the matter is completed.

3.4 Expiry of nomination right

3.4.1 Subject to Clauses 3.4.3 and 3.5, Exor shall no longer have the right to nominate the Exor Nominee pursuant to Clause 3.2.1, if Exor and its Affiliates combined Interest no longer equals or exceeds the 15% Threshold Stake and Exor and its Affiliates combined Interest has remained below the 15% Threshold Stake for six (6) consecutive months, as a result of (i) a Disposal of Ordinary Shares or (ii) a choice to receive cash dividend by Exor or its Affiliates.

3.4.2 The expiration of the right referred to in Clause 3.4.1 is definitive and Exor cannot remedy such expiration, unless agreed otherwise between Exor and Philips.

3.4.3 If Exor and its Affiliates combined Interest threatens to fall below the 15% Threshold Stake due to an issuance of new shares or rights to shares for a cash consideration or a consideration in kind (including in connection with M&A transactions), then Philips shall offer Exor to participate in such issuance pro rata up to a maximum number of Ordinary Shares to maintain the 15% Threshold Stake. In case Exor does not participate in such issuance in full and its and its Affiliates' combined Interest is diluted by more than one-and-a-half percent (1.5%) of the issued and outstanding Ordinary Shares as a result of such issuance, Exor shall retain its right to nominate the Exor Nominee pursuant to Clause 3.2.1, provided that:

(a) its and its Affiliates' combined Interest equals or exceeds at least ten percent (10%) of the issued and outstanding Ordinary Shares and the voting rights in respect thereof (the "**10% Temporary Threshold Stake**") following the issuance of Ordinary Shares in which Exor did not participate in full; and

(b) Exor and its Affiliates shall use reasonable best efforts, including, but not limited to, electing any stock dividend or reinvesting any cash dividends in any stock of Philips, in order to obtain the 15% Threshold Stake within three (3) years after the aforementioned issuance of new shares or rights to shares, it being understood that if Exor and its Affiliates combined Interest falls below the 10% Temporary Threshold Stake at any time and has remained below the 10% Temporary Threshold Stake for six (6) consecutive months after the issuance in which Exor did not fully participate, Exor shall no longer have the right to nominate the Exor Nominee pursuant to Clause 3.2.1.

3.4.4 Exor shall inform the Philips Supervisory Board in writing within five (5) Business Days if Exor and its Affiliates combined Interest no longer reaches the 15% Threshold Stake. Exor shall provide Philips with sufficient information to confirm the exact date on which Exor and its Affiliates combined Interest failed to reach the 15% Threshold Stake.

3.4.5 If Exor and its Affiliates combined Interest again reaches the 15% Threshold Stake before the expiration referred to in Clause 3.4.1, it will inform Philips in writing within five (5) Business Days and shall provide Philips with sufficient information to confirm the exact date on which Exor and its Affiliates combined Interest again reached the 15% Threshold Stake.

**3.5 Resignation Exor Nominee**

3.5.1 In case Exor and/or its Affiliates intends to undertake any of the actions as set out below in Clauses 3.5.2(a), 3.5.2(b), 3.5.2(c) or 3.5.2(d), the Parties shall take the following actions in the following order with the aim of reaching an amicable solution prior to Exor and/or its Affiliates taking any such action:

(a) first, Exor shall inform the chairman of the Philips Supervisory Board;

(b) secondly, the Parties shall each designate one senior executive to, in good faith, discuss and to seek mutual understanding on how to deal with the relevant matter;

(c) thirdly, if no mutual understanding can be reached by the relevant senior executives, the chairman of the Philips Supervisory Board and the CEO of Exor shall discuss the relevant matter.

3.5.2 In case the Parties have not reached an amicable solution pursuant to Clause 3.5.1 and Exor and/or its Affiliates have pursued any of the actions set out in Clauses 3.5.2(a), 3.5.2(b), 3.5.2(c) or 3.5.2(d) below, Clauses 3.5.3 through 3.5.5 will apply:

(a) Exor and/or its Affiliates vote (i) in favour of a resolution that is not proposed or supported by the Philips Supervisory Board and that is not adopted by the General Meeting of Shareholders, or (ii) against a proposal that is proposed or supported by the Philips Supervisory Board and adopted by the General Meeting of Shareholders;

(b) Exor and/or its Affiliates exercise any of their shareholder rights and powers attached to any Ordinary Shares held by Exor or its respective Affiliates, as the case may be, to request any items to be included on the agenda of the General Meeting of Shareholders within the meaning of article 2:114a DCC, without approval of the Philips Supervisory Board and that is not adopted by the General Meeting of Shareholders;

(c) Exor and/or its Affiliates initiate legal proceedings against Philips including but not limited to proceedings at the Dutch Enterprise Chamber within the meaning of article 2:345 DCC; or

(d) Exo&nbsp;&nbsp;&nbsp;&nbsp;r and/or its Affiliates breach Clauses 4, 5, 6 or 7.1

------

3.5.3 For any action taken pursuant to Clauses 3.5.2(a) or 3.5.2(b) Philips and Exor shall reasonably discuss in good faith over at least a period of two (2) weeks after the General Meeting of Shareholders at which the relevant proposal is voted on, whether the Exor Nominee should resign from the Philips Supervisory Board, and after such discussions have taken place, the Supervisory Board shall decide whether the Exor Nominee should resign.

3.5.4 In case of Clauses 3.5.2(a) or 3.5.2(b), where the General Meeting of Shareholders follows the position or proposal (as the case may be) of Exor, Philips and Exor shall reasonably discuss in good faith whether the Exor Nominee should resign from the Philips Supervisory Board.

3.5.5 For any action taken pursuant to Clauses 3.5.2(c) or 3.5.2(d), unless such action or breach is reasonably capable of being remedied and has not been remedied by Exor and/or its Affiliates within forty-five (45) days after receipt of a written notice of such breach from Philips, Exor shall procure that the Exor Nominee shall resign immediately upon first request by the Philips Supervisory Board, unless the Philips Supervisory Board (excluding the Exor Nominee) decides that the resignation may take place later.

3.5.6 Notwithstanding Clauses 3.5.1 through 3.5.5, Exor shall procure that the Exor Nominee shall resign immediately upon first request by the Philips Supervisory Board, unless the Philips Supervisory Board (excluding the Exor Nominee) decides that the resignation may take place later in case:

(a) Exor no longer has the right to nominate the Exor Nominee pursuant to Clause 4 (*Expiry of nomination right*); or

(b) the Exor Nominee engages in gross negligence, wilful misconduct, fraud or maladministration (*onbehoorlijk bestuur*).

3.5.7 In case of a resignation of the Exor Nominee pursuant to Clauses 3.5.2 or 3.5.6(a), Exor shall no longer have the right to nominate an Exor Nominee in accordance with Clause 3.2, provided that a resignation pursuant to maladministration (*onbehoorlijk bestuur*) or gross negligence as set out in Clause 3.5.6(b) shall require the prior consent of Exor (not to be unreasonably withheld) and that a resignation pursuant to Clause 3.5.6(b) shall not affect the right of Exor to nominate a replacement on the terms of this Agreement for appointment at the next General Meeting of Shareholders.

**3.6 Dismissal Exor Nominee**

The Philips Supervisory Board shall not be permitted to propose a suspension or dismissal of the Exor Nominee to the General Meeting of Shareholders, unless:

(a) in case of gross negligence, wilful misconduct, fraud, maladministration (*onbehoorlijk bestuur*); or

(b) the Exor Nominee, whose resignation was to be procured by Exor under Clause 5 (*Resignation Nominee*), did not resign immediately after such obligation arose,

provided that a dismissal pursuant to maladministration (*onbehoorlijk* bestuur) or gross negligence as set out in Clause 3.6(a) shall require the prior consent of Exor (not to be unreasonably withheld) and that a dismissal pursuant to Clause 3.6(a) shall not affect the right of Exor to nominate a replacement on the terms of this Agreement for appointment at the same or next General Meeting of Shareholders, as indicated by Exor.

**4 Standstill**

4.1 .1Exor shall not, and shall procure that its Affiliates and its other Representatives acting on its or any of its Affiliates' behalf shall not, without the prior written consent of Philips, directly or indirectly:

(a) Acquire more than the 20% Threshold Stake;

(b) make or announce, or cause, assist, advise or coordinate with another Person to make or announce, a public offer for any Ordinary Shares that is not recommended by the Philips BoM;

(c) offer, sell or tender their Ordinary Shares, in whole or in part, whether or not in the open market to any party, or parties acting together, that have made, have announced to make or are reasonably expected to make or partake in a public offer on the Ordinary Shares in accordance with Article 5:70 or 5:74 of the Dutch Financial Supervision Act (*Wet op het financieel toezicht*) that is not recommended by the Philips BoM, unless such party, or such parties, have Acquired an Interest of more than fifty percent (50%) in Philips or more (not caused or assisted by any action of Exor or any of its Affiliates);

(d) propose to enter into, directly or indirectly, any merger or business combination involving Philips or any of its Affiliates or to purchase, directly or indirectly, a material portion of the assets of Philips or any of its Affiliates;

(e) take any short position in any securities issued by Philips, except (i) as permitted under Clause 2.1(a) through 6.2.1(c) or (ii) in connection with a Permitted Disposal;

(f) act in concert with any hedge fund publicly engaged in any activist campaign against Philips at that point in time aimed at seeking control or influence over Philips' Supervisory Board, the Philips' BoM or policies; or

(g) advise, assist or encourage any Person in connection with any of the foregoing.

(such obligations together, the "**Standstill**").

4.1.2 If Philips intends to restructure its capital, in any way, as a result of which Exor would come to hold such a percentage of the Ordinary Shares that it would become obligated to make a Mandatory Offer, Philips shall inform Exor in writing at least thirty (30) Business Days before initiating such restructuring. In such case, Parties shall reasonably discuss in good faith to take such measures (including to participate in such restructuring, or to repurchase Exor's Ordinary Shares if appropriate) as are required to avoid that Exor will have to make such Mandatory Offer.

------

4.1.3 In case of any share buy-back program initiated by Philips, Parties shall reasonably discuss in good faith for Exor or its Affiliates to participate in such share buy-back program to the extent required to avoid that Exor and its Affiliates combined Interest will exceed the 20% Threshold Stake.

4.1.4 If, for whatever other reason Exor and its Affiliates combined Interest exceeds the 20% Threshold Stake, Philips may request that Exor and/or its Affiliates will Dispose of the excess Ordinary Shares in an orderly market manner within forty (40) Business Days, unless a longer period is agreed upon with Philips, failing which Philips will have the right (but not the obligation) to repurchase the excess Ordinary Shares at the prevailing market price.

**5 Non-compete**

For as long as Exor has a nomination right pursuant to Clause 2 (*Nomination of the Exor Nominee*), Exor shall not, and shall procure that its Affiliates and its other Representatives acting on its or any of its Affiliates' behalf shall not, without the prior written consent of Philips, directly or indirectly, either alone or together with another Person, Acquire any shares or other (options to) securities of a Philips Competitor, exceeding two percent (2%) of such Competitor's total issued share capital, provided that this restriction shall not apply to investments by or on behalf of the on arm's length, independently managed, asset management company Lingotto.

**6 Lock-Up and Sell Down**

**6.1 General**

Notwithstanding any other provision in this Agreement:

(a) Exor's obligations in this Clause 6 will fall away with immediate effect when any third party has Acquired an Interest of fifty percent (50%) or more in Philips (not caused, assisted or supported by any action of Exor or any of its Affiliates in breach of this Agreement); and

(b) the Lock-Up Period (*as defined below*) will fall away with immediate effect when Philips' long term issuer credit rating is downgraded to below investment grade.

**6.2 Lock-up period**

6.2.1 Subject to Clause 4 (*Standstill*), Clause 5 (*Non-compete*) and Clause 6 (*Lock-Up and Sell Down*), during the period commencing on the Signing Date and ending three (3) years thereafter (both days inclusive) (the "**Lock-Up Period**"), Exor shall not, and shall procure that its Affiliates shall not, undertake any action that causes Exor and its Affiliates combined Interest to fall below the 15% Threshold Stake or, for the avoidance of doubt, exceed the 20% Threshold Stake (the "**Lock-Up**"), provided that nothing in this Clause 6 shall prevent:

(a) the entry into, exercise of rights and performance of obligations under, or any transfer pursuant to, an agreement documenting, or relating to, the Permitted Derivatives Transaction or Permitted Securities Lending Transaction;

(b) the grant of a pledge, charge or any other security interest over any Ordinary Shares or the assignment of any rights in relation to any Ordinary Shares (including the creation and exercise of a right of use on one or more occasions at any time) (a "**Security Interest**") to or for the benefit of any Permitted Derivative Transaction Counterparty and/or any agent or trustee acting for any such counterparty; or

(c) the sale, transfer or appropriation of any Ordinary Shares or exercise of any other enforcement rights pursuant to and following any enforcement of a Security Interest over, or in relation to, any Ordinary Shares granted by Exor to or for the benefit of any Permitted Derivative Transaction Counterparty.

6.3 Post Lock-Up Sell Down

6.3.1 Subject to Clause 4 (*Standstill*), and Clause 5 (*Non-compete*), and Clause 6 (*Lock-Up and Sell Down*) (for the avoidance of doubt, including Clause 6.2 (*Lock-up period*)), Exor and its Affiliates may Dispose all or part of their Ordinary Shares, whether or not in the open market (a "**Permitted Disposal**"). Notwithstanding the preceding sentence, Exor shall use reasonable best efforts to conduct (and shall procure that its Affiliates will use reasonable best efforts to conduct) any Permitted Disposal in an orderly market manner.

6.3.2 Any Permitted Disposal by Exor or any of its Affiliates (other than in regular stock market transactions in which Exor, nor its Affiliates, brokers or intermediaries acting on its behalf reasonably know the identity of the counterparty or have control over the settlement of the respective transaction) to the following parties requires prior written approval from Philips:

(a) Philips Competitors;

(b) activist parties:

(i) publicly acting at that point in time as an activist vis-à-vis Philips; or

(ii) other activist parties with a track-record of shareholder activism, as regularly determined by Philips and Exor jointly, each acting in good faith;

(c) investors that as a result of the Permitted Disposal would come to legally or beneficially hold five percent (5%) or more of the issued and outstanding Ordinary Shares; and

(d) investors that as a result of the Permitted Disposal would become required to make a Mandatory Offer.

6.3.3 In case of an intended Permitted Disposal by Exor and its Affiliates of more than three percent (3%) over a one-month period of the issued and outstanding Ordinary Shares in Philips, Exor will, to the extent allowed by applicable laws and regulations, consult with Philips as soon as reasonably possible about the (intended) Permitted Disposal and, if applicable, the intended bookrunner(s) to be appointed.

------

6.3.4 Philips shall reasonably cooperate with Exor in good faith in connection with any Permitted Disposal by Exor and its Affiliates of more than three percent (3%) of the issued and outstanding Ordinary Shares in Philips, including, but not limited to (i) providing access to information required for a due diligence which is appropriate for a company of the size and nature of Philips and which is customary and market practice for similar transactions, (ii) providing cooperation and assistance in connection with the preparation of a prospectus or a similar offering document required under applicable law to consummate such Permitted Disposal, (iii) providing cooperation and assistance with requests from the underwriters or advisers involved in the Permitted Disposal, including for management involvement in a Marketed Offering that is being carried out in order to consummate such Permitted Disposal or being a party to an underwriting agreement in connection with a Marketed Offering on terms that are customary and market practice for similar transactions, including indemnification provisions, it being understood that nothing in this Clause 6.3.4, implies an obligation on the part of Philips to apply for a (secondary) listing of the Ordinary Shares and (b) Philips will be under no obligation to share inside information (as defined by the MAR) relating to Philips in respect of the foregoing except to the extent allowed under the MAR. Furthermore, Philips may delay its compliance with its obligations under this Clause 6.3.4, if Philips determines in good faith that such compliance would violate applicable law, stock exchange requirements or Philips' insider trading policy.

6.3.5 The Parties will maintain an ongoing dialogue with Philips regarding investors who potentially could be interested in acquiring the Ordinary Shares held by Exor and/or its Affiliates, provided that Exor will be under no obligation to share inside information (as defined by the MAR) with Philips in this respect.

6.3.6 The Parties acknowledge and agree that the obligation of Philips to reasonably cooperate in good faith with due diligence under Clause 6.3.4 includes but is not limited to (i) management interviews, (ii) a review of the minutes of meetings of the Philips BoM and the Philips Supervisory Board and (iii) a limited documentary review relating to major litigation, acquisitions and disposals.

6.3.7 Each Party will bear its own fees and expenses in connection with a Permitted Proposal, provided that any fees and expenses incurred by Philips in connection with the preparation of such Permitted Disposal as a direct result of a request by Exor to co-operate with such Permitted Disposal will be borne by Exor, it being understood that if the Permitted Disposal also includes the issue or sale of Ordinary Shares by Philips, Exor and Philips will each bear its pro rata share of such fees and external expenses based on the number of Ordinary Shares actually issued or sold by them in such Permitted Disposal.

6.3.8 In case of an Accelerated Bookbuilding Offering or a Marketed Offering, Exor will give Philips the opportunity to provide suggestions on the execution thereof including the allocation of placement of Ordinary Shares, provided that the final allocations will be decided between Exor and its banks.

**6.4 Intragroup disposal of shares**

The Parties acknowledge that Exor may at any time Dispose its (directly or indirectly held) Ordinary Shares to a Permitted Exor Transferee, provided that (i) the Permitted Exor Transferee first becomes a party to this Agreement by signing a Deed of Adherence and (ii) Exor remains jointly and severally liable with such Permitted Exor Transferee for all obligations under this Agreement. If the Permitted Exor Transferee is at any time no longer an Affiliate of Exor, the Ordinary Shares shall be transferred back to Exor or such other Permitted Exor Transferee of Exor in compliance with this Clause 4.

**7 Public Communications**

**7.1 Non-disparagement**

Each Party shall refrain from making, and shall cause its Affiliates and its and their respective Representatives not to make or cause to be made, any false or bad faith statement or announcement (including through any press, media, analysts or other Persons) that derogates or is reasonably likely to damage the reputation of the other Party and any of its Affiliates, or any of its or their respective current or former Representatives.

**7.2 General communications**

Any communication about Philips by Exor and/or its Affiliates, including any filings with the SEC (e.g., Schedule 13D and/or 13G) upon and after obtaining the 15% Threshold Stake, shall be made only after consultation with Philips. Such consultation shall not be required for any communication:

(a) which is in line with communication arrangements pre-agreed between the Parties, if any;

(b) which is in the ordinary course of business of investor communication; or

(c) confirming facts or information that are already in the public domain other than as a result of a breach of this Agreement.

**7.3 Communication on Permitted Disposals**

7.3.1 In view of the necessity of a clear and coordinated communication regarding any Permitted Disposal, public communications by either Party with respect to a Permitted Disposal will be made only in accordance with applicable law and after consultation with the other Party regarding the contents of such communication, to the extent reasonably practicable and subject to Clause 8 (*Information Requirements*). Such consultation shall not be required for any communication:

(a) which is in line with communication arrangements pre-agreed between the Parties, if any;

(b) which is in the ordinary course of business of investor communication and not disclosing specific information on an actual Permitted Disposal; or

(c) confirming facts or information that are already in the public domain other than as a result of a breach of this Agreement.

7.3.2 Each Party shall ensure that any communication by it relating to a Permitted Disposal will not result in violations of securities laws or inconsistencies with any prospectus or similar offering document regarding such Permitted Disposal.

------

**8 Information Requirements**

**8.1 Duty to disclose**

Nothing in this Agreement shall prohibit or restrict either Party from disclosing (in accordance with article 17 MAR or such other laws, or applicable rules or regulations, including the rules and regulations of any relevant stock exchange or other regulatory body (including the AFM and the SEC) to which either Party is or becomes subject) any inside information, as defined in the MAR, if and when such disclosure is in the reasonable opinion of such Party required and cannot or can no longer be delayed under applicable law or by any rules or regulations (including the rules and regulations of any relevant stock exchange or other regulatory body such as the AFM and the SEC).

**8.2 No selective disclosure**

Nothing in this Agreement will require a providing Party to disclose inside information, as defined in the MAR, to the receiving Party to the extent that such disclosure without general publication would violate applicable law. The Parties confirm their view, which view is based on the current interpretation of the relevant courts of applicable laws pertaining to inside information and the disclosure thereof, that to the extent that the information a Party discloses to another Party pursuant to this Agreement qualifies as inside information, this disclosure is made in the normal course of the exercise of that Party's duties, within the meaning of article 10(1) MAR.

**8.3 Price sensitive information relating to the other party**

8.3.1 The Parties acknowledge that each Party is subject to certain duties under the MAR and that Philips is also subject to certain duties under US federal securities laws and the rules of the New York Stock Exchange, and that such laws and rules may impose duties and restrictions as to the timely publication and/or use of inside information or other material information.

8.3.2 Each Party acknowledges that any disclosure of price sensitive information (*voorwetenschap*), as defined in the MAR, relating to such Party and/or its shares could also qualify as price sensitive information in relation to the other Party and/or its shares.

**8.4 Periodical Information Meetings**

Subject to applicable rules and regulations, including Philips' investor relations policy, Philips shall undertake that Exor shall have the opportunity to meet with Philips' investor relations team, the Philips BoM and chairman of the Philips Supervisory Board on a regular basis.

**8.5 Interest disclosure**

Philips may at any time reasonably request Exor to inform Philips how many Ordinary Shares Exor and its Affiliates legally or beneficially hold. Upon such request, Exor shall inform Philips as requested in writing within fifteen (15) Business Days.

**8.6 Exor information rights**

8.6.1 To the extent permitted under applicable law and regulation (including the MAR), Philips shall supply Exor with all such information reasonably required by Exor:

(a) to complete any tax return or other filing which may be required by law or regulation;

(b) for any audit or regulatory reason; or

(c) to meet its financial reporting requirements.

**8.7 Confidentiality**

8.7.1 Subject to Clause 8.7.2, each Party shall keep confidential all non-public information provided to it by the other Party or otherwise obtained by it under or in connection with this Agreement regarding the business and financial affairs of the other Party or any of its Affiliates ("**Confidential Information**").

8.7.2 Each Party shall be entitled to disclose Confidential Information:

(a) to any of its officers, employees, auditors, bankers or professional advisers, whose position makes it necessary to know that information in order to assist that Party, as applicable; provided that the recipient thereof agrees to be bound by the same duty of confidentiality as applies to the disclosing Party and that such Party shall be responsible for any breach of confidentiality by such recipient;

(b) in respect of Exor or the Exor Nominee, to any of its respective direct or indirect Affiliates and its respective officers, employees, auditors, bankers or professional advisers, in any event only if and when it is necessary that such party or person receives that information to assist Exor in relation to its shareholding in Philips provided that the recipient thereof agrees to be bound by the same duty of confidentiality as applies to the disclosing Party and that the disclosing Party shall be responsible for any breach of confidentiality by such recipient;

(c) if such information has ceased to be Confidential Information as a result of having become public without breach of this Agreement or any other duty of confidentiality relating to that information of which the relevant Party was aware;

(d) as may be required by law, rules or regulations or by any relevant securities exchange or governmental authority, regulatory body or antitrust authority to which that Party is subject (wherever situated), including information required to be disclosed in any shareholder circular, or for tax, financial reporting, audit or accounting purposes, whether or not the requirement for disclosure of such information has the force of law;

(e) as may be required for the purpose of any arbitral or judicial proceedings arising out of this Agreement or the related agreements; or

------

(f) with the written consent of the other Party.

**9 General Restrictions**

**9.1 General**

9.1.1 Exor shall, and shall procure that its Affiliates shall, not take any action that would have the effect of preventing the Philips Group from:

(a) complying with their obligations under applicable laws and regulations; or

(b) managing their affairs in accordance with the principles of good governance set out in the Dutch Corporate Governance Code (save as disclosed by Philips).

9.1.2 Exor shall, and shall procure that its Affiliates shall, not exercise any of its voting rights or other shareholder rights and powers attached to any Ordinary Shares held by Exor or its Affiliates, as the case may be, in a way that would be inconsistent with, or breach any of the provisions of this Agreement, applicable laws and regulations (including related to insider trading) or the Dutch Corporate Governance Code (including applicable deviations).

9.1.3 Other than the obligations set out in Clause 9.1.1 and 9.1.2, no limitations shall apply to Exor and its Affiliates in exercising their voting rights or other shareholder rights and powers attached to any Ordinary Shares held by Exor or its respective Affiliates, as the case may be.

**9.2 Constitutional documents**

Philips and Exor shall procure that the Philips BoM and the Philips Supervisory Board shall not propose, implement or approve any amendment to (i) the Articles of Association and (ii) the Rules of Procedure Supervisory Board, if such amendment would be contradictory to the arrangements set forth in this Agreement.

**10 Duration and termination**

**10.1 Duration and termination**

10.1.1 This Agreement shall enter into force on the date hereof and terminate automatically upon the occurrence of the earlier of:

(a) Exor no longer having the right to nominate the Exor Nominee pursuant to Clause 4 (*Expiry of nomination right*), the Exor Nominee ceasing to be a member of the Philips Supervisory Board, without Exor having nominated a replacement within eight (8) weeks (if applicable), or no Exor Nominee has been appointed pursuant to and subject to Clause 3.2.7, provided that in each of these events Clause 4.1.1 will continue to apply for a period of eighteen (18) months, the Lock-Up (as set out in Clause 6.2) will continue to apply until the earlier of (i) the expiry of the Lock-Up Period and (ii) a period of six (6) months and the other provisions of Clause 6 shall continue to apply for a period of twelve (12) months;

(b) a Party becoming subject to bankruptcy or suspension of payments;

(c) the Ordinary Shares ceasing to be admitted to listing on the regulated market of Euronext Amsterdam; or

(d) the dissolution or liquidation of a Party, provided that if a Party ceases to exist as a result of a merger, demerger, conversion, or other similar corporate transaction, such Party's legal successor shall be deemed to have become a party to this Agreement in such Party's place and this Agreement shall not terminate,

provided that this Clause 10, Clause 2 and Clauses 12 up to and including 18 shall survive termination of this Agreement.

10.1.2 Except as provided in Clause 10.1.1, this Agreement may only be terminated by mutual agreement of the Parties in writing.

**11 Validity**

**11.1 Signing**

11.1.1 This Agreement does not have any legal effect until each Party has validly signed this Agreement.

11.1.2 If this Agreement is signed in counterparts, these counterparts will count as one agreement.

**11.2 Invalidity**

11.2.1 In this Clause 11.2 "**enforceable**" includes legal, valid and binding (and derivative terms are to be construed accordingly).

11.2.2 If any provision in this Agreement is held to be or becomes unenforceable (in each case either in its entirety or in part) under any law of any jurisdiction:

(a) that provision will to the extent of its unenforceability be deemed not to form part of this Agreement but, subject to the restrictions of article 3:41 of the Dutch Civil Code, the enforceability of the remainder of this Agreement will not be affected; and

(b) the Parties shall use reasonable efforts to agree a replacement provision that is enforceable to achieve so far as possible the intended effect of the unenforceable provision.

**12 Entire Agreement**

This Agreement contains the entire agreement of the Parties in relation to its subject matter. All previous agreements and arrangements made by the Parties in relation to that subject matter are hereby terminated.

**13 Amendments and waivers**

------

**13.1 Amendments and waivers**

This Agreement may not be amended, supplemented or waived except by a written agreement between the Parties.

**13.2 No deemed waivers**

No failure to exercise, nor any delay in exercising, by a Party, any right or remedy under this Agreement will operate as a waiver. No single or partial exercise of any right or remedy will prevent any further or other exercise or the exercise of any other right or remedy.

**13.3 Further assurances**

The Parties shall at their own costs and expenses from time to time execute and procure to be executed such documents and perform and procure to be performed such acts as may be reasonable required by each of them to give the Parties the full benefit of this Agreement.

**14 Third party rights**

Except where this Agreement expressly provides otherwise:

(a) it contains no stipulations for the benefit of a third party (*derdenbedingen*) which may be invoked by a third party against a Party; and

(b) where this Agreement contains a stipulation for the benefit of a third party, this Agreement (including the relevant third party's rights under this Agreement) may be terminated, amended, supplemented or waived (in each case either in its entirety or in part) without that third party's consent.

**15 Rescission, errors and suspension**

**15.1 No rescission; errors**

15.1.1 No Party may fully or partly rescind (*ontbinden*) this Agreement.

15.1.2 If a Party has made an error (*heeft gedwaald*) in relation to this Agreement, it shall bear the risk of that error.

**15.2 No suspension**

No Party may suspend (*opschorten*) performance of its obligations under or in connection with this Agreement on whatever grounds.

**16 No assignment**

No Party may fully or partly assign or encumber rights and obligations under this Agreement without the other Party's prior written consent. Without this consent, no assignment or encumbrance is effected.

**17 Notices**

**17.1 Communications in writing**

Any communication to be made under or in connection with this Agreement must be made in writing and sent by regular mail or e-mail.

**17.2 Addresses**

The address and e-mail addresses (and the department of the officer, if any, for whose attention the communication is made) of each Party for any communication to be made under or in connection with this Agreement are any substitute address or department or officer as the Party may notify to the other Party by not less than five (5) days' notice.

**18 Governing law and dispute resolution**

**18.1 Governing law**

This Agreement shall be governed by and construed in accordance with the laws of the Netherlands.

**18.2 Dispute resolution**

18.2.1 Any dispute arising out of, or in connection with, this Agreement or other agreements and arrangements connected to or resulting from this Agreement, whether contractual or non-contractual, shall be submitted to the CEOs of Exor and Philips from time to time to be settled and resolved by them within twenty (20) Business Days of the matter being referred to them, following and upon the written request of either of the Parties.

18.2.2 If the dispute cannot be resolved by the CEOs of Exor and Philips within twenty (20) Business Days of the matter being referred to them in accordance with Clause 18.2.1, the Parties shall refer the dispute to proceedings under the rules of arbitration of the Netherlands Arbitration Institute (*Nederlands Arbitrage Instituut*) ("**NAI**", unless it concerns an urgent matter as referred to in Section 254 of the Dutch Code of Civil Procedure, in which case the dispute will be finally resolved in accordance with the Dutch Code of Civil Procedure. The place of arbitration will be in Amsterdam, the Netherlands. The language of arbitration will be in English.

18.2.3 The arbitral tribunal will consist of three (3) arbitrators to be nominated and/or appointed as follows:

(a) The claimant Party shall nominate one arbitrator in its request for arbitration, and the respondent Party shall nominate one arbitrator in its answer. If a Party fails to nominate an arbitrator, the relevant arbitrator will be appointed by the NAI;

(b) The third arbitrator will act as chairman of the arbitral tribunal. The third arbitrator will be nominated jointly by the two arbitrators referred to in paragraph (a) above within 30 days of the date of the last of their confirmations and/or appointments. If these two arbitrators fail to nominate jointly the third arbitrator, that arbitrator will be appointed by the NAI.

------

18.2.4 The arbitral tribunal shall decide and make its arbitral award or awards in accordance with the applicable rules of law. The arbitral tribunal shall not assume the powers of an *amiable compositeur* or decide *ex aequo et bono*.

18.2.5 An arbitration pursuant to this Clause 18.2 shall not be consolidated with any other arbitration, whether on the basis of article 1046 of the Dutch Code of Civil Procedure (*Wetboek van Burgerlijke Rechtsvordering*) or otherwise, except for another arbitration pursuant to this Clause 18.2.

18.2.6 The Parties shall not be entitled to any form of discovery or disclosure, and the arbitral tribunal shall have no power to order discovery or disclosure of (a) documentary evidence, (b) oral testimony, or (c) any other materials.

18.2.7 **Severability**

If any provision of this Agreement is held by any court or other competent authority to be void or unenforceable in whole or in part, the other provisions of this Agreement and the remainder of the effective provisions will continue to be valid. The Parties will then use all reasonable endeavours to replace the invalid or unenforceable provision(s) with a valid and enforceable substitute provision(s) the effect of which is as close as possible to the intended effect of the invalid or unenforceable provision(s).

THIS AGREEMENT HAS BEEN SIGNED ON THE DATE STATED AT THE BEGINNING OF THIS AGREEMENT BY:

**Koninklijke Philips N.V.**

By: W.R.O. Jakobs

Title:CEO

By: F.Sijbesma

Title: Chairman of the Supervisory Board

**EXOR N.V.**

By: G.de Boer

Title: CFO

**Schedule 1** Definitions and Interpretation

**1 Definitions**

"**10% Temporary Threshold Stake**" has the meaning given to it in Clause 3.4.3;

"**15% Threshold Stake**" has the meaning given to it in Recital (A);

"**20% Threshold Stake**" has the meaning given to it in Recital (A);

"**Accelerated Bookbuilding Offering**" means an offering of Ordinary Shares for which the risk has not been transferred to a third party (such as in a Bought Deal);

''**Acquire**'' means the act or process of obtaining, directly or indirectly, (economic) ownership, possession, or control including lending or holding for another Person;

"**Affiliates**" means, in respect of a Party, a Person which is Controlling or Controlled by such Party, or Controlled by a Person who also Controls such Party, or which otherwise qualifies as a "subsidiary" or "group company" of that Party as referred to in articles 2:24a and 2:24b Dutch Civil Code (*Burgerlijk Wetboek)*; for the avoidance of doubt, for purposes of this Agreement, Philips and its Affiliates shall not be considered to be Affiliates of Exor and vice versa;

"**AFM**" means Stichting Autoriteit Financiële Markten;

"**Agreement**" has the meaning given to it in Recital (A);

"**Articles of Association**" means the articles of association of Philips, as amended from time to time;

"**Bought Deal**" means a sale and transfer of Ordinary Shares in which an investment bank or other third party is taking a risk position other than taking a settlement risk;

"**Business Day**" mean a day (other than a Saturday or a Sunday) on which banks are open for general business in the Netherlands;

''**CGNS Committee**" means the Corporate Governance and Nomination & Selection Committee of the Philips Supervisory Board;

"**Clause**" means a clause of this Agreement;

''**Confidential Information**" has the meaning given in Clause 8.7.1;

"**Control**" means the possession, directly or indirectly, solely or jointly, whether through ownership of voting interests, by contract or otherwise, of (a) more than 50% of the voting power at general meetings of a Person, (b) the power to appoint and dismiss a majority of the managing directors or supervisory directors of a Person or (c) the power to otherwise direct or cause the direction of the management and policies of a Person, and "**Controlling**" and "**Controlled**" shall be construed accordingly;

"**DCC**" means the Dutch Civil Code;

"**Deed of Adherence**" as attached as Schedule 3 (*Deed of Adherence*);

------

"**Disposal**" or "**Dispose**" means (i) to directly or indirectly, sell, transfer, assign or otherwise dispose of any legal or beneficial interest in any Ordinary Share and the voting rights in respect thereof, (ii) to directly or indirectly grant any Encumbrance over any Ordinary Share or (iii) any arrangement, structuring device or other transaction having a similar economic or legal effect to the transactions referred to under (i) and (ii), it being understood that a Disposal of Ordinary Shares to a legal successor under universal title shall not be considered a Disposal, and where "**Encumbrance**" means any security interest, claim, lien, charge, pledge, or other restriction that creates or may create a security interest over the Ordinary Shares;

"**Dutch Corporate Governance Code"** means the Dutch Corporate Governance Code of 20 December 2022;

"**Exor**" has the meaning given in the preamble of this Agreement;

"**Exor Nominee**" has the meaning given in Clause 3.2.1;

"**General Meeting of Shareholders**" has the meaning given to it in Clause 3.2.1;

"**Interest**" has the meaning given to it in Recital (A);

"**Lock-Up**" has the meaning given to it in Clause 6.2.1;

"**Lock-Up Period**" has the meaning given to it in Clause 6.2.1;

"**Mandatory Offer**" means a mandatory public offer for Philips in accordance with Articles 5:70 and 72(1) of the Financial Supervision Act (*Wet op het financieel toezicht*);

"**MAR**" means Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation);

"**Marketed Offering**" means an offering of Philips securities which entails Philips' involvement in the form of a management road show and/or the preparation of a prospectus, registration statement or similar offering document;

"**NAI**" has the meaning given to it in Clause 18.2.1;

"**Ordinary Shares**" means the ordinary shares in the share capital of Philips;

"**Parties**" or "**Party**" has the meaning given to it in the preamble of this Agreement;

"**Permitted Derivative Transaction**" means the financial instrument entered into by Exor on or around the date of this Agreement to facilitate the purchase of Ordinary Shares by Exor to increase its shareholding to the initial 15% Threshold Stake, which may provide price protection in relation to such purchase and which has a final maturity date falling not more than 18 months following the date of this Agreement;

"**Permitted Derivative Transaction Counterparty**" means any party to a Permitted Derivative Transaction;

"**Permitted Disposal**" has the meaning given in Clause 6.3.1;

"**Permitted Exor Transferee**" means Exor Nederland N.V., Exor S.A., Ancom USA Inc, Exor SN LLC, and Exor Investments Limited, as well as any other Person that Exor notifies to Philips and is Controlled by Exor;

"**Permitted Securities Lending Transaction**" means any stock borrowing or lending, or repurchase or collateral arrangement or right of use relating to Ordinary Shares created pursuant to or in accordance with the terms of a Permitted Derivative Transaction or Security Interest to facilitate the transfer of Ordinary Shares to the Permitted Derivative Transaction Counterparty for the purposes of facilitating the hedging activities of the Permitted Derivative Transaction Counterparty to prevent the termination of the Permitted Derivative Transaction and under which Exor has a right to receive equivalent Ordinary Shares at or prior to maturity of the relevant Permitted Derivative Transaction;

"**Person**" means any individual, company, legal entity, partnership or unincorporated association, whether or not having separate legal personality;

"**Philips BoM**" has the meaning given to it in Clause 3.3.4;

"**Philips Competitor**" means any party identified between the Parties at the date hereof, provided that the list of Philips Competitors can be updated in good faith between the Parties every two years following the date of this Agreement and that Clause 5 shall not apply to investments held by Exor or its Affiliates in a party at the date that such party is qualified as a Philips Competitor;

"**Philips Group**" means Philips and its Affiliates;

"**Philips Shareholder**" means any Person holding any Ordinary Shares;

"**Philips Supervisory Board Member**" has the meaning given to it in Clause 3.2.1;

"**Philips Supervisory Board**" has the meaning given to it in Clause 3.2.1;

"**Philips**" has the meaning given in the preamble of this Agreement;

"**Representatives**" means, in respect of a Party, its Affiliates as well as the directors, officers, employees, agents and professional advisers (including lawyers, accountants, consultants and financial advisers) of such Party or any of its Affiliates;

''**Rules of Procedure Philips Supervisory Board**'' means the rules of procedure of the Philips Supervisory Board, as amended from time to time;

"**Schedule**" means a schedule to this Agreement;

------

"**SEC**" means the United States' Securities and Exchange Commission;

''**Security Interest**" has the meaning given to it in Clause 6.2.1(b);

"**Signing Date**" means the date on which the Agreement is duly signed by all Parties;

"**Standstill**" has the meaning given to it in Clause 4.1.1;

**2 Headings and references to Clauses and Schedules**

2.1Headings have been inserted for convenience of reference only and do not affect the interpretation of any of the provisions of this Agreement.

2.2A reference in this Agreement to:

(a) a Clause is to the relevant clause of this Agreement; and

(b) a Schedule is to the relevant schedule to this Agreement.

**3 Legal terms**

In respect of any jurisdiction other than the Netherlands, a reference to any Dutch legal term shall be construed as a reference to the term or concept which most nearly corresponds to it in that jurisdiction.

**4 Other references**

4.1 Whenever used in this Agreement, the words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation".

4.2 Whenever used in this Agreement, the words "as of" shall be deemed to include the day or moment in time specified thereafter.

4.3 Any reference in this Agreement to any gender shall include all genders, and words importing the singular shall include the plural and vice versa.

**Schedule 2** Press release

**Schedule 3** Deed of Adherence

**THIS DEED** is made on [●]

**BETWEEN**:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (1) [] (the "**New Shareholder**"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (2) [[●] (the "**Original Shareholder**")].

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• (3) [●] (the "**Company**").

**WHEREAS**:

(A) The Company and the Original Shareholder at the date of this deed of adherence are parties to a relationship agreement dated [●] (the "**Agreement**";)

(B) The Original Shareholder intends to transfer the Agreement to the New Shareholder

(C) This Deed is made by the New Shareholder in compliance with Clause [●] of the Agreement.

**IT IS AGREED** as follows:

1. The New Shareholder confirms that it has been supplied with a copy of the Agreement.

2. The New Shareholder undertakes to the each of the parties to the Agreement to be bound by the Agreement in all respects as if the New Shareholder was a Party to the Agreement and named in it as Exor and to observe and perform all the provisions and obligations of the Agreement applicable to or binding on Exor under the Agreement insofar as they fall to be observed or performed on or after the date of this Deed.

3. This Deed is made for the benefit of (a) the Parties to the Agreement and (b) every other person who after the date of the Agreement (and whether before or after the execution of this deed) assumes any rights or obligations under the Agreement or adheres to it.

4. The contact details of the New Shareholder are as follows:

Attn:

E-mail:

Address:

With copy to:

5. This Deed shall be governed by and construed in accordance with the laws of the Netherlands. Any dispute arising out of, or in connection with, this Deed shall be resolved in accordance with the provisions of the Agreement.<br>

**IN WITNESS WHEREOF** this Deed has been executed and has been delivered on the date which appears on the first page of this Deed.

**[New Shareholder]**

------

By:

Its:

**The Company**

By:

Its:

## Ex-8

**Exhibit 8**

**List of subsidiaries**

The following is a list of the company's subsidiaries (except for certain subsidiaries that, in the aggregate, would not be a "significant subsidiary" as defined in rule 1-02 (w) of Regulations S-X as of 31 December 2025). Unless otherwise stated, the company holds directly or indirectly 100% of the subsidiaries listed below, as of December 31, 2025.

---

| | |
|:---|:---|
| **Philips company** | **Country** |
| Philips Argentina Sociedad Anónima | Argentina |
| Australian Pharmacy Sleep Services Pty. Ltd | Australia |
| CapsuleTech Australia Pty Ltd | Australia |
| Philips Electronics Australia Limited | Australia |
| Philips Saeco Australia Pty. Limited | Australia |
| RDT Pty Ltd. | Australia |
| SPNC Australia PTY LTD | Australia |
| Philips Austria GmbH | Austria |
| Philips Electronics Bangladesh Private Limited | Bangladesh |
| Foreign consulting-trade unitary enterprise "Philips-Belorussia" of company Philips' Radio B.V. | Belarus |
| Philips Belgium Commercial | Belgium |
| Volcano Europe | Belgium |
| Philips Clinical Informatics - Sistemas de Informação Ltda. | Brazil |
| Philips do Brasil Ltda. | Brazil |
| Philips Medical Systems Ltda. | Brazil |
| Tucano do Brasil Sistema de Informação LTDA | Brazil |
| Philips Bulgaria EOOD | Bulgaria |
| Philips Electronics Ltd | Canada |
| Philips Chilena S.A. | Chile |
| Philips (China) Investment Company, Ltd. | China |
| Philips Domestic Appliances and Personal Care Company of Zhuhai SEZ, Ltd. | China |
| Philips Enterprise Service (Suzhou) Co., Ltd. | China |
| Philips Goldway (Shenzhen) Industrial Inc. | China |
| Philips Health Technology (China) Co., Ltd. | China |
| Philips Healthcare (Suzhou) Co., Ltd. | China |
| Philips Medical Device (Shanghai) Co., Ltd. | China |
| Philips Ultrasound (Shanghai) Co., Ltd. | China |
| Respironics Medical Products (Shenzhen) Ltd. | China |
| Philips Colombiana S.A.S. | Colombia |
| Philips de Costa Rica S.R.L. | Costa Rica |
| Philips d.o.o. | Croatia |

---

------

---

| | |
|:---|:---|
| Philips Ceská republika s.r.o. | Czech Republic |
| Philips Danmark A/S | Denmark |
| Philips Egypt (Limited Liability Company) | Egypt |
| Philips Egypt Investment Company | Egypt |
| Philips Oy | Finland |
| CapsuleTech SAS | France |
| Emergences Medicales et Technologies (70%) | France |
| Philips France | France |
| Philips GmbH | Germany |
| Philips Medical Systems DMC GmbH | Germany |
| Philips Medizin Systeme Böblingen GmbH | Germany |
| Philips SC Unterstützungskasse GmbH | Germany |
| PIP Verwaltungsgesellschaft mbH | Germany |
| Respironics Deutschland GmbH & Co. KG | Germany |
| Respironics Deutschland Verwaltungsgesellschaft mbH | Germany |
| TOMTEC Imaging Systems GmbH | Germany |
| Philips Ghana Ltd | Ghana |
| Philips Hellas Single Member Commercial and Industrial Societe Anonyme of Electrotechnical Products and Medical Systems | Greece |
| Philips Electronics Hong Kong Limited | Hong Kong |
| Respironics (HK) Ltd. | Hong Kong |
| Philips Magyarország Kereskedelmi Kft. | Hungary |
| Philips Global Business Services LLP | India |
| Philips India Limited (96.13%) | India |
| Philips VitalHealth Software India Private Limited | India |
| P.T. Philips Industries Batam | Indonesia |
| PT Philips Indonesia Commercial | Indonesia |
| Larestine Ireland Ltd. | Ireland |
| Philips Accounting Services Limited | Ireland |
| Philips Electronics Ireland Limited | Ireland |
| Philips Radio Communication Systems Ireland Limited | Ireland |
| Respironics (Ireland) Limited | Ireland |
| Saeco IPR Limited | Ireland |
| Saeco Strategic Services Limited | Ireland |
| Silicon B203 Limited | Ireland |
| Tineney Ireland Ltd. | Ireland |

---

------

---

| | |
|:---|:---|
| Western Biomedical Technologies Limited | Ireland |
| Dia Imaging Analysis Ltd. | Israel |
| EPD Research Ltd. | Israel |
| LifeWatch Technologies, Ltd. | Israel |
| Philips Electronics (Israel) Ltd. | Israel |
| Philips Medical Systems Technologies Ltd. | Israel |
| Philips Innovations S.p.A. | Italy |
| Philips Societa per Azioni | Italy |
| Philips Japan, Ltd. | Japan |
| Philips Kazakhstan LLP | Kazakhstan |
| Philips East Africa Limited | Kenya |
| Philips Korea Ltd. | Korea, Republic of |
| Philips Baltic SIA | Latvia |
| Philips Lighting Maseru Pty. Ltd. | Lesotho |
| Philips Luxembourg S.A. | Luxembourg |
| Philips Malaysia Sdn. Bhd. | Malaysia |
| Philips México Commercial, S.A. de C.V. | Mexico |
| Philips North Africa SARL | Morocco |
| Philips Myanmar Company Limited | Myanmar |
| EPD Medco B.V. | Netherlands |
| Metaaldraadlampenfabriek "Volt" B.V. | Netherlands |
| Philips Canada Holding B.V. | Netherlands |
| Philips Components B.V. | Netherlands |
| Philips Consumer Lifestyle B.V. | Netherlands |
| Philips Consumer Lifestyle International B.V. | Netherlands |
| Philips DAP Zhuhai Holding B.V. | Netherlands |
| Philips Electronics China B.V. | Netherlands |
| Philips Electronics Middle East & Africa B.V. | Netherlands |
| Philips Electronics Nederland B.V. | Netherlands |
| Philips Electronics Technology Shanghai Holding B.V. | Netherlands |
| Philips Export B.V. | Netherlands |
| Philips Imaging Systems China Holding B.V. | Netherlands |
| Philips International B.V. | Netherlands |
| Philips IP Ventures B.V. | Netherlands |
| Philips Medical Systems International B.V. | Netherlands |

---

------

---

| | |
|:---|:---|
| Philips Medical Systems Nederland B.V. | Netherlands |
| Philips Nederland B.V. | Netherlands |
| Philips Oral Healthcare B.V. | Netherlands |
| Philips Participations B.V. | Netherlands |
| Philips Patient Monitoring Systems China Holding B.V. | Netherlands |
| Philips' Radio B.V. | Netherlands |
| Philips Real Estate Investment Management B.V. | Netherlands |
| Philips USA Export Holding B.V. | Netherlands |
| Philips Venture Capital Fund B.V. | Netherlands |
| Philips Warehouse & Services B.V. | Netherlands |
| Spectranetics International B.V. | Netherlands |
| VitalHealth Software B.V. | Netherlands |
| Philips New Zealand Commercial Limited | New Zealand |
| LifeWatch MK DOOEL | North Macedonia |
| Philips Norge AS | Norway |
| Philips Caribbean Panamá, Inc. | Panama |
| Philips SEM S.A. | Panama |
| Philips del Paraguay S.A. | Paraguay |
| Philips Philippines, Inc. | Philippines |
| Philips Polska Sp.z.o.o. | Poland |
| Philips Respiromix sp. z o.o. | Poland |
| Philips Portuguesa, S.A. | Portugal |
| Philips Medical Systems Puerto Rico, Inc. | Puerto Rico |
| Philips Romania S.R.L. | Romania |
| Limited Liability Company "PHILIPS" | Russia |
| Philips Healthcare Saudi Arabia Limited (50%) | Saudi Arabia |
| Philips Personal Health | Saudi Arabia |
| Philips doo Beograd | Serbia |
| CapsuleTech Asia Pacific Pte. Ltd. | Singapore |
| Philips Electronics Singapore Pte Ltd | Singapore |
| PHILIPS SLOVENIJA trgovina, d.o.o. | Slovenia |
| Philips Africa (Proprietary) Limited | South Africa |
| Philips South Africa Commercial (Proprietary) Ltd. (89%) | South Africa |
| Volcano Therapeutics South Africa Pty Ltd | South Africa |
| Philips Ibérica, S.A.U. | Spain |

---

------

---

| | |
|:---|:---|
| Philips Lanka Solutions (Private) Limited | Sri Lanka |
| BioTel Europe AB | Sweden |
| Philips Aktiebolag | Sweden |
| LifeWatch GmbH | Switzerland |
| Philips AG | Switzerland |
| Philips Taiwan Ltd. | Taiwan |
| Philips (Thailand) Ltd. | Thailand |
| Türk Philips Ticaret Anonim Sirketi | Turkey |
| Limited Liability Company "Philips Ukraine" | Ukraine |
| Philips Electronics M E & Africa BV LLC | United Arab Emirates |
| Avent Limited | United Kingdom |
| Invivo UK Ltd. | United Kingdom |
| Philips Components Limited | United Kingdom |
| Philips Consumer Communications UK Limited | United Kingdom |
| Philips DCP (Belfast) Limited | United Kingdom |
| Philips Digital UK Limited | United Kingdom |
| Philips Electronics UK Limited | United Kingdom |
| Philips Healthcare Informatics Limited | United Kingdom |
| Philips Titan Limited | United Kingdom |
| Philips Trustee Company Limited | United Kingdom |
| Philips U.K. Limited | United Kingdom |
| Pye (Electronic Products) Ltd. | United Kingdom |
| Pyecam Company Limited | United Kingdom |
| Respironics (UK) Limited | United Kingdom |
| Respironics Ltd. | United Kingdom |
| Respironics Respiratory Drug Delivery (UK) Ltd. | United Kingdom |
| Respironics UK Holding Company Limited | United Kingdom |
| 370 West Trimble Road LLC | United States |
| AllParts Medical, LLC | United States |
| American Color & Chemical, L.L.C. | United States |
| ATL International LLC | United States |
| ATL Ultrasound, Inc. | United States |
| BioTel INR, LLC | United States |
| BioTelemetry Care Management, LLC | United States |
| BioTelemetry, Inc. | United States |

---

------

---

| | |
|:---|:---|
| Blue Willow Systems LLC | United States |
| Braemar Manufacturing, LLC | United States |
| Cardiac Monitoring Holding Company, LLC | United States |
| Cardiologs Technologies Inc. | United States |
| CardioNet, LLC | United States |
| CardioProlific, Inc. | United States |
| Cerebral Data Systems, Inc. (93%) | United States |
| Crux Biomedical LLC | United States |
| Discus Dental Canada, LLC | United States |
| Discus Dental, LLC | United States |
| Discus Holdings, LLC | United States |
| Discus International, LLC | United States |
| Electrical Geodesics, LLC | United States |
| Geneva Healthcare, LLC | United States |
| Helios Merger Sub, Inc. | United States |
| Intact Vascular, Inc. | United States |
| LifeWatch Services Inc. | United States |
| Philips CS Corporation | United States |
| Philips DS North America LLC | United States |
| Philips Electronics Realty, LLC | United States |
| Philips Healthcare Informatics, Inc. | United States |
| Philips Holding USA Inc. | United States |
| Philips Image Guided Therapy Corporation | United States |
| Philips Medical Systems (Cleveland), Inc. | United States |
| Philips Medical Systems Export, Inc. | United States |
| Philips Medical Systems MR, Inc. | United States |
| Philips MPEG Inc. | United States |
| Philips North America LLC | United States |
| Philips Oral Healthcare, LLC | United States |
| Philips Project Management, LLC | United States |
| Philips RS North America Holding Corporation | United States |
| Philips RS North America LLC | United States |
| Philips Semiconductors Inc. | United States |
| Philips Ultrasound LLC | United States |
| Philips USA Export Corporation | United States |

---

------

---

| | |
|:---|:---|
| Remote Diagnostic Technologies LLC | United States |
| Respiratory Technologies, Inc. | United States |
| Respironics California, LLC | United States |
| Respironics Colorado, Inc. | United States |
| Respironics Logistics Services, LLC | United States |
| Respironics Novametrix, LLC | United States |
| Spectranetics LLC | United States |
| Telcare Medical Supply, LLC | United States |
| Telcare, LLC | United States |
| Tomtec Corporation | United States |
| U.S. Philips Corporation | United States |
| Vesper Medical, Inc. | United States |
| VISICU, Inc. | United States |
| Volcano Atheromed, Inc. | United States |
| Philips Uruguay S.A. | Uruguay |
| Philips Vietnam Limited | Vietnam |

---

## Ex-11

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

**Exhibit 11**

**Philips Insider Trading Rules**

February 2025

**Purpose and scope**

Insider trading happens when someone trades securities (such as shares) based on price sensitive information that is not publicly available ('inside information'), which is illegal. Insider trading' conflicts with the basic principle that everyone trading on a stock exchange should simultaneously have access to the same information. If someone has inside information, such person is not allowed to trade securities, unless specific exemptions apply.

**Purpose:** The purpose of these insider trading rules is to set out the rules and restrictions applicable to trading in Philips securities and the unlawful disclosure of inside information. These rules are designed to ensure that everyone working for Philips follows the applicable regulations on insider trading and they aim to protect Philips' reputation and business integrity.

**Scope:** These rules apply to all employees and members of the board of management and supervisory board of Philips.

**Employees and members of the board of management and supervisory board of Philips:**

**1)must keep inside information confidential and not share it with others unless this is part of their regular duties and the recipient is bound by confidentiality; and**

**2)should not trade Philips securities on the basis of inside information.** 

The Compliance Officer Insider Trading is responsible for overseeing these rules and may grant exemptions in certain cases. Violating the rules can lead to disciplinary actions and severe penalties.

If there are any questions or uncertainties about these rules, employees are encouraged to contact the Compliance Officer Insider Trading.

These rules are an integral part of Philips' General Business Principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.Scope and definitions**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.1.**These insider trading rules (hereinafter referred to as: the "**Rules**") apply to all persons working under a contract of employment or otherwise, for Philips and any of its subsidiaries, and to the members of the Board of Management and of the Supervisory Board of Philips (together referred to in these Rules as: "**Philips Persons**"). Certain parts of these Rules apply to a particular group of people within Philips only, such as members of the Board of Management and Supervisory Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.2.**Certain capitalized terms used in these Rules have the meaning set out in Annex 1 (Definitions) to these Rules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.General rules**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.1. Inside information**

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 1 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

Inside Information is a crucial term in these Rules. In relation to Philips, Inside Information means information of a precise nature, which has not been made public, relating, directly or indirectly, to Philips, its subsidiaries or to one or more financial instruments (including Philips Securities), and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.2.No insider trading; exemptions**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.1&nbsp;&nbsp;&nbsp;&nbsp;If a Philips Person possesses Inside Information, such Philips Person may not Trade or attempt to Trade in Philips Securities. A cancellation or amendment of an order concerning Philips Securities is also considered Trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.2&nbsp;&nbsp;&nbsp;&nbsp;This insider trading prohibition does not apply in the following situations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)if the Philips Person Trades in discharge of an obligation that has become due in good faith (and not to circumvent the insider trading prohibition or for any other illegitimate reason) and where (a) the obligation results from an order placed or an agreement concluded, or (b) the transaction is carried out to satisfy a legal or regulatory obligation that arose, in each case before the Philips Person concerned possessed Inside Information. This is for example the case when you have the obligation to transfer or acquire Philips Securities further to an agreement concluded before you obtained Inside Information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)in case of the purchase or acceptance of Philips Securities or the acceptance of grants of Philips Securities under a Philips employee equity or share purchase plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)in case of the sale of Philips Securities acquired under a Philips employee equity or share purchase plan immediately after a sale is first permitted pursuant to the conditions of such plan, on the condition that: (a) the Philips Person concerned uses the sale proceeds to immediately pay a tax obligation arising in connection with such acquisition; and (b) the Philips Person concerned irrevocably decided to opt for such sale at least four months prior to the date a sale is first permitted pursuant to the conditions of such plan (also known as: 'sell to cover taxes');

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)in case of the exercise of options or the exercise of similar rights to Philips Securities under a Philips employee equity or share purchase plan on or within a period of five (5) business days prior to the expiry date of such right, as well as any subsequent sale of Philips Securities so acquired, provided that (i) such sale takes place on or within a period of five (5) business days prior to the expiry date of such right, and (ii) the Philips Person concerned has, at least four months prior to the expiry date, notified the Compliance Officer Insider Trading irrevocably in writing of such Philips Person's decision to exercise (subject to such options or similar rights being in the money) and, if so elected, to sell;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)in case of a Trade executed by an independent portfolio manager having full and exclusive discretionary power to take and execute any investment decision for the account of the Philips Person concerned and that is not based on any active investment decision of the Philips Person concerned provided that the Philips Person concerned did not possess Inside Information when the discretionary power to the independent portfolio manager was granted;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)the acceptance of dividend paid in Philips securities, provided that, in case a choice has to be made between a dividend paid out in shares or in cash, such choice was made when the Philips Person concerned did not possess Inside Information.

Philips Persons on a US pay-roll, Philips Persons holding Philips Securities traded on the New York Stock Exchange, Philips Persons seeking to make any Trades in the United States and Philips Persons who qualify as 'United States Person' for United States tax purposes should contact the Compliance Officer Insider Trading in case they would like to make use of any of the above exemptions, as such exemptions may not be available to them. Such Philips Persons may only Trade while in possession of Inside Information pursuant to a pre-arranged trading plan that complies with Rule 10b5-1.

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 2 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3.No unlawful disclosure or tipping**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3.1&nbsp;&nbsp;&nbsp;&nbsp;A Philips Person may not disclose Inside Information to anyone else, except where the disclosure is made strictly as part of the Philips Person's regular duty or function and the recipient of the Inside Information is under an obligation of confidentiality and is made aware of the restrictions on using that information under applicable market abuse rules and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3.2&nbsp;&nbsp;&nbsp;&nbsp;A Philips Person may not whilst in the possession of Inside Information recommend or induce anyone to engage in Trading in Philips Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.4.No Trading outside Open Windows**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.1.Philips Permanent Insiders and other Philips Persons so instructed by the Compliance Officer Insider Trading may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)not Trade in Philips Securities outside Open Windows, regardless of whether they possess Inside Information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)only Trade in Open Windows if they do not possess Inside Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.2.The exemptions from the insider trading prohibition set out in clause 2.2.2 of these Rules also apply to any Trade outside an Open Window, provided that in respect of a Trade by a member of the Board of Management or a member of the Supervisory Board only the exemptions set out under (ii), (iii), (iv) and (v) apply in each period of thirty (30) calendar days prior to the date of publication of Philips' semi-annual and annual financial report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.3.The Open Windows are the four (4) periods of twenty-eight (28) calendar days from the date of publication of Philips' annual and semi-annual financial statements and of Philips' first and third quarterly results and/or any other period as determined by the Compliance Officer Insider Trading from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.4.The Compliance Officer Insider Trading will publish the dates of the Open Windows in any financial year on Philips' intranet prior to the start of the financial year. Any changes or additions will be announced in the same manner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.5.No Trading in Philips Securities in violation of instructions**

A Philips Person may not Trade in Philips Securities when the Compliance Officer Insider Trading has prohibited such Philips Person from doing so, regardless of whether such Philips Person possesses Inside Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.6.No Trading in securities of total shareholder return performance peer group companies**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.1.In Blocked Periods, members of the Board of Management and Supervisory Board and other Philips Persons so instructed by the Compliance Officer Insider Trading may not Trade in financial instruments relating to any of the peer companies that are part of the total shareholder return performance peer group as determined by the Supervisory Board and published in Philips' annual report from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.2.The Blocked Periods are the four (4) periods of seven (7) calendar days preceding the date of publication of Philips' annual and semi-annual financial statements and of Philips' first and third quarter results and/or any other period as determined by the Compliance Officer Insider Trading and communicated to the relevant persons to whom clause 2.6.1 applies.

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 3 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.3.The exemptions in clause 2.2.2 (i), (v) and (vi) apply mutatis mutandis to the prohibitions in clause 2.6.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.7.No Trading in securities of certain other listed companies**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7.1.A Philips Person may not Trade in financial instruments relating to other listed companies if the Compliance Officer Insider Trading has prohibited such Philips Person from doing so in view of a potential M&A transaction, regardless of whether such Philips Person possesses inside information in relation to these companies or financial instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7.2.The exemptions in clause 2.2.2 (i), (v) and (vi) apply mutatis mutandis to the prohibitions in clause 2.7.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.8.Dispensation**

The Compliance Officer Insider Trading may grant a Philips Person dispensation from any of the restrictions included in clauses 2.4 through 2.7, to the extent permitted by law. Any dispensation from a prohibition granted by the Compliance Officer Insider Trading is without prejudice to the statutory market abuse prohibitions, including the prohibition on insider trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.9.Consultation Compliance Officer Insider Trading**

A Philips Person may consult the Compliance Officer Insider Trading on whether a particular Trading or other behaviour is allowed under this clause 2 (see also clause 6.4 of these Rules).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.10.Cooling off period**

The restrictions included in clauses 2.4 through 2.7 will continue to have effect until four (4) months after the Philips Person will have ceased to occupy the relevant position within Philips, and without prejudice to the statutory market abuse prohibitions. The Compliance Officer Insider Trading may grant a dispensation from this clause 2.10 or shorten the four (4) months period, in the sole discretion of the Compliance Officer Insider Trading on a case-by-case basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.Additional rules for Philips Qualified Insiders**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1.No derivatives, short selling or pledging**

Every Philips Qualified Insider is at any time prohibited from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) buying or writing (put/call) options or other derivatives whose value is derived from the value of any Philips Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) engaging in any short sales (i.e. selling stock you do not own and borrowing the shares to make delivery of Philips Securities); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) pledging Philips Securities as a collateral in a margin account or for a loan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2.Prohibition on reverse transactions**

Every Philips Qualified Insider is prohibited from Trading within six (6) months after a Trade if the second Trade is the opposite of the first Trade or otherwise results in undoing or limiting the effect of the first Trade. This prohibition does not apply if the first Trade is the exercise of stock options and the conversion

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 4 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

of convertible personnel debentures under any Philips Long-Term Incentive Plan or Philips employee equity or share purchase plan and the second Trade is a sale of Philips shares acquired by exercising such right.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3.Mandatory prior approval**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3.1.Philips Qualified Insiders may only proceed with a Trade in Philips Securities after the person concerned has notified the Compliance Officer Insider Trading of such person's intention to do so by means of an approval form and has received approval from the Compliance Officer Insider Trading. The approval requirement set out in the previous sentence does not apply to 'sell to cover taxes' transactions as referred to in clause 2.2.2 (iii).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3.2.The approval of the Compliance Officer Insider Trading is only valid for such intended Trade as set out in the approval form as submitted and only if such intended Trade is executed within the Open Window ongoing on the date of receipt of the approval of the Compliance Officer Insider Trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3.3.The Compliance Officer Insider Trading may set deadlines for Philips Qualified Insiders to submit an approval form in respect of an intended Trade in an upcoming Open Window and will publish such deadlines in any financial year on Philips' intranet prior to the start of the financial year. Any changes or additions will be announced in the same manner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4.Cooling off period**

The restrictions included in clauses 3.1 through 3.3 will continue to have effect until four (4) months after the Philips Person will have ceased to occupy the relevant position within Philips, and without prejudice to the statutory market abuse prohibitions. The Compliance Officer Insider Trading may grant a dispensation from this clause 3.4 or shorten the four (4) months period, in the sole discretion of the Compliance Officer Insider Trading on a case-by-case basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.Additional rules for members of the Board of Management and Supervisory Board**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.1.Notifications**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.1.Each member of the Board of Management and of the Supervisory Board must notify both the AFM and the Compliance Officer Insider Trading of the following at the time indicated below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)promptly and without delay:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)each change in number and/or type, in such person's share and/or voting interest in Philips. In this context, "share" also includes rights to obtain shares, such as options. A change in the type of interest will, for example, occur if an option is exercised and consequently shares are obtained or if options expire;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)every transaction in Philips Securities conducted by such person or on such person's account. A non-exhaustive list of transactions that must be notified is included in Annex 2 to these Rules;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)within two weeks of the appointment as a member of the Board of Management or Supervisory Board: such person's holding in Philips Securities or voting rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.2.The notifications referred to under clauses 4.1.1 (a) and (b) to the Compliance Officer Insider Trading shall be done: (i) by means of the notification form as published on the Philips Intranet from time to time -unless such notification form sets out that such type of transaction shall be reported to the Compliance Officer Insider Trading on their behalf-; or (ii) in such other manner as determined by the Compliance Officer Insider Trading.

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 5 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.3.Members of the Board of Management and of the Supervisory Board may request the Compliance Officer Insider Trading to submit the necessary notifications to the AFM on their behalf. The Compliance Officer Insider Trading may pose requirements in addition to the requirements set out in clause 4.1.2, in order to ascertain due and timely notification to the AFM. Members of the Board of Management and of the Supervisory Board will at all times remain responsible themselves for notifications to the AFM made on their behalf.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.4.The notifications referred to under clauses 4.1.1 (a) (1) and (2) can be combined if and to the extent permitted by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.5.Members of the Board of Management and Supervisory Board must instruct any person arranging or executing transactions on their behalf, such as an individual portfolio manager, to timely inform them of any transaction or change that is notifiable under clause 4.1 of these Rules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.2.Rules relating to Closely Associated Persons of the Board of Management and of the Supervisory Board**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.1.Members of the Board of Management and Supervisory Board must inform the Compliance Officer Insider Trading of all persons that qualify as their Closely Associated Persons from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.2.Members of the Board of Management and Supervisory Board must inform their Closely Associated Persons in writing or by e-mail of their duty to notify the AFM and the Compliance Officer Insider Trading promptly and ultimately within 3 business days of every transaction in Philips Securities and must preserve a copy of these letter(s) or e-mail(s) sent to their Closely Associated Person(s), but may ask the Compliance Officer Insider Trading to preserve such copy on their behalf. Members of the Board of Management and Supervisory Board will at all times remain responsible themselves for preserving such copy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.3.Members of the Board of Management and Supervisory Board and their Closely Associated Persons may request the Compliance Officer Insider Trading to submit the necessary notifications to the AFM on behalf of the relevant Closely Associated Person. The request must be made in writing or by e-mail, on the date of the transaction and must be accompanied by all details that must be notified to the AFM. The Compliance Officer Insider Trading may pose additional requirements in order to ascertain due and timely notification to the AFM. Closely Associated Persons will at all times remain responsible themselves for notifications to the AFM made by the Compliance Officer Insider Trading on their behalf.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.Insider list**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.1.**Pursuant to Philips' legal obligations under the MAR, Philips will keep a list (the "insider list") of Philips Persons who have or may have access to Inside Information ("**Philips Insiders**"). The insider list is divided into separate sections relating to different Inside Information, as well as a section with the details of Philips Permanent Insiders. New sections will be added to the insider list upon the identification of new Inside Information. The various sections of the insider list will be maintained by either the Compliance Officer Insider Trading or a person working on the relevant project or event. Philips Persons that are or will be placed on any section of the insider list will receive an email informing them thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.2.**The insider list includes the following details of individuals who have access to Inside Information:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)first name(s) and surname(s), as well as birth surname(s);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)professional telephone number(s);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)company name and address;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)function and reason for being insider;

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 6 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)date and time at which a person obtained access to Inside Information, or, in relation to Philips Permanent Insiders, date and time at which a person was included in the permanent insider section;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)date and time at which a person ceased to have access to Inside Information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)date of birth;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)national identification number;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)personal telephone numbers; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)personal full home address.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.3.**Philips is the data controller with regard to the processing of personal data included in the insider list and shall only use these data in accordance with applicable laws, Philips' Policy on Privacy and Data Protection and the Philips Privacy Compliance Framework Standard (all as amended from time to time) and for the following purposes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)to comply with the Company's legal obligations, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)keeping the list in accordance with the MAR;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)complying with requests from the AFM or any other competent authority; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)controlling the flow of Inside Information, thereby managing Philips' confidentiality obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)based on the legitimate interest of the Company, in which case the Company only processes the personal data that are necessary for the applicable purpose, which are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)informing Philips Persons of which other persons are in the same section of the insider list;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)informing certain Philips Persons of Open Windows;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)informing Philips Qualified Insiders of deadlines for submitting the approval form as referred to in clause 3.3 in view of upcoming Open Windows;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)protecting the corporate interests of Philips; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)holding or commissioning an inquiry into transactions conducted by or on behalf of a Philips Person or a Closely Associated Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.4.**Philips will retain the data in the list in accordance with Philips' Policy on Privacy and Data Protection and the Philips Privacy Compliance Framework Standard (all as amended from time to time). The insider list and all updates thereof will be dated. Philips will retain the insider list for a period of at least five years after it is drawn up or updated. If such data is necessary for an internal or external investigation, the resolution of a dispute or in connection with legal proceedings, Philips will retain the relevant data until the relevant investigation, dispute or legal proceeding has ended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.5.**Philips will inform a Philips Person of inclusion in the insider list. A Philips Person included in the insider list must acknowledge in writing that such Philips Person is aware of such Philips Person's duties as set forth in these Rules, as well as the applicable sanctions included and referred to in clause 7 of these Rules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.6.**Philips may provide information from the insider list to the AFM or other competent authorities upon their request. Information on the insider list will not be supplied to other parties, except when required or allowed by law or if a legitimate interest of Philips requires this.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.7.**Persons included in the insider list are entitled to review their personal data as processed by Philips and can exercise their data subject rights in the manner as set out in the applicable Philips privacy notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.8.**Persons may request to be informed about which other persons are included in sections of the insider list to the extent relevant for the requesting person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.Compliance Officer Insider Trading**

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 7 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.1.**The Board of Management will appoint the Compliance Officer Insider Trading. The Compliance Officer Insider Trading may, in consultation with the Board of Management, appoint one or more deputies to carry out the duties and powers of the Compliance Officer Insider Trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.2.**The Compliance Officer Insider Trading has the duties and powers granted to the Compliance Officer Insider Trading in these Rules. The Board of Management may grant additional duties or powers to the Compliance Officer Insider Trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.3.**The Compliance Officer Insider Trading may in exceptional circumstances grant dispensation from prohibitions, restrictions or obligations included in these Rules, to the extent permitted by law.

&nbsp;&nbsp;&nbsp;&nbsp;**6.4.**Philips Persons and Closely Associated Persons of members of the Board of Management or of the Supervisory Board may request the Compliance Officer Insider Trading as to whether a prohibition, restriction or obligation contained in these Rules applies to them. If a Philips Person is in doubt as to whether a prohibition or obligation applies, it is advisable to contact the Compliance Officer Insider Trading and seek advice. Philips Persons will at all times remain fully responsible for compliance with these Rules and the law.

&nbsp;&nbsp;&nbsp;&nbsp;**6.5.**The Compliance Officer Insider Trading is authorized to hold or commission an inquiry into transactions conducted by or on behalf a Philips Person or a Closely Associated Person of members of the Board of Management or Supervisory Board. The Compliance Officer Insider Trading may report the outcome of the inquiry to members of the Board of Management or to the chairman of the Supervisory Board, if deemed appropriate by the Compliance Officer Insider Trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.Sanctions**

&nbsp;&nbsp;&nbsp;&nbsp;**7.1.**In the event of a violation of any provision of these Rules, Philips or, as the case may be, the employer reserves the right to impose any sanctions which it is entitled to impose pursuant to the law and/or the (employment) agreement with the person in question. Such possible sanctions include termination of the (employment) agreement with the person involved, by way of summary dismissal or otherwise. Furthermore, Philips, or as the case may be the employer, may report a violation of any provision of these Rules to any relevant competent authority in the relevant jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;**7.2.**A description of the market abuse prohibitions under the MAR and related maximum sanctions can be found on Philips' intranet.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.Miscellaneous**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.1.Circumstances not covered by these Rules**

The Board of Management has the right to take decisions in any circumstances not covered by these Rules, provided that it does so in accordance with any applicable statutory provisions including the MAR and United States securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.2.Amendments**

The provisions of these Rules may be amended and/or supplemented by a resolution of the Board of Management. Amendments and supplements will enter into force from the moment that they are announced, unless the announcement specifies otherwise.

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 8 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.3.Governing law**

These Rules are governed by Dutch law.

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 9 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

**Annex 1: Definitions**

---

| | |
|:---|:---|
| AFM | The Netherlands Authority for the Financial Markets (*Stichting Autoriteit Financiële Markten*); |
| Blocked Period | a period as defined in clause 2.6.2. of these Rules; |
| Board of Management | Philips' board of management (*raad van bestuur*); |
| Closely Associated Persons | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)a spouse, or a partner considered to be equivalent to a spouse in accordance with national law; <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)a dependent child, in accordance with national law; <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)a relative who has shared the same household for at least one year on the date of the transaction concerned; or <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)a legal person, trust or partnership, the managerial responsibilities of which are discharged by a member of the Board of Management or Supervisory Board or by a person referred to in point (a), (b) or (c), which is directly or indirectly controlled by such a person, which is set up for the benefit of such a person, or the economic interests of which are substantially equivalent to those of such a person. |
| Inside Information | Information of a precise nature, which has not been made public, relating, directly or indirectly, to Philips, its subsidiaries or to one or more financial instruments (including Philips Securities), and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments; |
| MAR | The European Market Abuse Regulation ((EU) No 596/2014) as amended from time to time; |
| Open Window | A period as defined in clause 2.4.3 of these Rules; |
| Philips | Koninklijke Philips N.V.; |
| Philips Insiders | All Philips Persons included on any section of the insider list as referred to in clause 5.1 of these Rules from time to time; |
| Philips Persons | Persons working under a contract of employment or otherwise performing tasks for Philips or any of its subsidiaries and members of the Board of Management and the Supervisory Board; |
| Philips Qualified Insiders | Members of the Board of Management and Supervisory Board and other Philips Persons so instructed by the Compliance Officer Insider Trading; |

---

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 10 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

---

| | |
|:---|:---|
| Philips Permanent Insiders | Philips Persons who have access at all times to Inside Information within Philips, including but not limited to the Philips Qualified Insiders; |
| Philips Securities | Philips shares or debt instruments, or derivatives (such as options, puts, calls or warrants or any other financial instrument by which the aforementioned securities can be acquired or subscribed) whether or not issued by Philips (and whether or not settled in such securities or cash) or other financial instruments linked to them; |
| Rule 10b5-1 | Rule 10b5-1 under the United States Securities Exchange Act of 1934, as amended from time to time; |
| Rules | These insider trading rules; |
| Supervisory Board | Philips' supervisory board (*raad van commissarissen*); |
| Trade or Trading | Acquiring or disposing of, transferring (including gifting) or conducting any other transaction on a person's own account or for the account of a third party, directly or indirectly, relating to, financial instruments.<br>A cancellation or amendment of an order concerning a financial instrument is also considered Trading.<br>Enrolling in and terminating participation in an employee share purchase plan or amending the amount of the periodic contribution to such plan is also considered Trading; |

---

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 11 of #NUM_PAGES#

------

![gmc_wordmarkx2008xrgb.jpg](gmc_wordmarkx2008xrgb.jpg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Philips Insider Trading Rules

**Annex 2: Non-exhaustive list of transactions that must be notified by members of the Board of Management and Supervisory Board and their Closely Associated Persons**

Transactions in Philips' Securities which need to be notified to the AFM and the Compliance Officer Insider Trading under Article 19 of the MAR, include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)acquisitions or disposals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)transactions undertaken by persons professionally arranging or executing transactions or by another person on behalf of a member of the Board of Management or Supervisory Board or a Person Closely Associated with a member of the Board of Management or Supervisory Board, including where discretion is exercised (e.g. under an individual portfolio or asset management mandate);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)gifts and donations made or received, and inheritance received;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)acceptance or exercise of a stock option, including of a stock option granted to managers or employees as part of their remuneration package, and the disposal of shares stemming from the exercise of a stock option;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)subscription to a capital increase or debt instrument issuance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f)conditional transactions upon the occurrence of the conditions and actual execution of the transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g)automatic or non-automatic conversion of a financial instrument into another financial instrument, including the exchange of convertible bonds to shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h)pledging (or a similar security interest), borrowing or lending by or on behalf of a member of the Board of Management or Supervisory Board or Person Closely Associated with a member of the Board of Management or Supervisory Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i)short sale, subscription or exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j)entering into or exercise of equity swaps;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k)transactions in or related to derivatives, including cash-settled transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l)entering into a contract for difference on a financial instrument of Philips or on emission allowances or auction products based thereon;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m)acquisition, disposal or exercise of rights, including put and call options, and warrants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;n)transactions in derivatives and financial instruments linked to a debt instrument of Philips, including credit default swaps;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o)transactions executed in index-related products, baskets and derivatives, insofar as required by Article 19 of the MAR;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;p)transactions executed in shares or units of investment funds, including alternative investment funds (AIFs) referred to in Article 1 of Directive 2011/61/EU of the European Parliament and of the Council, insofar as required by Article 19 of the MAR;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;q)transactions executed by manager of an alternative investment fund (AIF) in which the member of the Board of Management or Supervisory Board or Person Closely Associated with the member of the Board of Management or Supervisory Board have invested, insofar as required by Article 19 of the MAR; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;r)transactions made under a life insurance policy, where the investment risk is borne by the member of the Board of Management or Supervisory Board or Person Closely Associated with the member of the Board of Management or Supervisory Board and such person has the power or discretion to make investment decisions regarding specific instruments in that life insurance policy or to execute transactions regarding specific instruments for that life insurance policy.

Policy Owner: Chief ESG & Legal Officer

Approved by: the Board of Management

Royal Philips (Koninklijke Philips N.V.)<br>www.philips.com

Document ID: PE_000699<br>Document Version: 4 Philips Information Classification: publicPrinted copies are uncontrolled unless authenticated Page 12 of #NUM_PAGES#

## Ex-12.A

**Exhibit 12 (a)**

Certification

I, R.W.O. Jakobs, certify that:

1. I have reviewed this Annual Report on Form 20-F of Koninklijke Philips N.V., a company incorporated under the laws of The Netherlands (the "Company");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: February 19, 2026

---

| |
|:---|
| /s/ R.W.O. Jakobs |
| Name: R.W.O. Jakobs |
| Title: Chief Executive Officer, |
| Chairman of the Board of Management and the Executive Committee |

---

## Ex-12.B

**Exhibit 12 (b)**

Certification

I, C.M. Hanneman, certify that:

1. I have reviewed this Annual Report on Form 20-F of Koninklijke Philips N.V., a company incorporated under the laws of The Netherlands (the "Company");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: February 19, 2026

---

| |
|:---|
| &nbsp;&nbsp;/s/ C.M. Hanneman |
| &nbsp;&nbsp;Name: C.M. Hanneman |
| Title: Chief Financial Officer, |
| Member of the Board of Management and the Executive Committee |

---

## Ex-13.A

**Exhibit 13 (a)**

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Koninklijke Philips N.V., a company incorporated under the laws of The Netherlands (the "Company"), hereby certifies, to such officer's knowledge, that:

The Annual Report on Form 20-F for the year ended December 31, 2025 (the "Report") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 19, 2026

---

| |
|:---|
| /s/ R.W.O. Jakobs |
| Name: R.W.O. Jakobs |
| Title: Chief Executive Officer, |
| Chairman of the Board of Management and the Executive Committee |

---

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document.

## Ex-13.B

**Exhibit 13 (b)**

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Koninklijke Philips N.V., a company incorporated under the laws of The Netherlands (the "Company"), hereby certifies, to such officer's knowledge, that:

The Annual Report on Form 20-F for the year ended December 31, 2025 (the "Report") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 19, 2026

---

| |
|:---|
| &nbsp;&nbsp;/s/ C.M. Hanneman |
| &nbsp;&nbsp;Name: C.M. Hanneman |
| Title: Chief Financial Officer, |
| Member of the Board of Management and the Executive Committee |

---

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document.

## Ex-15.A

**Exhibit 15 (a)**

**Consent of Independent Registered Public Accounting Firm PricewaterhouseCoopers Accountants N.V.**

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 No. 333-186849 of Koninklijke Philips N.V. of our report dated February 19, 2026 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.

/s/ PricewaterhouseCoopers Accountants N.V.

Amsterdam, the Netherlands

February 19, 2026

## Ex-15.B

**Exhibit 15 (b)**

**Consent of Independent Registered Public Accounting Firm EY Accountants B.V.**

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-186849) pertaining to the Employees' Savings Plan of Koninklijke Philips N.V. of our report dated February 21, 2025, with respect to the consolidated financial statements of Koninklijke Philips N.V. as of December 31, 2024 and for the two years in the period then ended, included in this Annual Report (Form 20-F) for the year ended December 31, 2025.

/s/ EY Accountants B.V.

Amsterdam, the Netherlands

February 19, 2026

## Ex-97

**Exhibit 97**

**CLAWBACK POLICY: RECOVERY OF ERRONEOUSLY AWARDED INCENTIVE-BASED COMPENSATION**

**I. BACKGROUND**

Koninklijke Philips N.V. (the "**Company**") has adopted this Policy Regarding the Recovery of Erroneously Awarded Incentive-Based Compensation (this "**Policy**") to provide for the recovery or "clawback" of excess Incentive-Based Compensation earned by current or former Executive Officers (as that term is defined in Section 303A.14 of the NYSE Listed Company Manual, and on the date hereof being the members of the Company's Board of Management (the "**Board of Management**")) in the event of a required Restatement (each, as defined herein)<sup>\*)</sup>.

For purposes of this Policy, "**Incentive-Based Compensation**" means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure. "**Financial Reporting Measures**" means any of the following: (i) measures that are determined and presented in accordance with the accounting principles used in preparing the Company's financial statements, and any measures that are derived wholly or in part from such measures, (ii) stock price and (iii) total shareholder return ("**TSR**"). A Financial Reporting Measure need not be presented within the Company's financial statements or included in a filing with the SEC.

**II. STATEMENT OF POLICY**

The Company shall recover reasonably promptly the amount of erroneously awarded Incentive-Based Compensation in the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a "**Restatement**").

The Company shall recover erroneously awarded Incentive-Based Compensation in compliance with this Policy except to the extent provided under the section entitled "V. Exceptions" herein.

**III. SCOPE OF POLICY**

This Policy applies to all Incentive-Based Compensation received by a member of the Board of Management:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• after beginning service as a member of the Board of Management,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• who served as a member of the Board of Management at any time during the performance period for that Incentive-Based Compensation,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• while the Company has its ordinary shares listed on the New York Stock Exchange ("**NYSE**"), and

during the three completed fiscal years immediately preceding the date that the Company is required to prepare a Restatement (the "**Recovery Period***"*)<sup>\*\*)</sup>.

For purposes of this Policy, Incentive-Based Compensation shall be deemed "received" in the Company's fiscal period during which the Financial Reporting Measure (as defined herein) specified in the Incentive-Based Compensation award is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that period.

For clarity, the Company's obligation to recover erroneously awarded Incentive-Based Compensation under this Policy is not dependent on if or when a Restatement is filed.

For purposes of determining the relevant Recovery Period, the date that the Company is required to prepare the Restatement is the earlier to occur of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the date the Board of Management and/or the Supervisory Board conclude or reasonably should have concluded, that the Company is required to prepare a Restatement, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the date a court, regulator, or other legally authorized body directs the Company to prepare a Restatement.<br>

**IV. AMOUNT SUBJECT TO RECOVERY**

The amount of Incentive-Based Compensation subject to this Policy is the amount of Incentive-Based Compensation received that exceeds the amount of Incentive-Based Compensation that otherwise would have been received had it been determined based on the restated amounts, computed without regard to any taxes paid.

For Incentive-Based Compensation based on stock price or TSR, where the amount of erroneously awarded Incentive-Based Compensation is not subject to mathematical recalculation directly from the information in a Restatement, the recoverable amount shall be based on a reasonable estimate of the effect of the Restatement on the stock price or TSR upon which the Incentive-Based Compensation was received. In such event, the Company shall maintain documentation of the determination of that reasonable estimate and provide such documentation to NYSE.

**V. EXCEPTIONS**

The Company shall recover erroneously awarded Incentive-Based Compensation in compliance with this Policy except to the extent that the conditions set out below are met and a majority of the independent directors serving on the Supervisory Board has made a determination that recovery would be impracticable:

------

***A. Direct Expense Exceeds Recoverable Amount.***The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered; provided, however, that before concluding it would be impracticable to recover any amount of erroneously awarded Incentive-Based Compensation based on expense of enforcement, the Company shall make a reasonable attempt to recover such erroneously awarded Incentive-Based Compensation, document such reasonable attempt(s) to recover, and provide that documentation to NYSE.

***B. Violation of Dutch Law.***Recovery would violate Dutch law where that law was adopted prior to November 28, 2022<sup>\*\*\*)</sup>; provided, however, that before concluding it would be impracticable to recover any amount of erroneously awarded Incentive-Based Compensation based on violation of Dutch law, the Company shall obtain an opinion of Dutch counsel, acceptable to NYSE, that recovery would result in such a violation, and shall provide such opinion to NYSE.

**C. *Recovery from Certain Tax-Qualified Retirement Plans*.** Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.

**VI. PROHIBITION AGAINST INDEMNIFICATION**

The Company shall not indemnify any current or former member of the Board of Management against the loss of erroneously awarded Incentive-Based Compensation.

**VII. DISCLOSURE**

The Company shall file all disclosures with respect to recoveries under this Policy in accordance with the requirements of the U.S. Federal securities laws, including the disclosure required by the applicable Securities and Exchange Commission filings.

**VIII. EFFECTIVENESS**

This Policy shall be effective as of December 1, 2023. This Policy is in addition to any other policy of the Company concerning the recovery of excess Incentive-Based Compensation earned by current or former members of the Board of Management or contractual clawback provisions in the services contracts between the Company and members of the Board of Management in the event of a required Restatement.

<sup>\*)</sup> This Policy is intended to comply with the requirements of Section 303A.14 of the New York Stock Exchange Listed Company Manual (the "Listing Standard"). To the extent that any provision in this Policy is ambiguous as to its compliance with the Listing Standard or to the extent any provision in this Policy must be modified to comply with the Listing Standard, such provision will be read, or will be modified, as the case may be, in such a manner so that all applicable provisions under this Policy comply with the Listing Standard.

<sup>\*\*)</sup>Notwithstanding this look-back requirement, the Company is only required to apply this Policy to Incentive-Based Compensation received on or after October 2, 2023, being the effective date of NYSE's Listing Standard.

<sup>\*\*\*)</sup>This includes the contractual clawback provisions in the services contracts between the Company and members of the Board of Management entered into prior to such date

<br>