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Rudy ProvoostCEO of Philips Lighting
Philips Lighting Lighting
Strategy
2
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
3
Philips Lighting ndash
strategic cornerstone
Philips Healthcare Philips Cons LifestylePhilips Lighting
2007
Sales ( euro B) 61
Comp growth 6
EBITA ( euro M) 722
as of sales 119
Headcount 54323
RampD 45
NOC ( euro B) 39
Mission
We understand peopleand improve the quality of their lives with lighting
Vision
We lead by setting the pace of the the lighting industry
4
Systems amp LuminairesElectronics amp ControlsSSL Sources amp Modules
Philips Lighting -
key acquisitions
39 7561
55 515 27 1805 38 B788
TotalAcquisitions
TIRPhotonicsLumileds Bodine PLI
2005 2006 2007
CK
2008
LTI Genlyte
bull
Genlytebull
Color Kineticsbull
Partners in Lightingbull
LTI
bull Bodinebull TIR Systems
bull Lumileds
Over time
Over value chainIn EUR millions
5
Philips Lighting ndash
balanced portfolio
Business structure Geographic distribution
36
31
12
11Lamps
ConsumerLuminaires
5
ProfessionalLuminaires
Automotive ampSpec LightingApplications
LightingelectronicsLED
components
4
49 Applications 51 Components Light sources
) 2008) as if Genlyte would be consolidated2007
32 of Philips Lighting sales from emerging markets
Market segmentation
Homes
22
19
1513
13
84 6
Offices
OutdoorIndustry
Shops
TransportHospitality
Other
6
5 key segments cover82 of our market
LightingElectronics
17
4
35
WestEurope
KeyEmerging
OtherMature 29
OtherEmerging
NorthAmerica
15
6
Philips Lighting ndash
global leadership
L America Japan
Lamps
ConsumerLuminaires
LightingElectronics
Automotive
AsiaPacificN America TotalEurope
number 1 not in top 3number 2 or 3
Special L Applications
LED Components
Professional
Luminaires
7
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
8
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
9
Lighting market ndash
significant opportunities
From conventional light sources to solid state lighting
From component and product to applications and solutions focus
From incandescent bulbs to energy efficient lighting
10
Lighting market -
dynamic economic conditions
Building amp construction industry dynamics Energy amp commodity price dynamics
Philips Lighting revenues100
W-Eu
NA64
EmergingOth36
New40
Replacement24
Home
7Professional
20Other
13
Medium to High correlation with industry dynamics but with significant variances by country and segment
Home Residential Housing Professional Retail Office Industrial Hospitals Schools Hotels hellipOther Roadamp Tunnel City Beatification Sport amp Area AutomotivePhilips Lighting estimates
bull
Higher energy prices ndash
Transportndash
Manufacturingndash
hellip
bull
Increases in commodity prices ndash
Copperndash
Steelndash
hellip
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
2
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
3
Philips Lighting ndash
strategic cornerstone
Philips Healthcare Philips Cons LifestylePhilips Lighting
2007
Sales ( euro B) 61
Comp growth 6
EBITA ( euro M) 722
as of sales 119
Headcount 54323
RampD 45
NOC ( euro B) 39
Mission
We understand peopleand improve the quality of their lives with lighting
Vision
We lead by setting the pace of the the lighting industry
4
Systems amp LuminairesElectronics amp ControlsSSL Sources amp Modules
Philips Lighting -
key acquisitions
39 7561
55 515 27 1805 38 B788
TotalAcquisitions
TIRPhotonicsLumileds Bodine PLI
2005 2006 2007
CK
2008
LTI Genlyte
bull
Genlytebull
Color Kineticsbull
Partners in Lightingbull
LTI
bull Bodinebull TIR Systems
bull Lumileds
Over time
Over value chainIn EUR millions
5
Philips Lighting ndash
balanced portfolio
Business structure Geographic distribution
36
31
12
11Lamps
ConsumerLuminaires
5
ProfessionalLuminaires
Automotive ampSpec LightingApplications
LightingelectronicsLED
components
4
49 Applications 51 Components Light sources
) 2008) as if Genlyte would be consolidated2007
32 of Philips Lighting sales from emerging markets
Market segmentation
Homes
22
19
1513
13
84 6
Offices
OutdoorIndustry
Shops
TransportHospitality
Other
6
5 key segments cover82 of our market
LightingElectronics
17
4
35
WestEurope
KeyEmerging
OtherMature 29
OtherEmerging
NorthAmerica
15
6
Philips Lighting ndash
global leadership
L America Japan
Lamps
ConsumerLuminaires
LightingElectronics
Automotive
AsiaPacificN America TotalEurope
number 1 not in top 3number 2 or 3
Special L Applications
LED Components
Professional
Luminaires
7
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
8
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
9
Lighting market ndash
significant opportunities
From conventional light sources to solid state lighting
From component and product to applications and solutions focus
From incandescent bulbs to energy efficient lighting
10
Lighting market -
dynamic economic conditions
Building amp construction industry dynamics Energy amp commodity price dynamics
Philips Lighting revenues100
W-Eu
NA64
EmergingOth36
New40
Replacement24
Home
7Professional
20Other
13
Medium to High correlation with industry dynamics but with significant variances by country and segment
Home Residential Housing Professional Retail Office Industrial Hospitals Schools Hotels hellipOther Roadamp Tunnel City Beatification Sport amp Area AutomotivePhilips Lighting estimates
bull
Higher energy prices ndash
Transportndash
Manufacturingndash
hellip
bull
Increases in commodity prices ndash
Copperndash
Steelndash
hellip
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
3
Philips Lighting ndash
strategic cornerstone
Philips Healthcare Philips Cons LifestylePhilips Lighting
2007
Sales ( euro B) 61
Comp growth 6
EBITA ( euro M) 722
as of sales 119
Headcount 54323
RampD 45
NOC ( euro B) 39
Mission
We understand peopleand improve the quality of their lives with lighting
Vision
We lead by setting the pace of the the lighting industry
4
Systems amp LuminairesElectronics amp ControlsSSL Sources amp Modules
Philips Lighting -
key acquisitions
39 7561
55 515 27 1805 38 B788
TotalAcquisitions
TIRPhotonicsLumileds Bodine PLI
2005 2006 2007
CK
2008
LTI Genlyte
bull
Genlytebull
Color Kineticsbull
Partners in Lightingbull
LTI
bull Bodinebull TIR Systems
bull Lumileds
Over time
Over value chainIn EUR millions
5
Philips Lighting ndash
balanced portfolio
Business structure Geographic distribution
36
31
12
11Lamps
ConsumerLuminaires
5
ProfessionalLuminaires
Automotive ampSpec LightingApplications
LightingelectronicsLED
components
4
49 Applications 51 Components Light sources
) 2008) as if Genlyte would be consolidated2007
32 of Philips Lighting sales from emerging markets
Market segmentation
Homes
22
19
1513
13
84 6
Offices
OutdoorIndustry
Shops
TransportHospitality
Other
6
5 key segments cover82 of our market
LightingElectronics
17
4
35
WestEurope
KeyEmerging
OtherMature 29
OtherEmerging
NorthAmerica
15
6
Philips Lighting ndash
global leadership
L America Japan
Lamps
ConsumerLuminaires
LightingElectronics
Automotive
AsiaPacificN America TotalEurope
number 1 not in top 3number 2 or 3
Special L Applications
LED Components
Professional
Luminaires
7
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
8
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
9
Lighting market ndash
significant opportunities
From conventional light sources to solid state lighting
From component and product to applications and solutions focus
From incandescent bulbs to energy efficient lighting
10
Lighting market -
dynamic economic conditions
Building amp construction industry dynamics Energy amp commodity price dynamics
Philips Lighting revenues100
W-Eu
NA64
EmergingOth36
New40
Replacement24
Home
7Professional
20Other
13
Medium to High correlation with industry dynamics but with significant variances by country and segment
Home Residential Housing Professional Retail Office Industrial Hospitals Schools Hotels hellipOther Roadamp Tunnel City Beatification Sport amp Area AutomotivePhilips Lighting estimates
bull
Higher energy prices ndash
Transportndash
Manufacturingndash
hellip
bull
Increases in commodity prices ndash
Copperndash
Steelndash
hellip
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
4
Systems amp LuminairesElectronics amp ControlsSSL Sources amp Modules
Philips Lighting -
key acquisitions
39 7561
55 515 27 1805 38 B788
TotalAcquisitions
TIRPhotonicsLumileds Bodine PLI
2005 2006 2007
CK
2008
LTI Genlyte
bull
Genlytebull
Color Kineticsbull
Partners in Lightingbull
LTI
bull Bodinebull TIR Systems
bull Lumileds
Over time
Over value chainIn EUR millions
5
Philips Lighting ndash
balanced portfolio
Business structure Geographic distribution
36
31
12
11Lamps
ConsumerLuminaires
5
ProfessionalLuminaires
Automotive ampSpec LightingApplications
LightingelectronicsLED
components
4
49 Applications 51 Components Light sources
) 2008) as if Genlyte would be consolidated2007
32 of Philips Lighting sales from emerging markets
Market segmentation
Homes
22
19
1513
13
84 6
Offices
OutdoorIndustry
Shops
TransportHospitality
Other
6
5 key segments cover82 of our market
LightingElectronics
17
4
35
WestEurope
KeyEmerging
OtherMature 29
OtherEmerging
NorthAmerica
15
6
Philips Lighting ndash
global leadership
L America Japan
Lamps
ConsumerLuminaires
LightingElectronics
Automotive
AsiaPacificN America TotalEurope
number 1 not in top 3number 2 or 3
Special L Applications
LED Components
Professional
Luminaires
7
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
8
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
9
Lighting market ndash
significant opportunities
From conventional light sources to solid state lighting
From component and product to applications and solutions focus
From incandescent bulbs to energy efficient lighting
10
Lighting market -
dynamic economic conditions
Building amp construction industry dynamics Energy amp commodity price dynamics
Philips Lighting revenues100
W-Eu
NA64
EmergingOth36
New40
Replacement24
Home
7Professional
20Other
13
Medium to High correlation with industry dynamics but with significant variances by country and segment
Home Residential Housing Professional Retail Office Industrial Hospitals Schools Hotels hellipOther Roadamp Tunnel City Beatification Sport amp Area AutomotivePhilips Lighting estimates
bull
Higher energy prices ndash
Transportndash
Manufacturingndash
hellip
bull
Increases in commodity prices ndash
Copperndash
Steelndash
hellip
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
5
Philips Lighting ndash
balanced portfolio
Business structure Geographic distribution
36
31
12
11Lamps
ConsumerLuminaires
5
ProfessionalLuminaires
Automotive ampSpec LightingApplications
LightingelectronicsLED
components
4
49 Applications 51 Components Light sources
) 2008) as if Genlyte would be consolidated2007
32 of Philips Lighting sales from emerging markets
Market segmentation
Homes
22
19
1513
13
84 6
Offices
OutdoorIndustry
Shops
TransportHospitality
Other
6
5 key segments cover82 of our market
LightingElectronics
17
4
35
WestEurope
KeyEmerging
OtherMature 29
OtherEmerging
NorthAmerica
15
6
Philips Lighting ndash
global leadership
L America Japan
Lamps
ConsumerLuminaires
LightingElectronics
Automotive
AsiaPacificN America TotalEurope
number 1 not in top 3number 2 or 3
Special L Applications
LED Components
Professional
Luminaires
7
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
8
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
9
Lighting market ndash
significant opportunities
From conventional light sources to solid state lighting
From component and product to applications and solutions focus
From incandescent bulbs to energy efficient lighting
10
Lighting market -
dynamic economic conditions
Building amp construction industry dynamics Energy amp commodity price dynamics
Philips Lighting revenues100
W-Eu
NA64
EmergingOth36
New40
Replacement24
Home
7Professional
20Other
13
Medium to High correlation with industry dynamics but with significant variances by country and segment
Home Residential Housing Professional Retail Office Industrial Hospitals Schools Hotels hellipOther Roadamp Tunnel City Beatification Sport amp Area AutomotivePhilips Lighting estimates
bull
Higher energy prices ndash
Transportndash
Manufacturingndash
hellip
bull
Increases in commodity prices ndash
Copperndash
Steelndash
hellip
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
6
Philips Lighting ndash
global leadership
L America Japan
Lamps
ConsumerLuminaires
LightingElectronics
Automotive
AsiaPacificN America TotalEurope
number 1 not in top 3number 2 or 3
Special L Applications
LED Components
Professional
Luminaires
7
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
8
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
9
Lighting market ndash
significant opportunities
From conventional light sources to solid state lighting
From component and product to applications and solutions focus
From incandescent bulbs to energy efficient lighting
10
Lighting market -
dynamic economic conditions
Building amp construction industry dynamics Energy amp commodity price dynamics
Philips Lighting revenues100
W-Eu
NA64
EmergingOth36
New40
Replacement24
Home
7Professional
20Other
13
Medium to High correlation with industry dynamics but with significant variances by country and segment
Home Residential Housing Professional Retail Office Industrial Hospitals Schools Hotels hellipOther Roadamp Tunnel City Beatification Sport amp Area AutomotivePhilips Lighting estimates
bull
Higher energy prices ndash
Transportndash
Manufacturingndash
hellip
bull
Increases in commodity prices ndash
Copperndash
Steelndash
hellip
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
7
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
8
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
9
Lighting market ndash
significant opportunities
From conventional light sources to solid state lighting
From component and product to applications and solutions focus
From incandescent bulbs to energy efficient lighting
10
Lighting market -
dynamic economic conditions
Building amp construction industry dynamics Energy amp commodity price dynamics
Philips Lighting revenues100
W-Eu
NA64
EmergingOth36
New40
Replacement24
Home
7Professional
20Other
13
Medium to High correlation with industry dynamics but with significant variances by country and segment
Home Residential Housing Professional Retail Office Industrial Hospitals Schools Hotels hellipOther Roadamp Tunnel City Beatification Sport amp Area AutomotivePhilips Lighting estimates
bull
Higher energy prices ndash
Transportndash
Manufacturingndash
hellip
bull
Increases in commodity prices ndash
Copperndash
Steelndash
hellip
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
8
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
9
Lighting market ndash
significant opportunities
From conventional light sources to solid state lighting
From component and product to applications and solutions focus
From incandescent bulbs to energy efficient lighting
10
Lighting market -
dynamic economic conditions
Building amp construction industry dynamics Energy amp commodity price dynamics
Philips Lighting revenues100
W-Eu
NA64
EmergingOth36
New40
Replacement24
Home
7Professional
20Other
13
Medium to High correlation with industry dynamics but with significant variances by country and segment
Home Residential Housing Professional Retail Office Industrial Hospitals Schools Hotels hellipOther Roadamp Tunnel City Beatification Sport amp Area AutomotivePhilips Lighting estimates
bull
Higher energy prices ndash
Transportndash
Manufacturingndash
hellip
bull
Increases in commodity prices ndash
Copperndash
Steelndash
hellip
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
9
Lighting market ndash
significant opportunities
From conventional light sources to solid state lighting
From component and product to applications and solutions focus
From incandescent bulbs to energy efficient lighting
10
Lighting market -
dynamic economic conditions
Building amp construction industry dynamics Energy amp commodity price dynamics
Philips Lighting revenues100
W-Eu
NA64
EmergingOth36
New40
Replacement24
Home
7Professional
20Other
13
Medium to High correlation with industry dynamics but with significant variances by country and segment
Home Residential Housing Professional Retail Office Industrial Hospitals Schools Hotels hellipOther Roadamp Tunnel City Beatification Sport amp Area AutomotivePhilips Lighting estimates
bull
Higher energy prices ndash
Transportndash
Manufacturingndash
hellip
bull
Increases in commodity prices ndash
Copperndash
Steelndash
hellip
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
10
Lighting market -
dynamic economic conditions
Building amp construction industry dynamics Energy amp commodity price dynamics
Philips Lighting revenues100
W-Eu
NA64
EmergingOth36
New40
Replacement24
Home
7Professional
20Other
13
Medium to High correlation with industry dynamics but with significant variances by country and segment
Home Residential Housing Professional Retail Office Industrial Hospitals Schools Hotels hellipOther Roadamp Tunnel City Beatification Sport amp Area AutomotivePhilips Lighting estimates
bull
Higher energy prices ndash
Transportndash
Manufacturingndash
hellip
bull
Increases in commodity prices ndash
Copperndash
Steelndash
hellip
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
11
Lighting market ndash
full spectrum of measures
State-of-the-art price management Focus on renovation amp Total Cost of Ownership
Adequate strategies to deal with the Lighting industry dynamics
bull
Mix managementbull
Cost productivity and efficiencybull
Purchasing effectivenessbull
Supply chain optimizationbull
Channel diversificationbull
Acquisition pipeline
Rundbau
Gerling
Konzern Cologne Germanybull
Renovation 40 year old buildingbull
TL-5 luminaires
with omnisensendash
Presence detectionndash
Daylight regulationbull
Energy saving of up to 70
Effective execution of Philips Lighting initiatives
eg Lumileds eg Lamps Prof Lum Cons Lum
ApplicationsLight SourcesComponents
Trade PricingTransaction Pricing Project Pricing
bull
Active price management in all parts of our businessbull
Active focus on customer profitability
bull
Highly energy efficient solutions bull
New Solid State Lighting applicationsbull
Symbiosis between art and science function and fashion
Best practices and new ways of working Faster and better innovation
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
12
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging marketsndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
13
BusinessModels
Strategic value drivers ndash
a winning formula
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositions bull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
14
Acquisitions ndash
a strong backbone for the future
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
15
Acquisitions ndash
value creation through synergies global reach and combined innovation power
Global presence and expansion Continuous acquisition pipeline
Sportlite USAbull
Bought in 2008bull
Via GenlyteDaybrite
bull
Combination of Color Kinetics technology with task lighting know how of Philips Professsional
Luminaires
NA
Successful Post-Merger Integration Unique innovation platform
PLIbull
Integration on schedulebull
Expansion outside Europe
Genlytebull
Integration well under waybull
Significant synergies
Color Kinetics fully embedded and leveraged across the chain
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
16
Green value propositions ndash
planned phase-out of incandescent with systematic footprint rationalization
0
20
40
60
80
100
2000
2003
2006
2009
2012
2015
2018
CFL-IOther lampsIncandescent
This plot is only relevant for the GLS CFL category not Fluo HID etc
Installed baseLamps park
Phase-out of incandescent lamps park Incandescent lamps footprint rationalization
bull
From 2001 till 2008 rescaled from 20 to 11 incandescent factories further reductions are planned following demand curves
= rescaled
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
17
Green value propositions ndash
enhanced energy savings through system approach and renovation focus
Environmental efficiency metrics System approach
bull
Energy prices keep on rising
bull
Up to 60 to 70 of savings feasible on lighting energy consumption in officesschools hospitals etc through energy efficient Lighting System upgrades
Office energy consumption Energy savings opportunity
AB
CD
E
Application of building performance standards and energy certificates
New lamps
New lamps new gear
New luminaires
New system (incl Controls)
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
18
Level5
Level
4
Innovative solutions ndash
transition from components to applications requires a shift in RampD investments
Market Life- cycle
Emerging
Growth
Mature
Decline
Improved Product
New toCategory
New toLighting
New to World
Innovation type
bullCFL-I C-
HID LED (red Auto)bullHID TL Halogen CFL-NI UHP Xenon
bullLED lamps amp modules (Outdoor Hospitalit
y Office) LED luminaire
s
bullControls (Homes) LED (Headlig
ht Auto)
bullOLED E-UV Ventures (Scene setting Galaxy)
bullLED lamps amp modules (Homes Shops Industry)
bullControls (Shops Hospitalit
y) LED luminaire
s
(Homes) LED Display backlight
Level1
Level 23
UpstreamDownstream
Light sources
Drivers controls modules engines
Luminaires systems
Projects solutions
ComponentsApplications
From components to applications Distribution of RampD investments
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
19
Innovative solutions ndash
from technological invention to end user insight design and business creation
Light generation Ambience creation
End user driven market insightsApplication development and design
City beautificationNational Theatre London
Ambience creation for shops with Ambiscene
Ambience creation at homewith Living Colors Mini
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
20
Solid state lighting components and light sources
Grow our Lumileds
and SSL modules business
Systems
Move into controls through own development and Acquisitions
Applications
Grow our Luminaires
businessDouble-the-market sales growth rate Above-the-sector average gross margin realizationHigher return on RampD investmentExtra IP value creationNew revenue models
LEDSSL revolution ndash
driving the transformation of our business and capturing the opportunities
Philips Lighting sales in general illumination
Opportunities
new to Philips
SSL substituteand new
applications
Lumileds
Classic
Lighting
Illustrative SSL projections More opportunity than risk
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
21
LEDSSL revolution ndash
leading in both consumer and professional application development with great design
FunctionalLedino
Light + Building lsquoFutureInnovationsrsquo
Award
Scene settingLiving Colors
OutdoorCity Wing
IndoorSpot Led
Professional Consumer
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
22
Emerging markets ndash
double-digit growth with compelling business cases
bull
Bridge in Sao Paulo Brasilndash
State-of-the-art city beautification projectndash
53 reduction in energy consumption
2
54
8
6
2
98
14
16
0
5
10
15
20
Emerging Markets growth Latam
20
10
15
5
02003 2004 2005 2006 2007
2 2
5
9 8
4
8
14
6
16
Comparable Sales Growth Lighting
Comparable Sales Growth Emerging Markets
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
23
Emerging markets ndash
expanding across Asia and engaging in partnerships in Africa
bull
SESA partnership with UNgovernmentsndash
Safe and reliable lighting solutions ndash
higher-quality light ndash
renewable or mechanical energyndash
cost-competitive with fuel-based lamps ndash
payback 6-12 months target is 3-6 months
bull
Singapore Flyer
SESA Sustainable Energy Solutions for Africa
Asia Africa
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
24
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
25
Segment leadership ndash
develop professional project business through multi stakeholder partnerships
Buildingproject owner
ArchitectDesignerSpecifier
Philips Professional luminaires
Wholesaler
Raw materials electrical components
Salesrepresentative
Contractor
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
Segment specific applications Multiple stakeholders along value chain
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
26
Brand franchise ndash
leverage category management and brand equity
bull
Growing Philips as global brand of choice and partner of preference
bull
Leveraging specialized acquired brands with strong reputation in specific segments -
examples
-
Lightolier
for indoor specification business in North America
-
Varilite
and Strand with world class entertainment products
Consumer Luminaires Professional Luminaires
Living Kitchen Bath Bed Garden
best
better
good
Functional
HealthyLiving
Scene Setting
Drive category management Capitalize on brand equity
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
27
Business models ndash
create
new forms of cooperation and ways of working PPPPPP contract with VINCI for theCity of Rouen
bull
120 000 inhabitants
Normandy Regional Urban Polebull
VINCIrsquos
PPP contract amount euro100M a large 18-years Design Build Finance Operate amp Maintain contract in the area of
ndash
Public lighting (15000 public lighting points)
ndash
Wireless local loop in the old center amp Traffic management
Benefitsbull
Cities Significant euro
amp CO2
savingsbull
Installmaintain cpy revenuestreambull
Philips Added value -
green -
sales
PESContracts to help energycompanies meet CO2
emission targets
bull
Contract with British Gas for 52m energy saving lamps
bull
Sales of PES contracts gt euro
100M
Benefitsbull
Consumer euro
amp CO2
savingsbull
Utility cpy growth customer base bull
Philips Added value -
green sales
Carbon tradingThree types of carbon financingmechanisms
bull
Emissions Trading Scheme
(ETS) primarily between governments in Western Europe
bull
Joint Implementation (JI)
primarily between Western Europe and Eastern Europe (transition economies)
bull
Clean Development Mechanism
(CDM) between Europe and developing countries (BICA+)
Benefitsbull
Governmentcompanies Energy saving CO2
cost reductionbull
Philips Added value -
green sales
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
28
Intellectual property ndash
develop the SSL market through a dedicated IP licensing program
bull
Luminairesndash
3 Single Colorndash
4 Tunable White ndash
5 Color Changebull
Retrofit unitsndash
5bull
Standard royalties are due on luminaires
with only some components from Philips (eg only the LEDs)
bull
Leading position with Philips brandbull
Accelerated adoption of SSL increasing market size
bull
Continuous income and cash streams from licensing
SSL technology platform IP policy
IP patent portfolio IP business case
2000 2005
SSLConventional
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
29
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
30
Philips Lighting ndash
commitment to Vision 2010
Philips Lighting 2007 Philips Lighting 2010
bull
Comparable annual average growth of 6 for 2008-2010
bull
EBITA of 12 -
14
bull
Application focus 23
bull
RampD as of sales gt4
bull
Sales of 61 billion Euro in 2007 excl Genlyte
bull
EBITA of 119
bull
Application focus 13
bull
RampD of sales gt4
Royal Philips Vision 2010
bull Comparable annual average growth of 6 for 2008-2010
bull Double EBITA per share from 2007 level and improve EBITA margin
to 10 -
11
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
31
Acquisitions
Growth
Value CreationWork
Green
Innovation
LEDrsquos
Emerging Markets
Price ManagementMargin
Cost Effectiveness
Asset Productivity Capital Efficiency
Philips Lighting ndash
value creation work
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
32
Philips Luminaires
ndash
in shape for the future
10
Industry
Shops
Offices
Sports
Road
City Beautification
Healthcare
Hospitality
Entertainment
Homes
27
LuminairesIn shape for the future
Acquisitions Green Value Propositions
Innovative Solutions
LEDSSL Revolution
Emerging MarketsPhilips Luminaires
Total Sales 2004-2007
0
1000
2000
2004 2005 2006 2007Year
Tota
l Sal
es
Philips Professional Luminaires Genlyte CK Modular PLI-Homes
CAGR 04-07 8
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
33
Philips ndash
Delighting with Lighting
bull
Clear on strategic direction and intention
bull
Confident in making the Vision 2010 targets
BusinessModels
IntellectualProperty
SegmentLeadership
BrandFranchise
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
Growth Enginesbull
Acquisitionsbull
Green value propositionsbull
Innovative solutionsbull
LEDSSL revolutionbull
Emerging markets
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
34
Agenda
bull
Business overviewbull
Market perspectivebull
Strategic value driversndash
Growth enginesndash
Segment leadershipndash
Brand franchisendash
Business modelsndash
Intellectual propertybull
Summarybull
QampA
