Interests in entities

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

  • Interests in subsidiaries
  • Investments in associates

Interests in subsidiaries

Wholly owned subsidiaries

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

Philips Group
Interests in materially wholly owned subsidiaries in alphabetical order
2014
Legal entity name
Principal country of business
Invivo Corporation
United States
Philips (China) Investment Company, Ltd.
China
Philips Consumer Lifestyle B.V.
Netherlands
Philips Domestic Appliances and Personal Care Co
China
Philips Electronics China B.V.
Netherlands
Philips Electronics Japan, Ltd.
Japan
Philips Electronics North America Corporation
United States
Philips Electronics UK Limited
United Kingdom
Philips GmbH
Germany
Philips Lighting Poland S.A.
Poland
Philips Lumileds Lighting Company Sdn. Bhd.
Malaysia
Philips Medical Systems Technologies Ltd.
Israel
Philips Nederland B.V.
Netherlands
Philips Oral Healthcare, Inc.
United States
Philips Respironics GK
Japan
Philips Societa per Azioni
Italy
Philips Ultrasound, Inc.
United States
RI Finance, Inc.
United States
RIC Investments, LLC
United States

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Not wholly owned subsidiaries

In total, 21 consolidated subsidiaries are not wholly owned by the Company. Among the consolidated legal entities is Philips Lighting Saudi Arabia created after the acquisition of General Lighting Company (GLC) where the Company owns 51% of the voting power. GLC was acquired on September 2, 2014. The Company controls this entity. The sales, income from operations and net income of this entity is less than 1% of the consolidated financial data. The non-controlling interest of 49% represents an amount of EUR 86 million as per December 31, 2014. The non-controlling interest related to GLC at the acquisition date was measured at the holders’ proportionate interest in the recognized amount of the identifiable net assets, which means that goodwill recognized by Philips in this transaction relates only to the 51% interest acquired.

Also among the consolidated legal entities is Philips India Limited where the Company owns 96% of the voting power. The non-controlling interest of 4% represents an amount of EUR 8 million as per December 31, 2014.

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

Investments in associates

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

The changes during 2014 are as follows:

Philips Group
Investments in associates in millions of EUR
2014
 
Total investments
Balance as of January 1, 2014
161
Changes:
 
Acquisitions/additions
10
Sales/Redemption
(1)
Reclassifications
(8)
Share in income
30
Dividends declared
(41)
Translation and exchange rate differences
16
Transfer to assets classified as held for sale
(10)
Balance as of December 31, 2014
157

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Included in the line acquisitions/additions is an investment of EUR 6 million where the Company owns less than 20% in the capital of the underlying company but is able to exercise significant influence and is therefore accounted for as an Investment in associate.

During 2014 the Company’s shareholding in one of its investments in associates was diluted and subsequently an amount of EUR 8 million was reclassified to available-for-sale financial assets, this movement is shown in the reclassifications line in the table above. The dilution gain of EUR 32 million is recognized in Results relating to investments in associates.

The Company owns three equity interests which represent more than 20% in the capital of the underlying companies. With respect to these equity interests, the Company cannot exercise significant influence based on governance agreements concluded among shareholders. These equity interests are accounted for as Other non-current financial assets. In 2014, the Company’s share in net income of these entities was insignificant.

Summarized information of investments in associates

Unaudited summarized financial information on the Company’s most significant investments in associates, on a combined basis and not adjusted for the percentage of ownership held by Philips, is presented below. It is based on the most recent available financial information.

Included from April 2012 until December 31, 2013 is the 30%-interest in TP Vision Holding which includes the former Philips Television business.

Philips Group
Summarized income statement of investments in associates in millions of EUR
2012 - 2014
 
2012
2013
2014
Net sales
2,534
2,180
341
Income before taxes
(7)
(243)
126
Income taxes
2
12
(37)
Net income
(5)
(231)
89
Total share in net income of associates recognized in the Consolidated statements of income
(5)
5
30

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Philips Group
Summarized net asset value of investments in associates in millions of EUR
2013 - 2014
 
2013
2014
Current assets
1,368
584
Non-current assets
412
190
Total assets
1,780
774
Current liabilities
(1,327)
(360)
Non-current liabilities
(278)
(45)
Net asset value
175
369
Investments in associates included in the Consolidated balance sheet
161
157

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