1、PDF/printed versionThis document is the PDF/printed version of the 2022 Annual Reportof Royal Philips and has been prepared for ease of use.The 2022Annual Report was made publicly available pursuant to section 5:25cof the Dutch Financial Supervision Act(Wet op het financieeltoezicht),and was filed w

2、ith Netherlands Authority for the FinancialMarkets in European single electronic reporting format(the ESEFpackage).The ESEF package is available on the companys website athttps:/ and includesa human readable XHTML version of the 2022 Annual Report.In anycase of discrepancies between this PDF version

3、 and the ESEFpackage,the latter prevails.IFRS basis of presentationThe financial information included in this document is based on IFRS,as explained in General information to the Consolidated financialstatements,starting on page 151,unless otherwise indicated.Forward-looking statementsThis document

4、contains certain forward-looking statements.By theirnature,these statements involve risk and uncertainty.For moreinformation,please refer to Forward-looking statements and otherinformation,starting on page 259.References to PhilipsReferences to the company,to Philips or the(Philips)Group or group,re

5、late to Koninklijke Philips N.V.and its subsidiaries,as the contextrequires.Royal Philips refers to Koninklijke Philips N.V.Dutch Financial Markets Supervision ActThis document comprises regulated information within the meaningof the Dutch Financial Markets Supervision Act(Wet op het financieeltoezi

6、cht).Statutory financial statements and management reportThe chapters Group financial statements,starting on page 141 andCompany financial statements,starting on page 225 contain thestatutory financial statements of the company.The introduction tothe chapter Group financial statements,starting on pa

7、ge 141 sets outwhich parts of this Annual Report form the Management reportwithin the meaning of Section 2:391 of the Dutch Civil Code.ContentsMessage from the CEO51Board of Management and ExecutiveCommittee72Strategy and Businesses93Our strategic focus103.1How we create value with sustainable impac

8、t123.2Materiality analysis133.3Our businesses153.4Our geographies223.5Supply chain and procurement243.6Financial performance264Performance review274.1Factors impacting performance284.2Results of operations304.3Restructuring and acquisition-related charges354.4Acquisitions and divestments364.5Cash fl

9、ows374.6Financing384.7Debt position384.8Liquidity position394.9Shareholders equity404.10Cash obligations434.11Dividend434.12Analysis of 2021 compared to 2020444.13Outlook444.14Environmental,Social and Governance455ESG reporting framework465.1Philips ESG commitments505.2Environmental performance525.3

10、Social performance625.4Governance695.5Philips ESG performance at a glance755.6ESG by key country765.7Risk management876Our approach to risk management886.1Risk factors926.2Strategic risks936.3Operational risks966.4Financial risks1016.5Compliance risks1036.6Supervisory Board1057Supervisory Board repo

11、rt1078Report of the Corporate Governance andNomination&Selection Committee1158.1Report of the Remuneration Committee1168.2Report of the Audit Committee1298.3Report of the Quality&RegulatoryCommittee1318.4Corporate governance1329Introduction1329.1Board of Management and ExecutiveCommittee1329.2Superv

12、isory Board1339.3Other Board-related matters1359.4General Meeting of Shareholders1379.5Risk management approach1389.6Annual financial statements and externalaudit1389.7Stichting Preferente Aandelen Philips1399.8Investor Relations1399.9Major shareholders1409.10Corporate information1409.11Group financ

13、ial statements14110Managements report on internal control14310.1Report of the independent auditor14310.2Independent auditors report on internalcontrol over financial reporting14410.3Consolidated statements of income14510.4Consolidated statements of comprehensiveincome14610.5Consolidated balance shee

14、ts14710.6Consolidated statements of cash flows14810.7Consolidated statements of changes in equity14910.8Notes to the Consolidated financialstatements15110.9Company financial statements22511Statements of income22711.1Balance sheets before appropriation of results22811.2Statements of changes in equity

15、22911.3Notes to the Company financial statements23111.4Further information23712Appropriation of profits23712.1Independent auditors report23712.2Reconciliation of non-IFRS information24612.3Other Key Performance Indicators25712.4Forward-looking statements and otherinformation25912.5Investor informati

16、on26012.6Definitions and abbreviations26312.7ESG statements26613Approach to ESG reporting26613.1Economic indicators27313.2Environmental statements27413.3Social statements28113.4Governance indicators29213.5Assurance report of the independent auditor29613.62022at a glanceSocial impact1.81 billion live

17、s improved202 million in underserved communitiesPatient safety&qualityStrengthening patient safety and qualityPhilips highest priorityUpdated Quality Policy,furtherimplementation of Accelerating Patient Safety&Quality program,and mandatory Qualitytraining completed by all employeesCustomersAround 10

18、0 new long-term strategicpartnershipsApproximately 40%recurring revenuesInnovationIncreased focus on innovation impact andproductivity,with patient safety and quality atthe core of innovation designPhilips named as a Clarivate Top 100 GlobalInnovator for 9thyear in successionOperationsSignificant fo

19、cus and effort on PhilipsRespironics recall around 90%of productionrequired for delivery of replacement devices topatients completed by year-endChallenging macroeconomic/geopoliticalenvironment giving rise to high inflation,resource shortages and global supply chainheadwinds,in combination with oper

20、ationalchallenges causing supply delivery delaysEnvironmental sustainabilityCircular revenues at 18%of salesUpdated carbon reduction targets approvedby Science Based Targets initiatives(SBTi)CDP A List rating for 10th year in a rowPeople&cultureReinvigorated culture and leadership focusedon organic

21、growth,people-and patient-centric innovation at scale,and improvedexecution30%representation of women in seniorleadership rolesFinancialsEUR 17.8 billion sales impacted by global andindustry-wide challengesProfitability also affected by consequences ofthe Respironics field actionProductivity measure

22、s and restructuringintroducedContents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Compan

23、y financial statements12Further information13ESG statements4Message from the CEO1Roy Jakobs CEO Royal Philips2022 was a very disappointing year for Philips and its stakeholders,and we are taking firm action to strengthenpatient safety and quality,improve our execution and step up performance with ur

24、gency in 2023.”“Dear Stakeholder,Philips is a company with strong market leadership positions,an extensive customer base,strong innovation portfolio,talented employees,and a global purpose-driven brand.Yet,asour 2022 performance underlines,we are not extracting the full value of our businesses andha

25、ve disappointed many stakeholders.My priority as CEO is to address operational challenges,improve performance,and driveprogressive value creation through a strategy of focused organic growth and an innovationmodel shift to increase the impact of patient-and people-centric innovation at scale.Executi

26、on will be the key value driver,with three clear priorities around improving patientsafety and quality,creating more reliable and resilient supply chains,and simplifying the waywe work,so we are more agile and competitive.Addressing priority challenges improved execution as key value driverOur first

27、 priority is to rebuild Philips reputation around patient safety and quality.The recallof specific Respironics sleep therapy devices and ventilators let down the patients whodepended on them,and the doctors caring for those patients.We apologize deeply for thatand are working hard to restore trust w

28、ith all stakeholders.By year-end,following thesubstantial ramp-up of capacity,Philips Respironics had completed around 90%of theproduction required for the delivery of replacement devices to patients.In consultation with regulators around the world,we have also been conducting acomprehensive test an

29、d research program to better understand the potential health risksassociated with the use of affected devices.I am very conscious that 18 months is long,butthis work had to be done thoroughly.I am encouraged by the test results for the first-generation DreamStation devices,that account for over two

30、thirds of the registered affecteddevices:the prevalence of visible foam degradation is low,and the emission of the detectedvolatile organic compounds and particulates are within the applicable safety limits and notexpected to result in appreciable harm to health in patients.We are fully committed to

31、 completing the Respironics recall and testing program in 2023.We will also implement all measures agreed with the US Food&Drug Administration(FDA)and US Department of Justice,including a consent decree,and rebuild ties with the FDA andother national regulators.We have put the leadership and end-to-

32、end organization in placeand have invested significantly in doing so.Across the company,we have assigned thehighest priority to making the necessary step-up in patient safety and quality managementand have elevated leadership of patient safety and quality to Executive Committee level.An integral asp

33、ect of quality is the ability to deliver and install equipment on time and to therequired specifications.To this end,we are taking decisive action to make our supply chainmore reliable and predictable,by securing near-term supply,redesigning and pruning ourportfolio,and moving from a one size fits a

34、ll supply chain structure to a more agile,tailoredvalue chain model per business,with dedicated and upgraded domain expertise.This willsecure more deliveries,drive faster order-book conversion and build down inventory.We are also simplifying the way we work to drive accountability and agility,with t

35、he aim ofunlocking significant productivity and margin gains.This simplification with end-to-endbusinesses with single accountability and more focused targets,supported by a much leanerenterprise layer,strong regions and a reinvigorated culture of patient-and people-centricity,innovation impact and

36、clear accountability is a primary enabler to drive flawless execution.The set of measures we have taken includes the very difficult,yet necessary decisionsannounced in October 2022 and January 2023 to reduce our workforce by 4,000 employeesand then a further 6,000 respectively,as we drive a major st

37、ep-up in productivity.We willstrive to implement these reductions with due respect for every employee affected and inline with all local rules and regulations.We believe that,together,these measures will help us establish the culture,capabilities andinfrastructure needed to consistently execute and

38、deliver as a reliable patient-and people-centric health technology company.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate

39、governance10Group financial statements11Company financial statements12Further information13ESG statements5Focused organic growth in Diagnosis&Treatment,Connected Care andPersonal HealthAs well as restoring our reputation as a responsible patient-and people-centric innovationleader in health technolo

40、gy,we urgently need to get back on course to create value withsustainable impact.To do this,we will drive organic growth through scale and leadership:Focusing investments to accelerate growth in Image Guided Therapy,Ultrasound andMonitoring,where we have strong#1 or#2 positions,and expand our leader

41、shipposition in Personal HealthScaling our new Enterprise Informatics businessDriving margin improvement in Diagnostic ImagingRestoring the Sleep&Respiratory Care business.We will leverage our distinctive market positions,especially our strong presence in NorthAmerica and many international markets,

42、while further localizing to support our leadershipposition in China.Patient-and people-centric innovation at scaleWe will continue to invest significantly in innovation,but are making a number of importantchanges to increase the impact of our patient-and people-driven innovation.Focusing ourresource

43、s on fewer,better-resourced and more impactful projects,we will concentrate ahigher proportion of our R&D resources in the businesses to ensure that innovation is donecloser to our customers.We will scale and accelerate innovations,driven by the business andsupported by rightsized corporate research

44、,with patient safety,quality and sustainability atthe core of innovation design.The technological and business model innovation that Philipsbrings to healthcare across care settings often as part of long-term partnerships is critical,making care delivery more convenient and sustainable.2022 performa

45、nceLooking back on last year,sales increased nominally to EUR 17.8 billion,while several factorsweighed down on profitability.Performance was impacted by our efforts to mitigate supplychain and inflationary pressures and the revenue and cost consequences of the PhilipsRespironics sleep recall,whilst

46、 at the same time dealing with global challenges such as theCOVID situation in China,volatile demand and supply,and the war in Ukraine.As we workedthrough the operational challenges,we progressed on our execution priorities in the fourthquarter and saw initial signs of improvement.I find it greatly

47、encouraging that,despite our recent difficulties,Philips purpose,strategyand solutions resonate strongly with customers,as evidenced by the around 100 long-termstrategic partnerships we entered into with hospitals and health systems around the worldin 2022,and by the continued strength of our order

48、book.Delivering on our ESG commitmentsEnvironmental,Social&Governance(ESG)are three key dimensions defining our approachto doing business responsibly and sustainably.In 2022,we reached 1.81 billion people withour products and services,including 202 million in underserved communities taking us astep

49、closer to our goal of improving 2 billion lives per year by 2025,including 300 million inunderserved communities.We continued to work hard to deliver on our other key ESG commitments.For example,ourupdated carbon reduction targets were approved by the Science Based Targets initiative(SBTi),and we we

50、re included in CDPs climate action A-List for the 10thyear in a row.We seeincreasing momentum within the healthcare industry and on the part of our customers toreduce their environmental impact,and we are well placed with innovations such as ourBlueSeal magnet for helium-free-for-life MR and our Cir

51、cular portfolio to support thattrend and help create a sustainable infrastructure for the future of healthcare.Looking aheadWe remain cautious in light of the subdued economic outlook for the year,staffing andinflationary pressures facing our customers,geopolitical risks,supply and demand volatility

52、,and uncertainties around ongoing consent decree negotiations,litigation and Departmentof Justice investigations.Nevertheless,we expect that,by prioritizing patient safety andquality,tightening our focus on innovation and strengthening our category leadershipareas,while at the same time improving ex

53、ecution and taking a disciplined approach tocapital,we will be able to progressively create value with sustainable impact.Against thisbackground,and reflecting the importance we attach to dividend stability,we propose tomaintain the dividend at EUR 0.85 per share,to be distributed in shares.On behal

54、f of the Executive Committee,I would like to acknowledge,once again,that 2022has been very disappointing and we carry accountability for the plan to bring Philips back towhere it belongs.I want to thank our customers and their patients for their understanding and our suppliers and ecosystem partners

55、 for their support over this past year.I appreciateour employees hard work and willingness to embrace change and drive performanceimprovement.And I wish to thank our shareholders and other stakeholders for theircontinued support in these challenging times.I am honored to have been tasked with leadin

56、g our company and am heartened by thesupport I have encountered from our employees and customers,investors and otherstakeholders.I am realistic about the challenges we face,but have full confidence in ourplan of action and am firm in my resolve to lead Philips back to a position of strength in aworl

57、d that needs meaningful innovation.Roy JakobsChief Executive OfficerContents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governa

58、nce10Group financial statements11Company financial statements12Further information13ESG statements6Board of Management and Executive Committee2Royal Philips has a two-tier board structure consisting of a Board of Management and a Supervisory Board,each of which isaccountable to the General Meeting o

59、f Shareholders for the fulfillment of its respective duties.The Board of Management isentrusted with the management of the company.The other members of the Executive Committee have been appointed tosupport the Board of Management in the fulfilment of its managerial duties.Please also refer to Board

60、of Management andExecutive Committee,starting on page 132 within the chapter Corporate governance.Members of the Board of ManagementRoy JakobsBorn 1974,Dutch and GermanChief Executive Officer(CEO)Chairman of the Board of Management and theExecutive Committee since October 2022Roy Jakobs joined Phili

61、ps in 2010 and has held variousglobal leadership positions across the company,startingas Chief Marketing&Strategy Officer for Philips Lighting.In 2012,he became Market Leader for Philips Middle East&Turkey,leading the Healthcare,Consumer,and Lightingbusinesses out of Dubai.Subsequently,he becameBusi

62、ness Leader of Domestic Appliances,based inShanghai,in 2015.In 2018,Roy joined the ExecutiveCommittee as Chief Business Leader of the PersonalHealth businesses and in early 2020 he started as ChiefBusiness Leader of Connected Care.Prior to his career atPhilips,he held various management positions at

63、 RoyalDutch Shell and Reed Elsevier.Abhijit BhattacharyaBorn 1961,IndianExecutive Vice PresidentMember of the Board of Management since December2015Chief Financial OfficerAbhijit Bhattacharya first joined Philips in 1987 and hasheld multiple senior leadership positions across variousbusinesses and f

64、unctions in Europe,Asia Pacific and theUS.Between 2010 2014,he was the Head of InvestorRelations of Philips,and subsequently,CFO of PhilipsHealthcare,Philips largest sector at the time.Prior to2010,Abhijit was Head of Operations&Quality at ST-Ericsson,the joint venture of ST Microelectronics andEric

65、sson,and he was CFO of NXPs largest business group.Marnix van GinnekenBorn 1973,DutchExecutive Vice PresidentMember of the Board of Management since November2017Chief ESG&Legal OfficerMarnix van Ginneken joined Philips in 2007 and becameHead of Group Legal in 2010.In 2014,Marnix becameChief Legal Of

66、ficer of Royal Philips and Member of theExecutive Committee.He is responsible for ESG/Sustainability,Legal,Intellectual Property&Standardsand Government&Public affairs.Since 2011,he is alsoProfessor of International Corporate Governance at theErasmus School of Law in Rotterdam.Before joiningPhilips,

67、Marnix worked for Akzo Nobel and as an attorneyin a private practice.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate govern

68、ance10Group financial statements11Company financial statements12Further information13ESG statements7Other members of the Executive Committeeas of December 31,2022Willem AppeloBorn 1964,DutchExecutive Vice PresidentChief Operations OfficerAndy HoBorn 1961,Chinese/CanadianExecutive Vice PresidentChief

69、 Market Leader of Philips Greater ChinaDeeptha KhannaBorn 1976,SingaporeanExecutive Vice PresidentChief Business Leader Personal HealthBert van MeursBorn 1961,DutchExecutive Vice PresidentChief Business Leader Image Guided Therapy andjointly responsible for Diagnosis&TreatmentEdwin PaalvastBorn 1963

70、,DutchExecutive Vice PresidentChief of International MarketsShez PartoviBorn 1967,CanadianExecutive Vice PresidentChief Innovation&Strategy OfficerVitor RochaBorn 1969,Brazilian/AmericanExecutive Vice PresidentChief Market Leader of Philips North AmericaDaniela SeabrookBorn 1973,SwissExecutive Vice

71、PresidentChief Human Resources OfficerKees WesdorpBorn 1976,DutchExecutive Vice PresidentChief Business Leader Precision Diagnosis and jointlyresponsible for Diagnosis&TreatmentThis page reflects the composition of the Executive Committee as per December 31,2022.As announced on December 8,2022,Kees

72、Wesdorp left the company on January 1,2023,with Bert van Meurs(Chief Business Leader for the Image GuidedTherapy businesses)temporarily expanding his role to include the leadership of the Precision Diagnosis businesses.Asannounced on January 30,2023,Steve C.de Baca and Jeff DiLullo joined the Execut

73、ive Committee,effective February 6,2023,as Chief Patient Safety&Quality Officer and Chief Market Leader of Philips North America,respectively.As such,MrDiLullo succeeds Vitor Rocha,who left the company effective as per the same date.Philips expects to announce new leadersfor its Connected Care busin

74、esses(which was the responsibility of Roy Jakobs until his appointment as CEO)as well as forits Precision Diagnosis businesses,in 2023.For a current overview of the Executive Committee members,see alsohttps:/ from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial

75、performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG statements8At a glanceStrategy andBusinessesContinued strong customer interest in our in

76、novativehealthcare technologyChallenging macroeconomic/geopolitical environmentgiving rise to high inflation,resource shortages,andglobal supply chain headwindsSignificant focus and effort on Philips Respironics recall:around 90%of production required for delivery ofreplacement devices to patients c

77、ompleted by year-endPersonal health innovations supported by onlineexpansion,retail partnerships,and scaling of newbusiness modelsContents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk managemen

78、t7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG statements9Strategy and Businesses3Our strategic focus3.1A strategy of focused organic growth,founded on clear choices inbusiness and innovation,and i

79、mproved executionOver the past 10 years,Philips has undergone a transformation to reshape its portfolio andbecome a focused health technology company.As a result,we are active in highly attractivesegments that offer significant potential for growth and margin expansion.These markets are attractive d

80、ue to the underlying growth of demand for access tohealthcare from an aging and growing population.This in turn fuels the need formeaningful innovation to address the rising healthcare spending and staff shortages andmake healthcare more efficient and productive,while driving better outcomes.At Phil

81、ips,we view the provision and collection of data from patient monitors,imagingdevices,and Electronic Medical Records as the foundation upon which Artificial Intelligence(AI)propositions can be built to turn clinical data into actionable insights for patients,providers,and consumers.In addition to pr

82、oviding clinical insights,the same system,informatics and service solutions also provide improved operational forecasting somethingour customers have been requesting since COVID-19 to help them improve productivity.When we perform all of the above for a particular health condition,such as cardiac di

83、sease,we establish domain expertise across various sites of care for that disease state.Ourhealthcare customers are asking for integrated innovations that enable them to care forpatients both in the hospital and in outpatient settings.In parallel we continue to provideimpactful consumer health propo

84、sitions.Creating value with sustainable impact2022 was a difficult year for Philips as its business and financial performance suffered due tochallenges in execution,quality and supply,and a complex operating model.Going forward,Philips will address these operational challenges,improve performance,an

85、d driveprogressive value creation through a strategy of a)focused organic growth,b)scalablepatient-and people-centric innovation,and c)focus on reliable execution,prioritizingpatient safety and quality,supply chain reliability,and a simplified operating model.Allsupported by a reinvigorated culture

86、of accountability,empowerment and strengthenedhealth technology talent and capabilities.Focused organic growthHaving transformed to become a health technology company in recent years,we will nowfocus on extracting the full value of our strong portfolio with leading positions.We will focus investment

87、s to accelerate growth and margin expansion in areas ImageGuided Therapy,Ultrasound,Monitoring,and Personal Health where we have strong#1 or#2 positions.In 2022,approximately 70%of our sales were generated by businesses withsuch leadership positions in the hospital and the home.We will also scale ou

88、r new EnterpriseInformatics business,drive margin improvement in Diagnostic Imaging,and restore Sleep&Respiratory Care.Scalable patient-and people-centric innovationPhilips purpose to improve peoples health and well-being through meaningfulinnovation is at the center of everything we do.This core pr

89、inciple has never been morerelevant than it is in these challenging times.As a leading health technology company,webelieve that viewed through the lens of customer needs patient-and people-centricinnovation can improve peoples health and healthcare outcomes,as well as making caremore convenient and

90、sustainable,both in the hospital and at home.Given our global presence,strong enterprise informatics platforms,(ambulatory)monitoringand imaging data,as well as our capabilities to support care across settings,we believePhilips is well positioned to do this,and leveraging our strong clinical,consume

91、r andEnvironmental,Social&Governance(ESG)franchise,and our strong brand do it in aconvenient and sustainable way.In the consumer domain,we develop innovative solutions that support healthier lifestyles,prevent disease,and help people to live well with chronic illness,also in the home andcommunity se

92、ttings.In clinics and hospitals,we are teaming up with healthcare providers to innovate andtransform the way care is delivered.We listen closely to our customers needs and togetherwe co-create solutions that help our customers improve outcomes,patient and staffexperience and productivity.We are embe

93、dding AI and data science in our propositions for instance,applying the power of predictive data analytics and artificial intelligence at thepoint of care to leverage the value of data in the clinical and operational domains,aidingclinical decision making and improving the quality and efficiency of

94、healthcare services.Increasingly,we are working together with our health systems customers in novel businessContents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Su

95、pervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG statements10models,including outcome-oriented payment models,that align their interests and ours inlong-term partnerships.Going forward,we will focus our innovation on wher

96、e we see customer needs evolving.Toimprove outcomes,we will support clinical workflows in areas where we have domainleadership,e.g.cardiology and the ICU.To increase productivity in a system having tocontend with high patient volumes,staff shortages and rising costs,we will enhance carepathways and

97、operational workflows through integrated technology infrastructure,and wewill leverage our(enterprise)informatics and hardware innovation to lower costs andreduce the burden on staff.To improve the delivery of care outside the hospital,we willutilize our consumer/home experience and our strength in

98、data and informatics to connectand support care for patients,with better outcomes,across settings.In doing so,we will leverage leading technologies across our portfolio.To name just ahandful,by way of example:our Ingenia Ambition MR system with BlueSeal magnet thatoffers helium-free-for-life operati

99、on;our Azurion suite of interventional cardiologysolutions;our IntelliVue MX750 and MX850 patient monitors and MCOT ambulatory cardiacePatch offering comprehensive monitoring capabilities across sites of care;and our multi-vendor,multi-modality,multi-site Radiology Operations Command Center virtuali

100、zedimaging solution.While we continue to invest significantly in innovation,we are making a number ofimportant changes to increase the impact of our patient-and people-driven innovation andgenerate better returns.Moving forward,we will focus our resources on a smaller numberof projects and products

101、with greater potential for impact.We will scale and accelerateinnovations,driven by the business and supported by rightsized Group research,withpatient safety,quality and sustainability at the core of design.By bringing our centralinnovation activities into the heart of the businesses,we are bringin

102、g our system andsoftware innovation closer to our customers.Focus on improved executionThe key driver for our performance improvement is improved execution grounded in threedecisive actions:1.patient safety and quality:putting this at the heart of(business)innovation,elevatingthe function to Executi

103、ve Committee level,and embedding it in our culture,e.g.bygiving all employees dedicated patient safety and quality objectives;2.supply chain reliability:moving from a centralized one size fits all supply chainstructure to a more agile,dedicated end-to-end set-up per business,and pruning andredesigni

104、ng products;3.a simplified operating model:end-to-end businesses with single accountability workingin a leaner,more agile way,guided by patient-and people-centricity and accountableleadership with empowered teams.Our ambitionWith our global reach,market leadership positions,deep clinical and technol

105、ogical insights,and customer-centric,patient-and people-focused innovation capability,we believe Philipsis well placed to create further value in a changing health and care world.We aim to improve the lives of 2 billion people a year by 2025,including 300 million inunderserved communities,rising to

106、2.5 billion and 400 million respectively by 2030.This isone of the comprehensive set of commitments we have deployed across all theEnvironmental,Social and Governance(ESG)dimensions that help guide the execution ofour strategy and support our contribution to UN Sustainable Development Goals 3(Ensure

107、healthy lives and promote well-being for all at all ages),12(Ensure sustainable consumptionand production patterns)and 13(Take urgent action to combat climate change and itsimpacts).We strive to deliver superior,long-term value to patients,customers,consumers andshareholders,while acting responsibly

108、 towards our planet and society,in partnership withour stakeholders.We believe that,executed with rigor,discipline and quality,the strategicimperatives outlined above,in combination with a relentless focus on execution,will put usback on track for a future of progressive value creation with sustaina

109、ble impact.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statem

110、ents12Further information13ESG statements11How we create value with sustainable impact3.2Based on the International Integrated Reporting Council framework,we use various resources to create value with sustainable impact for our stakeholders.Resource inputsHumanEmployees 77,233,120-plus nationalities

111、,39%femalePhilips University 1,344,956 courses,1,880,416 hours,1,009,459 training completions32,742 employees in growth geographiesFocus on Inclusion&DiversityIntellectualInvested in R&D EUR 2.1 billion(Green InnovationEUR 168 million)Employees in R&D 11,690FinancialEquity EUR 13.3 billionNet debt*)

112、EUR 7.0 billionManufacturingEmployees in production 39,742Industrial sites 23,cost of materials used EUR 4.3billionTotal assets EUR 31 billionCapital expenditures on property,plant andequipment EUR 444 millionNaturalEnergy used in manufacturing 338.1 gigawatt hoursWater used 677,632 m3Closing the lo

113、op on all our professional medicalequipment by 2025SocialPhilips FoundationStakeholder engagementVolunteering policyValue outcomesHumanEmployee Engagement Index 77%favorableSales per employee EUR 230,817Safety 172 Total Recordable CasesIntellectualNew patent filings 920Royalties EUR 419.0 million171

114、 design awardsFinancialComparable sales growth*)(2.8)%Adjusted EBITA*)as a%of sales 7.4%Free cash flow*)EUR(961)millionManufacturingEUR 12.1 billion revenues from goods soldNatural71.7%Green/EcoDesigned Revenues18%revenues from circular propositionsNet CO2emissions from own operations down tozero ki

115、lotonnes62,000 tonnes(estimated)materials used to putproducts on the marketWaste 22,802 tonnes,of which 91%repurposedSocialBrand value USD 12.8 billion(Interbrand)Partnerships with UNICEF,Red Cross,Amref andAshokaSocietal impactHumanEmployee benefit expenses EUR 6,952 million,all staffpaid at least

116、a Living WageAppointed 71%of our senior positions from internalsources30%of Leadership positions held by womenIntellectualAround 55%of revenues from new products andsolutions introduced in the last three yearsApproximately 70%of sales from leadership positionsFinancialMarket capitalization EUR 12 bi

117、llion at year-endLong-term credit rating A-1,Baa12,BBB+3*)Dividend EUR 741 millionManufacturing100%electricity from renewable sourcesNaturalEnvironmental impact of Philips operations up to EUR128 millionAll 23/23 industrial sites Zero Waste to Landfill atyear-end 2022Updated CO2reductions approved b

118、y the ScienceBased Targets initiativeSocial1.81 billion Lives Improved,of which 202 million inunderserved communities(including 2.2 million viaPhilips Foundation)459,000 employees impacted at suppliersparticipating in the Beyond Auditing programTotal tax contribution EUR 3,469 million(taxes paid/wit

119、hheld)Income tax benefit EUR 113 million;the effectiveincome tax rate is 6.5%Non-IFRS financial measure.For the definition and reconciliation of the most directly comparable IFRSmeasure,refer to Reconciliation of non-IFRS information,starting on page 246.*)*)1Fitch,2Moodys,3Standards&PoorsContents1M

120、essage from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further informa

121、tion13ESG statements12Materiality analysis3.3We identify the Environmental,Social and Governance topics which we believe have thegreatest impact on our business and the greatest level of concern to stakeholders along ourvalue chain,for instance patient safety and quality.We do this through a multi-s

122、takeholderprocess.Assessing these topics enables us to prioritize and focus upon the most materialtopics and effectively address these in our policies,programs and targets.We do this withreference to the GRI standard and identify and assess impacts on an ongoing basis,forexample through discussions

123、with our customers,suppliers,investors,employees,peercompanies,social partners,regulators,NGOs,and academics.We also conduct a benchmarkexercise,carry out trend analysis and run media searches to provide input for our materialityanalysis.GRI has not yet published a sector standard for the healthcare

124、 industry.Philipsimpact on society at large is covered through our Lives Improved metric and theEnvironmental Profit&Loss account,as well as a number of other KPIs addressed inEnvironmental,Social and Governance,starting on page 45.Similar to 2021,we used an evidence-based approach to materiality an

125、alysis,powered by athird-party AI-based application.The application allows automated sifting and analysis ofmillions of data points from publicly available sources,including corporate reports,mandatory regulations and voluntary initiatives,as well as news.In our 2022 materialityanalysis,we identifie

126、d a list of topics that are material to our businesses.With this data-driven approach to materiality analysis we have incorporated a wider range of data andstakeholders than was ever possible before and managed to get an evidence-basedperspective on regulatory,strategic and reputational risks and op

127、portunities.Topics wereprioritized through a survey sent to a large and diverse set of internal and externalstakeholders,combined with input from the application.Public health risks emerged as a new material topic in 2020,as a result of the COVID-19pandemic,and it was assessed as a material topic in

128、 2022 as well.Changes in 2022On the external importance axis,the most significant increases compared to 2021 wereSustainable value creation,Geopolitical events,Responsible and Resilient Supply Chains,Talent&development,and Energy efficiency.On the internal importance axis,there weresignificant incre

129、ases on Pollution,Governance,Access to(quality and affordable)care,Competition&market access,and Talent&development.Double materialityAfter completing the regular materiality analysis,we completed a preliminary doublemateriality analysis,in preparation for the upcoming requirements of the EU Corpora

130、teSustainability Reporting Directive(CSRD).The double materiality analysis addresses bothfinancial materiality(the impact of society on Philips)as well as impact materiality(theimpact of Philips on society):we only included the high and medium material topics listedabove.The data sources used for th

131、e financial materiality include corporate reports,mandatory regulations with sanctions,voluntary initiatives by e.g.central banks,andSustainability Accounting Standards Board(SASB)accounting metrics.For impactmateriality,we included sustainability data from corporate reports or sustainability report

132、s,coverage in the news and voluntary initiatives and regulation.The results of the doublemateriality analysis are depicted below.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management

133、7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG statements13From the financial materiality analysis,the topics that ranked highest were:(1)from theenvironmental topics,Circular economy,and Climate ch

134、ange;(2)from the social topics,Fair&inclusive workplace,Employee well-being,health&safety,and Responsible&resilientsupply chains;and(3)from the governance topics,Business ethics&General BusinessPrinciples,Big data&privacy,and Product responsibility&safety.From the impact materiality analysis,the top

135、ics that ranked the highest were:(1)from theenvironmental topics,Climate change,and Energy efficiency;(2)from the social topics,Public health risks and Employee well-being,health&safety,and Fair&inclusive workplace;and(3)from the governance topics,Big data&privacy and Innovation&research.Thesetopics

136、 are all covered in more detail in the Annual Report 2022 and monitored regularly.The outcome of the double materiality assessment did not result in any significant changesin the material topics identified.The results of our materiality assessment have been reviewed and approved by the PhilipsESG Co

137、mmittee and will be used to prepare for the upcoming EU legislation.For more information on materiality,refer to Material topics and our focus,starting on page267.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Soc

138、ial and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG statements142022Diagnosis&Treatment51%Connected Care25%Personal Health20%Other4%Our businesses3.4Our reporting struct

139、ure in 2022Koninklijke Philips N.V.(Royal Philips)is the parent company of the Philips Group.In 2022,the reportable segments were Diagnosis&Treatment businesses,Connected Carebusinesses,and Personal Health businesses,each having been responsible for themanagement of its business worldwide.Additional

140、ly,Royal Philips identifies the segmentOther.Total sales by reportable segmentPhilips GroupOur reporting structure in 2023 and beyondAs announced on January 30,2023,Philips is changing its operating model to end-to-endbusinesses with single accountability.In 2023,the businesses will be as follows.Di

141、agnosis&Treatment businesses in 20223.4.1Our Diagnosis&Treatment businesses create value through their unique portfolio ofinnovative solutions consisting of systems,smart devices,software and services,poweredby AI-enabled informatics that support precision diagnosis and minimally invasivetreatment i

142、n therapeutic areas such as cardiology,peripheral vascular,neurology,surgery,and oncology.With these solutions,we enable our customers to realize the full potential ofthe Quadruple Aim better health outcomes,improved patient and staff experience,andlower cost of care.Serving diagnostic enterprise im

143、aging markets globally,we see significant opportunity toenable precision diagnosis while at the same time supporting adjacent needs for careorchestration across care pathways and increasing departmental productivity.We do thisthrough smart diagnostic systems,connected workflow solutions,integrated d

144、iagnosticsand pathway informatics,driving enterprise-wide operational efficiency and helpingclinicians to provide an early and definitive diagnosis,enabling them to select tailored carepathways with predictable outcomes for every patient,both inside and outside the hospital.Contents1Message from the

145、 CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG state

146、ments152022Diagnostic Imaging41%Ultrasound18%Enterprise Diagnostic Informatics8%Image Guided Therapy33%We also provide integrated solutions combining imaging systems and diagnostic andtherapeutic devices,which optimize interventional procedures to deliver more effectivetreatment,better outcomes and

147、higher productivity.Building upon our leading-edge ImageGuided Therapy System Azurion,we continue to innovate,optimizing clinical andoperational lab performance through advances in workflow and integration for routineprocedures,and expanding the role of image-guided interventions to treat new groups

148、 ofpatients such as those with complex diseases including stroke,lung cancer and spinedisorders.We are also innovating the way we engage with our customers,using newbusiness models across different care settings,including out-of-hospital settings such asoffice-based labs and ambulatory surgical cent

149、ers,which offer clear clinical,financial andoperational benefits.In 2022,Philips completed the acquisition of Vesper Medical Inc.a US-based medicaltechnology company that develops minimally-invasive peripheral vascular devices.VesperMedical will further expand Philips portfolio of diagnostic and the

150、rapeutic devices with anadvanced venous stent portfolio for the treatment of deep venous disease.In 2022,the Diagnosis&Treatment segment consisted of the following areas of business:Diagnostic Imaging:Magnetic Resonance Imaging(MRI),with helium-free-for-lifeoperations,bundled with associated softwar

151、e to streamline workflows,optimizediagnostic quality,and improve patient experience;X-ray systems,together withassociated software to streamline workflows and optimize diagnostic quality;advancedand efficient Computed Tomography(CT)systems and software,including detector-based Spectral CT and molecu

152、lar and hybrid imaging solutions for nuclear medicineUltrasound:echography solutions focused on diagnosis,treatment planning andguidance for cardiology,general imaging,obstetrics/gynecology,and point-of-careapplications,as well as proprietary software capabilities to enable advanced diagnosticsand i

153、nterventions,and remote capabilities to enable tele-ultrasound operations andtrainingEnterprise Diagnostic Informatics:a suite of integrated multivendor products andservices that deliver a comprehensive platform designed to connect clinical data andoptimize workflows around every step in the patient

154、s journey across a range ofdiagnostic(radiology,point-of-care,laboratory)and clinical(oncology,cardiology,neurology)service linesImage Guided Therapy:integrated interventional systems that combine informationfrom imaging systems,interventional devices,navigation tools and patient healthrecords to pr

155、ovide interventional staff with the control and information they need toperform procedures efficiently;interventional diagnostic and therapeutic devices to treatcoronary artery and peripheral vascular diseaseTotal sales by businessDiagnosis&TreatmentRevenue is predominantly earned through the sale o

156、f products,leasing,customer servicesfees,recurring per-procedure fees for disposable devices,and software license fees.Forcertain offerings,per-study fees or outcome-based fees are earned over the contract term.Sales channels are a mix of a direct sales force,especially in all the larger markets,thi

157、rd-partydistributors and an online sales portal.This varies by product,market and price segment.Oursales organizations have an intimate knowledge of technologies and clinical applications,aswell as the solutions necessary to solve problems for our customers.Under normal circumstances,sales at Philip

158、s Diagnosis&Treatment businesses are generallyhigher in the second half of the year,largely due to the timing of customer spendingpatterns.At year-end 2022,Diagnosis&Treatment had around 33,000 employees worldwide.2022 business highlightsPhilips received FDA clearance to market its new 7700 3.0T MR

159、system,which features anenhanced gradient system for Philips highest image quality to support a precision diagnosis.Philips also received FDA clearance for its SmartSpeed MR acceleration software,adding AIdata collection algorithms to Philips existing Compressed SENSE MR engine for higherimage resol

160、ution with three times faster scan times and virtually no loss in image quality.By combining the Spectral CT 7500 scanner with the Azurion with FlexArm image-guidedtherapy system,Philips has developed a fully integrated hybrid angio CT suite solution forsingle-room,single-session diagnosis and treat

161、ment in areas such as oncology,stroke,andtrauma care.In radiotherapy,the AI-enabled Philips MR for Calculating Attenuation(MRCAT)Head andNeck radiotherapy application expands the range of MR-only workflows for cancer patients,advancing comprehensive and personalized cancer care through precision onc

162、ologysolutions.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial st

163、atements12Further information13ESG statements16Philips expanded its leading ultrasound portfolio with the FDA market clearance for its newUltrasound 5000 Compact system to deliver cart-based premium image quality in compactform for point-of-care,cardiology,general imaging,and obstetrics and gynecolo

164、gyapplications.Building on Philips leading position in interventional cardiology solutions,the companylaunched the latest version of its EchoNavigator image-guidance tool,which integrates liveultrasound,interventional X-ray imaging and advanced 3D heart models to helpinterventional teams treat struc

165、tural heart disease with greater ease and efficiency.To improve outcomes for patients undergoing endovascular treatment,physicians now haveaccess to advanced new 3D image-guidance capabilities through Philips Zenition mobile C-arm system,which offers enhanced clinical accuracy and efficiency.Philips

166、 is successfully expanding into interventional oncology with the installation of itsinnovative lung cancer diagnosis and treatment solution Lung Suite in hospitals in Belgium,France,Israel,and the UK.Based on Philips Azurion,this solution enhances the accuracy ofbiopsy procedures and provides a ther

167、apy option for immediate treatment of early-stagelung cancer patients.Inferior Vena Cava(IVC)filters are used to treat patients with venous thromboembolism,inwhich blood clots form in the deep veins of the leg and groin and can travel through thecirculatory system,but research has shown that they ma

168、y have long-term complications.Inthe United States,the first patients were successfully treated for Inferior Vena Cava(IVC)filter removal using Philips CavaClear solution the only FDA-cleared solution for advancedIVC filter removal.Connected Care businesses in 20223.4.2The Connected Care businesses

169、aim to connect and elevate care for all.Philips connectspatients and caregivers across care settings,delivering clinical,operational and therapeuticsolutions that help our customers address the Quadruple Aim of better health outcomes,improved patient and staff experience,and lower cost of care.After

170、 the years of the COVIDpandemic,which has accelerated the digital transformation of healthcare,in 2022 thevolatile global economic situation put additional pressure on customer budgets andworsened trends such as staff shortages,as well as increasing the need for solutions thatenable more effective,s

171、ustainable and convenient care in hospital,clinics and the home.Philips Sleep&Respiratory Care business in particular faced multiple operational,regulatoryand supply-chain challenges in 2022,but action has been taken to address these through thedecision to establish Sleep&Respiratory Care as an orga

172、nization with end-to-endaccountability,spanning product creation through to customer fulfillment(pending theoutcome of consultation with workers councils in a number of countries).There has been areset to put patient safety front and center in everything we do,and we believe that theimplementation o

173、f a new simplified organization,which began in 2022,will help to achievethis,as well as to improve productivity and increase agility.For information about the PhilipsRespironics recall and remediation effort,please refer to Quality&Regulatory and patientsafety,starting on page 70.With clinical depth

174、 and discovery,Philips Connected Care technologies help to cultivate amore accurate and complete view of the patient that drives better health and care.Thecombination of advanced technological solutions and a consultative approach allows Philipsto be an effective partner to its customers in their di

175、gital transformation,both across theenterprise and at the level of the individual clinician,nurse and patient.The role ofConnected Care is to collect,connect,analyze and communicate data to provide insightsand clinical decision support that help to improve outcomes and drive productivity.To help ena

176、ble care delivery across the health continuum and help our customers embracehealthcares digital transformation,the Connected Care businesses continue to step upplatform investments that span three key domains:Acute Patient Management:in-hospital continuous monitoring and workflow solutionsfueled by

177、advanced interoperability and patient data insightsAmbulatory Patient Care Management:ambulatory and home-based monitoring anddiagnosis solutions and services supporting the patient journeyEnterprise Informatics Management:turning data insights into decision support andproductivity tools.Philips pla

178、tforms aggregate and leverage information from clinical devices,patient andhistorical data to support care providers in patient engagement,diagnostics,(ambulatory)patient monitoring and(clinical)therapy solutions.In January 2022,Philips completed the acquisition of Cardiologs,a France-based medicalt

179、echnology company focused on transforming cardiac diagnostics using artificialintelligence(AI)and cloud technology.Cardiologs is already further strengthening Philipscardiac monitoring and diagnostics offering with innovative software technology,electrocardiogram(ECG)analysis and reporting services.

180、Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Furth

181、er information13ESG statements172022Hospital Patient Monitoring47%Emergency Care5%Sleep&Respiratory Care28%Connected Care Informatics20%In 2022,the Connected Care segment consisted of the following areas of business:Hospital Patient Monitoring:This business delivers acute patient management solution

182、sto improve clinical and patient outcomes and achieve operational and economicefficiencies.Leveraging a strong presence in the intensive care unit(ICU),Hospital PatientMonitoring solutions enhance customers experience and improve patient outcomeswith seamless patient data monitoring from admission t

183、o discharge,and by turningpatient data into clinical insights that are actionable at the right time and specific totargeted care settings.Emergency Care:Emergency Care propositions play a critical role in connected acutecare management,both inside and outside the hospital,including cardiac resuscita

184、tion(e.g.AEDs)and emergency care solutions(devices,services,and digital/data solutions)for professional and consumer applications.Sleep&Respiratory Care:Working closely with clinical partners and Durable/HomeMedical Equipment providers,Philips Respironics provides sleep and respiratory solutionsto c

185、ustomers,clinicians and patients.This extends from ambulatory patient care solutionsfor obstructive sleep apnea,to solutions encompassing diagnostics,people-centrictherapy,cloud-based connected propositions and care management services for patientswith COPD(Chronic Obstructive Pulmonary Disease)and

186、respiratory conditions.HospitalRespiratory Care provides invasive and non-invasive ventilators for acute and sub-acutehospital environments;Home Respiratory Care supports chronic care management in thehome.Connected Care Informatics:Comprised of three core business units,this businessfocuses on clin

187、ical analytics solutions that provide actionable insights to optimize patientdata.The fully integrated Electronic Medical Record&Care Management business enablescentralized management of clinical,organizational and operational processes,andvirtual care delivery propositions,including remote patient

188、management and real-timemonitoring in acute care.The Tele-ICU program continues to play a pivotal role,enablingclinicians and nursing staff to remotely monitor a scalable number of ICU beds from acentral monitoring facility with predictive analytics,enabled by Philips HealthSuitePlatform.The Clinica

189、l Data Services business formerly Capsule Technologies,acquired by Philips inearly 2021 offers medical device and data integration across the enterprise forcontinuous,vendor-neutral data capture from more than 1,000 device models supportedby insightful clinical decision support and analysis.Our Ambu

190、latory Monitoring&Diagnostics business comprised of BioTelemetry,whichPhilips acquired in 2021 provides industry-leading patient care management inambulatory and home care settings in North America and beyond through a suite ofcardiac diagnostic and monitoring solutions to identify heart rhythm diso

191、rders supportedby AI algorithms that orchestrate workflows and services across care settings.Theacquisition of Cardiologs complements this capability with a vendor-neutral heartdisorder screener and ECG analysis applications,based on machine learning algorithms.Total sales by businessConnected CareI

192、n most of the Connected Care businesses,revenue is earned through the sale of productsand solutions,customer services fees and software license fees.Where bundled offeringsresult in solutions for our customers,or offerings are based on the number of people beingmonitored,we see more usage-based earn

193、ings models.In the patient care managementbusinesses(Ambulatory Monitoring&Diagnostics and Sleep&Respiratory Care),revenue isgenerated through clinical services,product sales and through rental models,wherebyrevenue is generated over time.Sales channels include a mix of a direct salesforce,partly pa

194、ired with an online sales portaland distributors(varying by product,market and price segment).Sales are mostly driven by adirect salesforce with an intimate knowledge of the procedures that use our integratedsolutions smart devices,systems,software and services.Philips works with customers andpartne

195、rs to co-create solutions,drive commercial innovation and adapt to new models suchas monitoring-as-a-service and software-as-a-service.Sales at Philips Connected Care businesses are generally higher in the second half of theyear,largely due to customer spending patterns.However,the Philips Respironi

196、cs voluntaryrecall notification in the Sleep&Respiratory Care business in June 2021 had a negativeimpact on sales throughout 2022.At year-end 2022,Connected Care had around 17,000 employees worldwide.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Fi

197、nancial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG statements182022Oral Healthcare37%Mother&Child Care11%Personal Care52%2022 busin

198、ess highlightsPhilips offerings improving clinical workflow and alarm management in critical careenvironments,as well as its contributions to a quieter healing environment in intensive careunits,resonated well with customers.Philips expanded its Advanced Life Support activities across international

199、markets andGreater China.In Greater China,Philips partnered to drive localization of its EMR Tasy offering in order tobe locally relevant for the China market.Philips continues to successfully expand into ambulatory care.Newly published researchvalidated that Philips Mobile Cardiac Outpatient Teleme

200、try(MCOT)is crucial in detectingarrhythmias and providing data that allows care teams to intervene quickly and decisively toprovide the optimal patient treatment.Underlining the clinical and economic value of remote cardiac patient monitoring,Philipsannounced new research demonstrating increased atr

201、ial fibrillation detection andsignificant cost savings using Philips mobile cardiac outpatient telemetry monitoring.Philips expanded its remote cardiac monitoring portfolio with a patch-based,clinical-gradeECG to improve patient recruitment,compliance and retention for clinical trials.Personal Healt

202、h businesses in 20223.4.3Our Personal Health businesses play an important role serving peoples needs in the areas ofhealthy living,prevention and home care delivering compelling value propositions toenable people to live a healthy life and proactively manage their own health.We aim to drive profitab

203、le growth through a focus on innovation across three key areas:Reaching more people through consumer-driven product and solutions innovationAccelerating online growth and engaging more people through an end-to-end digitalapproachExpanding our ecosystem through partnerships with leading retailers and

204、 scaling newbusiness modelsThe Personal Health segment consists of the following areas of business:Oral Healthcare:power toothbrushes for a range of price segments,from entry-levelbattery-operated toothbrushes for a young audience to premium,intuitive powertoothbrushes connected to the Sonicare app

205、with in-app coaching;brush heads,whichare also available as a subscription service;products for interdental cleaning and forteeth whiteningMother&Child Care:products to support parents and babies in the first 1,000 days,including infant feeding(breast pumps,baby bottles and sterilizers),connected ba

206、bymonitors and digital parental solutions(Pregnancy+and Baby+apps)Personal Care:grooming and beauty products ranging from entry-level to premium.Thegrooming portfolio includes shavers,OneBlade,groomers,trimmers and hair clippers,aswell as premium solutions with SkinIQ technology,in-app coaching for

207、a personalizedshave,and blade subscriptions.The beauty portfolio includes devices to support skincare,hair care and hair removal,including Lumea premium IPL hair removal devices andsolutions with the latest SenseIQ technology that sense and adapt for personalized care;also available through subscrip

208、tion models.Total sales by businessPersonal HealthThrough our Personal Health businesses,we offer a broad range of solutions in variousconsumer price segments to support people in proactively managing their health and well-being.Depending on the market,we offer an additional portfolio of locally rel

209、evantinnovations and adjust our range to increase accessibility.A notable aspect of ourcommercial strategy is driving increased direct-to-consumer relationships and sales throughour consumer communities and online store.About half of our Personal Health salesworldwide now take place online.We are le

210、veraging connectivity to offer new business models,partnering with other playersin the health ecosystem,e.g.insurance companies and healthcare professionals,with thegoal of extending opportunities for people to live healthily and prevent or manage disease.We are engaging consumers in their health jo

211、urney in new and impactful ways throughsocial media and digital innovation.For example,we strongly believe in the connection between good oral care and goodoverall health a belief underpinned by the World Health Organization(WHO),which in2021 adopted a stronger resolution on oral healthcare as part

212、of the drive towards universalContents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Compa

213、ny financial statements12Further information13ESG statements19health coverage.Good oral care is important for everyone.And since everyone is different,oral healthcare should also be personalized to each user to garner the best health outcome.Philips Sonicare,which celebrated its 30thanniversary in 2

214、022,offers a wide range ofsolutions for complete oral care:from intelligent and intuitive power toothbrushes tointerdental cleaning solutions and apps that help users to manage their complete oral careon a daily basis and give the option to share brushing data with their dental practitioners,putting

215、 personalized guidance at their fingertips.We also offer mobile solutions to support parents and parents-to-be for a more informed,more connected and healthier journey to parenthood.The Pregnancy+app and Baby+appoffer parents supportive content at every stage of their first 1,000-day journey.Pregnan

216、cy+also offers state-of-the-art,photo-realistic and interactive 3D fetal models to make theexperience even more exciting,with new,personalized content for each day of thepregnancy.As of year-end 2022,the Pregnancy+app and Baby+app combined have morethan 68 million downloads,more than 1.5 million dai

217、ly active users,and are available in 22languages.The companys wide portfolio of connected consumer health platforms leverages PhilipsHealthSuite Platform,a cloud-enabled connected health ecosystem of devices,apps anddigital tools that support personalized health and continuous care.The revenue model

218、 is mainly based on product sale at the point in time the products aredelivered to retailers and online platforms.We continue to increase revenue model diversityby expanding our new business models,including direct-to-consumer,subscriptions,try-and-buy offerings and services.The Personal Health busi

219、nesses experience seasonality,with higher sales around keynational and international events and holidays.At year-end 2022,Personal Health employed around 9,000 people worldwide.2022 business highlightsBuilding on the successful strengthening of the companys innovative power toothbrushesportfolio,ran

220、ging from entry-level to premium propositions,as well as targeted advertisingand promotion campaigns,Philips Oral Healthcare recorded continued market share gains inNorth America.Philips locally developed China power interdental cleaning innovation launched in Q1contributed to our leadership positio

221、n in overall market share(source:GfK).Building on its successful OneBlade platform,Philips introduced in Europe the newOneBlade 360,which leverages a new blade that adjusts to the curves of the face toenhance shaving comfort.The global roll-out is expected to start in 2023.Philips completed the glob

222、al introduction of its new Philips Shaver S9000 with SkinIQ withits launch in Japan,resulting in accelerated sales growth for this category and a 4.9(out of 5)consumer rating and review score within the first month.Philips continues the integration of SkinIQ technology by expanding into the S5000-S7

223、000ranges,increasing access to Philips proprietary technology that senses pressure andmovement to adapt and guides the users for a more efficient shave.In China,Philips launched its first premium portable shaver,which garnered 4.7-star ratings/reviews(source:Taobao)within the first month.Other3.4.4I

224、n our external reporting on Other we report on the items Innovation&Strategy,IPRoyalties,Central costs,and other small items.At year-end 2022,around 18,000 peopleworldwide were working in these areas.About OtherInnovation&StrategyInnovation&Strategy supports all businesses and markets within Philips

225、 in developing aninnovation roadmap and strategies to deliver on our customers needs and achieve ourgrowth and profitability ambitions.We innovate to help our customers and consumers overcome clinical challenges,and toimprove healthcare.We help our businesses to enable and accelerate innovation bypr

226、oviding deeply specialized expertise.This starts with strategy and entails cooperationbetween research,development,design,medical affairs,professional services,marketingand businesses in a multi-disciplinary fashion,from early exploration to first-of-a-kindofferings.We do so in the following ways:We

227、 actively participate in open innovation through relationships with academic,clinical,industrial partners and start-ups,as well as via public-private partnerships.We do so toincrease innovation speed and improve agility,to capture and generate new ideas,and insome cases to leverage third-party capab

228、ilities.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statement

229、s12Further information13ESG statements20We drive continuous improvement in the Philips product and solution portfolios.Innovation&Strategy improves the efficiency and effectiveness of innovation throughCenters of Excellence,such as Platform Modularity&Re-use,Data Science,ArtificialIntelligence(AI)an

230、d Internet of Things.We strive for breakthrough innovations that can help drive fundamental shift in thehealthcare industry,thereby supporting businesses to focus on selected must-win battles.We drive adoption of digital architecture and platforms,moving to cloud-basedSoftware-as-a-Service for infor

231、matics offerings,and excellence in Data Science and AI,aswell as software engineering.Industry best practices include creating and maintainingapplication-level software,modular and configurable system design and model-basedsystem engineering.We drive our HealthSuite Architecture to help unlock the p

232、ower of data and enablehealthcare professionals,patients and consumers.Its modular set of re-usable digitalcapabilities liberate,integrate and enable actionable insights on data from disparatesystems within a secure environment.We help secure patient safety and quality by participating in stage gate

233、 reviews from thestart of the idea-to-market(I2M)process.This is intended to ensure that patient safetyand quality aspects of Philips products and solutions match the expectations and criteriaof the end-users in the field.We engage with professional medical societies duringregular and ad hoc advisor

234、y boards to help us understand the criteria on patient safetyand quality related to medical devices.Together with the Regulatory function,wecontribute to clinical evaluation during pre-market risk assessments,post-marketsurveillance,and support any health hazards evaluations with expert advice.We le

235、verage the knowledge and expertise of our community of medical professionals.Activities include strategic guidance built on clinical and scientific knowledge,buildingand nurturing customer partnerships and growth opportunities,fostering peer-to-peerrelationships in relevant medical communities,drivi

236、ng co-innovation with customers,liaising with medical regulatory bodies,and supporting clinical and economic evidencedevelopment.We deploy our engineering capabilities to realize innovations that deliver on ourcustomers needs,advancing the Quadruple Aim of better health outcomes,improvedpatient and

237、staff experience,and lower cost of care.We drive innovation effectiveness and enable locally relevant solution creation at fourestablished innovation hubs:Eindhoven(Netherlands),Cambridge(USA),Bangalore(India)and Shanghai(China).These four hubs form a global network,together with theother smaller in

238、novation and research sites in their respective regions,to provide accessto each others capabilities to serve businesses,markets,and customers globally.We ensure that the user experiences of our innovations are inspiring,meaningful,people-focused,and locally relevant.A key enabler for this is an eng

239、aging anddifferentiating design language system(DLS)that is embedded in software,hardware,and services across our businesses.In 2022,Philips received a total of 171 awards fordesign excellence.During 2022,Innovation&Strategy started to refocus R&D to deliver a greater return oninvestments by being s

240、elective in our choice of innovations in which to invest.We stoppedprojects and reduced the workforce by 5%.As part of the strategy to create value withsustainable impact,resources will shift to the businesses to innovate closer to,and with,customers.IP RoyaltiesPhilips Intellectual Property&Standar

241、ds(IP&S)proactively pursues the creation of newIntellectual Property(IP)in close co-operation with Philips operating businesses andInnovation&Strategy.IP&S is a leading industrial IP organization providing world-class IPsolutions to Philips businesses to support their growth,competitiveness and prof

242、itability.Royal Philips IP portfolio currently consists of 56,000 patent rights,33,000 trademarks,114,000 design rights and 3,200 domain names.Philips filed 920 new patents in 2022,with astrong focus on the growth areas in health technology services and solutions.Philips earns substantial annual inc

243、ome from license fees and royalties.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 costsWe recharge the directly attributable part of the functional costs to the

244、businesses.Theremaining part is accounted for as central costs,and includes costs related to the ExecutiveCommittee and Group functions such as Strategy,Legal and Audit fees.Real estatePhilips is present in 75 countries globally and has its corporate headquarters in Amsterdam,Netherlands.Our real es

245、tate sites are spread around the globe,with key manufacturing andR&D sites in Europe,the Americas and Asia.In 2022,we relocated key offices in Budapest(Hungary),Carlsbad(USA)and Haifa(Israel),and manufacturing operations in Zhuhai(China).We invested in,amongst others,our R&Dand manufacturing sites i

246、n Bangalore(India),Pune(India),Plymouth(USA),Pittsburg(USA),Shenzhen(China)and Suzhou(China)to create an engaging work environment that fostersthe attraction and retention of the best talent.We have continued to drive productivity byoptimizing our footprint globally and reducing the number of sites

247、through post-acquisitionintegration programs,as well as by implementing our Future of Work concepts to supporthybrid working.We also announced that Philips headquarters will be moving to a newlocation in Amsterdam in 2025.Contents1Message from the CEO2Board of Management and Executive Committee3Stra

248、tegy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG statements21In line with our Environmental ESG commitments

249、 towards 2025,we continue to activelyoptimize our real estate portfolio.Having met our goal of bringing our site-related COemissions under 35 kilotons per year in 2020,we further reduced our CO emissions to 25kilotons in 2022.In addition,we reached 77%renewable energy in 2022,already exceedingour ta

250、rget of 75%by 2025.Anticipating the higher cost of energy for 2023,we redoubledour efforts on energy-saving measures.Combined with portfolio optimization,this resultedin a 5.3%reduction in 2022 total energy consumption compared to 2020 and 2021.Over 75%of our locations are leased properties,and we m

251、anage vacancy closely to ensurethe right level of space efficiency and flexibility to support our business dynamic.Our currentfacilities are adequate to meet the requirements of our present and foreseeable futureoperations.As expected,occupancy rates in our offices continued to be low in the first h

252、alfof 2022 in the aftermath of COVID-19.In the second half of 2022 we saw occupancystabilizing and we are currently evaluating options to right-size our office footprint,tofurther adopt task-based working principles,and to cater for meaningful presence ininspiring layout and workplace solutions.The

253、net book value of our land and buildings as ofDecember 31,2022,represented EUR 1,336 million;construction in progress represented EUR23 million.Our geographies3.5Our Markets3.5.1We address North America,Western Europe and other mature geographies,as well asGreater China and other growth geographies,

254、via three market groups North America,Greater China and International Markets which are active in more than 100 countriesworldwide.The Markets core objective is to understand local market/customer needs,to create andactivate the local marketing plans,to develop and manage the relationship with exist

255、ingand new customers,and to deliver orders.They act as the voice of the customer in thecreation of the suite of solutions strategy,bring relevant products and solutions to market,and ensure local(solution)delivery and service execution,as well as managing the(integral)go-to-market approaches to our

256、key customers and indirect channels all with the aim ofmaximizing long-term customer value and gaining market share.Macro-economic landscape in 20223.5.2In 2022,global economic activity slowed down compared to 2021,when the global economyrebounded strongly from a COVID-induced recession.Several fact

257、ors were at play.Firstly,there-opening of the economy for most of the world in 2021 has disrupted global supply chains.Secondly,previous loose monetary policy,combined with supply chain issues,resulted instrong inflationary pressures commencing towards the end of 2021.Thirdly,to combat highinflation

258、,central banks around the globe have embarked on aggressive monetary policytightening cycles.Consequently,global real GDP is estimated to have grown by 3.0%in2022,compared with the 6.0%estimated in 2021 for 2022.Looking ahead,Oxford Economicsexpects mild recessions for advanced economies in 2023,wit

259、h full-year global real GDPgrowth expected at just 1.3%.2022 highlights from our Market Groups3.5.3North AmericaIn North America,Philips continues to expand its leadership in long-term strategicpartnership,helping health systems like TriHealth,Prisma Health and the University HealthSystem of San Ant

260、onio to address interoperability challenges and standardize care acrosstheir networks.This includes entering into a 7-year agreement with Northwell Health,thelargest healthcare provider in the state of New York,to help standardize patient monitoring,drive interoperability,and lay the foundation for

261、a future-proof,enterprise-wide platform.Moreover,Philips has signed multi-year agreements to continue to expand virtualmonitoring and care with the US Department of Defense.Philips continues to innovate in its personal health business and has started selling PhilipsAvent breast pumps via Durable Med

262、ical Equipment(DME)providers to give parents theability to receive breastfeeding equipment and supplies that may be covered by their healthinsurance.Celebrating 30 years in business in 2022,Philips Sonicare leads the electricrechargeable toothbrush market in the US and Canada and is the most-recomme

263、ndedrechargeable toothbrush brand in the US.Philips Norelco remains the leading electric malegrooming brand in the US and Canada,reaching the next generation of young men with ournew OneBlade multi-purpose shaver.Philips continues to be recognized for its Inclusion and Diversity efforts in North Ame

264、rica,including being recognized by Forbes as one of their Best Employers for Diversity and BestEmployers for Women.Greater ChinaIn 2022 we continued to provide innovative health technology solutions in support ofChinas national health strategy,supplying national top hospitals,primary hospitals andpr

265、ivate hospitals with tailor-made solutions for their clinical and research needs.We partnered with national top hospitals Shanghai Ruijin Hospital and Sichuan HuaxiHospital on clinical research that leverages our cutting-edge health technologies,andhelped the 1st Affiliated Hospital of Guangzhou Med

266、ical University establish the largestsleep center in South China by providing consulting services,key equipment andsystems.We also provided Zhongshan-Jinshan Diabetic Foot Center with an integratedsolution comprised of laser ablation and ultrasound screening technology,and suppliedContents1Message f

267、rom the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ES

268、G statements22Hainan Dongfang Peoples hospital with high-end patient monitors and defibrillators foruse in acute and critical care.And we provided Suzhou Kowloon Hospital with a radiologysolution that included Ingenia Elition,Ingenia Ambition,Spectral CT and Azurion 7,anddelivered a cardiology and s

269、mart hospital solution to Jiangxi Cihuai Cardiovascular andCerebrovascular Hospital.In the consumer space,in line with the consistent Professional,Young and Premiumpositioning,we continue to accelerate local innovation to address the specific needs of localconsumers.In 2022,locally initiated product

270、s generated 20%of revenue.In addition,Philipswas recognized as a gold brand(most favored brand of consumers)in the Personal Healthcategory for the third consecutive year by China Business Weekly.With the aim of better serving the Chinese market,we established three Philips InnovationCenters in China

271、 to focus on local-for-local innovation in systems,products and software,and continue to drive made in China fulfillment for professional medical equipment.International MarketsIn our International Markets we strive to execute on a shared global vision whilst meetingthe unique local needs and circum

272、stances of our customers.Our goal is to elevate customerrelationships and move from being a trusted supplier of equipment,services and software toa transformational partner directly contributing to our customers long-term success.Tosupport this vision we have made great progress on leveling up our g

273、o-to-market model,developing scalable solutions and software,expanding fit-for-future capabilities,reinvestingrevenue to enable new business models,and establishing new partnerships.In International Markets,Personal Health showed top-line resilience in 2022.Growth wasstrongest in the Middle East,Tur

274、key&Africa,India and Japan,and overall our growthmarkets delivered double-digit growth.A major driver of growth in Middle East,Turkey&Africa came from activating GenZ consumers via social media and influencer marketingcampaigns on TikTok and other platforms,focusing on relevant GenZ propositions suc

275、h asOneBlade and Hair Care.In Japan,we successfully launched our latest Shaver series 9000with SkinIQ technology via a cut-through advertising campaign in Hokkaido and Kantoprefectures.This campaign targeted younger audiences and succeeded in increasing marketshares and distribution points.Philips e

276、ntered into many new customer partnerships,including the following:Philips entered into partnerships with healthcare providers in the UK and Germany to deliverits vendor-neutral Radiology Operations Command Center,which enables remotecollaboration between technologists,radiologists and imaging opera

277、tions teams acrossmultiple sites,to help increase productivity and expand access to MR-and CT-baseddiagnosis.In Germany,Philips signed a 10-year partnership agreement with the municipalhospital Stdtisches Klinikum Braunschweig,one of the countrys largest care providers,toprovide monitoring solutions

278、 and alarm management.In an interview with a Germanhealthcare magazine,Dr.Andreas Goepfert,CEO Braunschweig Clinic,commented:“Qualityof care is an important aspect that is safeguarded by such a partnership.Nowadays,it isdifficult to imagine successful economic operation in the healthcare sector in t

279、he mediumand long term without technology partners.”In the Netherlands,Philips signed a long-termagreement with the Rijnstate hospital to deliver a wide range of advanced ultrasounddevices for 17 different departments at multiple locations of the hospital.The agreementinvolves ultrasound devices and

280、 services for cardiological,vascular or radiologicalexaminations,OB/GYN,as well as mobile devices for the emergency department.In Spain,we provided computed tomography,magnetic resonance and image-guidedtherapy solutions for several Spanish public hospitals as part of INVEAT,an impact initiativedriv

281、ing investment in high-technology equipment in the Spanish national health system.InFinland,Philips signed a 10-year agreement with Oulu University Hospital to deliver thelatest Azurion image-guided therapy solutions,as well as maintenance,consultancy andfinancing services.In the SDA Imaging Center

282、in Chelm,Poland,Philips installed an MR 5300scanner with Ambient Experience technology,which combines images,sound and light tocreate an atmosphere that puts patients at ease and reduces the need to redo scans.InRomania,Philips is the trusted partner and supplier of medical equipment and solutions t

283、oTransylvania Hospital,a private medical initiative launched in September 2022.The medicaltechnology we provided includes an Azurion 7 biplane angiograph,an Ingenia 3T MRsystem,and an Affiniti 50 Doppler ultrasound.In Turkey,as part of a project supported bythe European Bank for Reconstruction and D

284、evelopment(EBRD),we installed 3,400 hospitalpatient monitors and 437 ultrasound systems across 250 different hospitals within a4-month window.The Philips team also trained over 3,000 clinicians and monitored usage.In Central Asia,we supplied equipment for Kazakhstans National Research Oncology Cente

285、rand two multi-modality projects,while in Uzbekistan we won a project to equip TashkentInternational Medical Clinic(TIMC)with advanced clinical technology solutions.In a 10-yearpartnership deal with the Cloud Nine hospital group in India,we connected 257 beds across26 tele-ICU locations.In addition,

286、some 2,000 Zenition C-arms and 500 Affiniti ultrasoundsystems were shipped from our manufacturing plant in Chakan.In Japan,Philips signed a 10-year agreement with a large university hospital for theexpansion of its eICU program for centralized,remote surveillance of high-risk ICUpatients.Philips and

287、 Thanh Vu Medic Hospital Vietnam signed a 10-year strategicpartnership agreement for which Philips is providing state-of-the-art imaging technology,informatics connectivity,10-year comprehensive service and 5-year structured financing.InFiji,Philips and Aspen Medical signed a 12-year strategic partn

288、ership agreement to supplyand integrate diagnostic imaging equipment and services for use in two public hospitals.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Bo

289、ard8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG statements23In Brazil,Philips joint venture to provide and operate imaging diagnostics in the state ofBahia via a Public-Private Partnership model continues to expand

290、 access to qualitydiagnostics and care for underserved populations,e.g.through the provision of a newreporting center and 12 imaging units placed in 12 hospitals.Also in Brazil,a two-yearElectronic Medical Record implementation at Fundao Hospitalar do Estado de MinasGerais(FEHMIG)will integrate 23 p

291、ublic hospitals in the state of Minas Gerais.In Argentina,Philips successfully participated in a tender for a turnkey solution providing high-endimaging equipment for 17 public hospitals.In Mexico,Philips secured a deal with GrupoAngeles to provide an extensive range of Diagnostic Imaging and Image

292、Guided Therapysolutions.Supply chain and procurement3.6Integrated Supply Chain3.6.1Philips runs an Integrated Supply Chain(ISC),which encompasses supplier selection andmanagement through procurement,manufacturing across all the industrial sites,logisticsand warehousing operations,customer installati

293、on,as well as demand/supply orchestration.When selecting and evaluating partners,we consider not only business metrics such asquality,on-time delivery performance and cost,but also environmental,social andgovernance factors.We use supplier classification models to identify critical suppliers,includi

294、ng those supplying materials,components and services that could influence thesafety and performance of our products and solutions.The Philips Supplier Quality Manual outlines Philips quality,regulatory,product,process andcustomer requirements.The standards outlined in this manual underpin agreements

295、between suppliers and Philips,and guide compliance with Philips quality standards.Addressing immediate challenges2022 continued to test the resilience of supply chains globally.The Russia-Ukraine warcontinues to put severe pressure on the commodity landscape and supply chains,and hascontributed to t

296、he sharp rise in energy and food prices and extreme inflation rates.Thiscame on top of a pre-war environment of low inventories and long lead times,with theaccompanying build-up of backlog orders.In addition,the Chinese governments zero-COVID policy in 2022 again led to outages and supply chain issu

297、es.Furthermore,Philips hasbeen hampered by an aging product portfolio with older technology(component designs)and a fragmented supplier landscape.As a result,our lead times to customers suffered,forwhich we are sorry and are working to take corrective actions.Under these market circumstances,the ISC

298、 functions priority was to endeavor to safeguardcontinuity of supply,with dedicated Procurement teams by modalities and types ofcommodities,so that Philips could continue to provide critical healthcare equipment andsolutions to our customers all over the world.For example,we have placed non-cancella

299、blesemiconductor orders for a 12-month horizon to ensure our place in the queue.At the sametime,we have intensified spot buys and alternate parts qualifications in partnership withResearch&Development.In parallel,we continue our advocacy towards the industry andgovernments on prioritizing supply for

300、 life-saving equipment.In 2022,extremely high energy costs,especially in Europe,and increasing labor costs drivenby inflation led to a significant rise in production/operational cost in our supply base.In thesecond half of the year,these same drivers led to a slowdown of demand,and spot prices forco

301、mmodities and energy started to come off from their historical peaks in the secondquarter.However,costs for production and materials remained at historical elevated levels.Specifically for electronic components,although the supply crunch has receded from itspeaks,distributor data suggest that shorta

302、ges will continue into 2023.For information about the Philips Respironics recall and remediation effort,please refer toQuality&Regulatory and patient safety,starting on page 70.Driving end-to-end supply chain reliability and agilityWhereas Philips supply chain organization historically delivered eff

303、iciencies through afunctional orientation,the above-mentioned factors required much greater agility for ourbusinesses,each having their own specific requirements.We are moving to a business andcustomer-centric orientation to address end-to-end visibility and improve reliability andoutcomes by implem

304、enting solutions that are tailored to specific business needs.Much like the rest of the industry,we remain exposed to inflation and the continuedgeopolitical tensions around the world.All of these challenges have reinforced our strategyfor a more regional vs global approach to our end-to-end network

305、 design.Philips has continued to progress the consolidation of its manufacturing footprint intoversatile multi-modality manufacturing sites that produce multiple product categories andare located within or near the regions they serve.We do this for enhanced scale,efficiencyand customer proximity,and

306、 to reduce our environmental footprint.While our site counthas continued to decrease,the number of locations equipped to make the same product isincreasing.Philips is using its multi-modality sites,in combination with contractmanufacturing partners,to regionally multi-source many of its products.Thi

307、s will increasethe resilience of our supply chain to manage future,unplanned disruptions and ensureaccess to public healthcare investment where local requirements exist in our largestmarkets.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial p

308、erformance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG statements242022Western Europe30%North America36%Other mature geographies6%Total mature g

309、eographies71%Growth geographies29%Philips Group100%We continue to make progress in transforming our warehousing and distribution operationsinto a more customer-centric and agile network.In 2022,we reduced our warehousingfootprint by 31%compared to 2021,essentially through consolidation and servicing

310、 ofmultiple businesses from a single location.On the logistics front,we have established long-term contracts with suppliers,with the aimof increasing reliability as well as secured costs and availability on contracted lanes.Wecontinue to explore and implement solutions to diversify transportation op

311、tions to increasereliability while reducing carbon emission and cost.Supplier spend analysis per region in%Philips GroupSupplier sustainability3.6.2Philips purpose to improve peoples lives applies throughout our value chain.An importantarea of focus for the Integrated Supply Chain is sustainability,

312、and we are actively workingon this together with our partners,whether these be component suppliers or energy orlogistics providers.Close cooperation with our suppliers not only helps us deliver healthtechnology innovations,it also supports new approaches that help us minimize ourenvironmental impact

313、 and maximize the social and economic value we create.Since 2003,our sustainability strategy has included dedicated supplier sustainabilityprograms.We have a direct(tier 1)business relationship with approximately 5,300 productand component suppliers and 17,100 service providers.In many cases,social

314、issues deeper inour supply chain require us to intervene beyond tier 1 of the chain.We want to make a difference through sustainable supply management and responsiblesourcing.This is more than just managing compliance it is about collaborating with oursupply partners to make a positive and lasting i

315、mpact.Therefore,the sustainabilityperformance of our suppliers is fully embedded in our procurement strategy and way ofworking.In 2022,we focused on further maximizing our positive impact deeper in the supply chain,strengthening our maturity-based approach to drive continuous improvement.Through the

316、Supplier Sustainability Performance program,we improved the lives of approximately459,000 workers in our supply chain(2021:430,000).We also launched new ways to engageour suppliers,performing deep-dives at second-tier suppliers and actively supporting ourstrategic partners to become more effective i

317、n their own supply chain engagementapproaches.In addition,our improvement program has been adopted by the Responsible BusinessAlliance under the name Responsible Factory Initiative.This program enables othercompanies to work on continuously improving their suppliers sustainability performancethrough

318、 the same methodology as Philips.Managing our large and diverse supply chain in a socially and environmentally responsibleway requires a structured and innovative approach,while being transparent and engagingwith a wide variety of stakeholders.In 2022,our programs focused specifically on improvingsu

319、ppliers sustainability performance,responsible sourcing of minerals,and reducing theenvironmental footprint of our supply base by driving the adoption of Science BasedTargets.Detailed information on our supplier sustainability programs is available in section Supplierindicators,starting on page 286

320、of this Annual Report.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Financial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company finan

321、cial statements12Further information13ESG statements25At a glanceFinancialperformanceGroup sales amounted to EUR 17.8 billion,with a 3%comparable sales*)decline due to operational andsupply chain challenges,lower sales in China,theconsequences of the Respironics field action,and theRussia-Ukraine wa

322、rThe order book at year-end 2022 was 10%higher thanat the end of 2021,ensuring a higher coverage for salesin 2023Net income amounted to a loss of EUR 1.6 billion;profitability affected by lower sales,cost inflation andimpairments,partly offset by pricing and productivitymeasuresOperating cash flow a

323、mounted to an outflow of EUR 0.2billion*)Non-IFRS financial measure.For the definition and reconciliation of the mostdirectly comparable IFRS measure,refer to Reconciliation of non-IFRS information.Contents1Message from the CEO2Board of Management and Executive Committee3Strategy and Businesses4Fina

324、ncial performance5Environmental,Social and Governance6Risk management7Supervisory Board8Supervisory Board report9Corporate governance10Group financial statements11Company financial statements12Further information13ESG statements26Financial performance4Abhijit Bhattacharya CFO Royal PhilipsOur financ

325、ial performance in 2022 was significantly challenged,largely due to supply issues,COVID-relatedconsequences,and the impact of the Respironics recall.As we look forward to 2023,we are taking firm actions tofocus on patient safety and quality,improve supply reliability and simplify the organization to

326、 increase agility andstructurally lower the cost base.”“Performance review4.1The year 2022Sales amounted to EUR 17.8 billion,an increase of 4%on a nominal basis.On acomparable basis*),sales declined 3%,due to operational and supply challenges,theCOVID situation in China,the consequences of the Respi

327、ronics field action,and theRussia-Ukraine war.Comparable sales*)showed a 1%decline in the Diagnosis&Treatment businesses,an 11%decline in the Connected Care businesses,and flat growthin the Personal Health businesses.Net income amounted to a loss of EUR 1,605 million,a decrease of EUR 4.9 billioncom

328、pared to 2021,mainly due to a charge of EUR 1.5 billion related to goodwill and R&Dimpairments in 2022 and the EUR 2.5 billion gain on the sale of Domestic Appliances in2021.In 2021,our subsidiary,Philips Respironics,initiated a voluntary recall notification in theUnited States and field safety noti

329、ce outside the United States for certain sleep andrespiratory care products.In 2022,as we took steps to accelerate the remediationprogram,we recorded an additional provision of EUR 250 million.By year-end 2022,around 90%of the production required for the delivery of replacement devices topatients ha

330、d been completed.Due to revisions to the financial forecast of Philips Respironics,Philips recorded a EUR 1.3billion non-cash charge in the third quarter for the impairment of goodwill of thisbusiness.Adjusted EBITA*)amounted to EUR 1,318 million,or 7.4%of sales,compared to 12.0%ofsales in 2021.The

331、Diagnosis&Treatment,Connected Care and Personal Health businessesshowed a decline in Adjusted EBITA*)margin,mainly due to the sales decline and costinflation,partly offset by pricing and productivity measures.Philips has initiated several productivity actions,including simplifying the organization t

332、ostreamline ways of working,increase agility and reduce operating expenses.Additionally,Philips is implementing several actions to enhance performance and productivity in thesupply chain,R&D and quality.Operating cash flow amounted to an outflow of EUR 173 million;free cash flow*)amounted to an outf

333、low of EUR 961 million.To further strengthen its liquidity position and optimize its debt maturity profile,Philipssecured a EUR 1 billion credit facility and conducted a liability management exercise,which reduced the debt repayment profile for the period 2023 to 2025 from EUR 3.2 to2.0 billion and increased the average maturity on bonds by 1.3 years to 7.9 years.Contents1Message from the CEO2Boar