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Income from operations | 12 Months Ended
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Dec. 31, 2021
Income from operations [Abstract] |
Income from operations [Text Block] | ### 7Income from operations For information related to Sales on a segment and geographical basis, refer to Information by segment and main country. Philips Group Sales and costs by nature in millions of EUR
| 2019 | 2020 | 2021
--- | --- | --- | ---
Sales | 17,147 | 17,313 | 17,156
Costs of materials used | (4,197) | (4,221) | (4,142)
Employee benefit expenses | (6,097) | (6,289) | (6,246)
Depreciation and amortization1) | (1,343) | (1,462) | (1,323)
Shipping and handling | (509) | (554) | (645)
Advertising and promotion | (741) | (696) | (752)
Lease expense2) | (50) | (34) | (19)
Other operational costs3)4) | (2,811) | (2,741) | (3,524)
Other business income (expenses) | (33) | (51) | 48
Income from operations | 1,366 | 1,264 | 553
1)Includes impairments; for impairment values please refer to Property, plant and equipment and Intangible assets excluding goodwill 2)Lease expense relates to short-term and low value leases.3)Other operational costs contain items which are dissimilar in nature and individually insignificant in amount to disclose separately. These costs contain among others expenses for outsourcing services, mainly in IT and HR, 3rd party workers, consultants, warranty, patents, costs for travelling, external legal services and EUR 104 million government grants recognized in 2021 (2020: EUR 98 million 2019: EUR 87 million). The grants mainly relate to research and development activities and business development.4)The significant increase in other operational costs 2021 versus 2020 is mainly due to the field action provision. For more details on the field action provision, please refer to Provisions. #### Sales composition and disaggregation Philips Group Sales composition in millions of EUR
| 2019 | 2020 | 2021
--- | --- | --- | ---
Goods | 12,476 | 12,491 | 11,981
Services | 3,811 | 4,058 | 4,374
Royalties | 381 | 301 | 383
Total sales from contracts with customers | 16,668 | 16,851 | 16,738
Other sources1) | 479 | 462 | 418
Sales | 17,147 | 17,313 | 17,156
1)Other sources mainly relates to leases, including sublease income from right-of-use assets and related services of EUR 293 million (2020: EUR 325 million 2019: EUR 307 million) At December 31, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations from a sale of goods and services was EUR 14,305 million. The company expects to recognize approximately 50% of the remaining performance obligations within 1 year. Revenue expected to be recognized beyond 1 year is mostly related to longer term customer service and software contracts. Philips Group Disaggregation of Sales per segment in millions of EUR
| 2021
--- | ---
| Sales at a point in time | Sales over time | Total sales from contracts with customers | Sales from other sources1) | Total sales2)
Diagnosis & Treatment | 5,407 | 3,177 | 8,583 | 52 | 8,635
Connected Care | 3,135 | 1,090 | 4,227 | 366 | 4,593
Personal Health | 3,403 | 6 | 3,410 |  | 3,410
Other | 195 | 323 | 518 | - | 519
Philips Group | 12,142 | 4,596 | 16,738 | 418 | 17,156
1)Other sources mainly relates to leases, including sublease income from right-of-use assets and related services of EUR 293 million 2)Represents revenue from external customers as required by IFRS 8 Operating Segments. Philips Group Disaggregation of Sales per segment in millions of EUR
| 2020
--- | ---
| Sales at a point in time | Sales over time | Total sales from contracts with customers | Sales from other sources1) | Total sales2)
Diagnosis & Treatment | 5,132 | 2,998 | 8,129 | 46 | 8,175
Connected Care | 4,208 | 943 | 5,152 | 417 | 5,568
Personal Health | 3,170 | 4 | 3,173 |  | 3,173
Other | 69 | 327 | 396 | - | 396
Philips Group | 12,580 | 4,272 | 16,851 | 462 | 17,313
1)Other sources mainly relates to leases, including sublease income from right-of-use assets and related services of EUR 325 million 2)Represents revenue from external customers as required by IFRS 8 Operating Segments. Philips Group Disaggregation of Sales per segment in millions of EUR
| 2019
--- | ---
| Sales at a point in time | Sales over time | Total sales from contracts with customers | Sales from other sources1) | Total sales2)
Diagnosis & Treatment | 5,428 | 2,989 | 8,417 | 68 | 8,485
Connected Care | 3,545 | 718 | 4,263 | 411 | 4,674
Personal Health | 3,513 | 3 | 3,516 |  | 3,516
Other | 168 | 303 | 472 | - | 472
Philips Group | 12,655 | 4,013 | 16,668 | 479 | 17,147
1)Other sources mainly relates to leases, including sublease income from right-of-use assets and related services of EUR 307 million 2)Represents revenue from external customers as required by IFRS 8 Operating Segments. Philips Group Disaggregation of Sales per geographical cluster in millions of EUR
| 2021
--- | ---
| Sales at a point in time | Sales over time | Total sales from contracts with customers | Sales from other sources1) | Total sales2)
Western Europe | 2,537 | 1,087 | 3,624 | 21 | 3,645
North America | 4,427 | 2,268 | 6,695 | 86 | 6,781
Other mature geographies | 1,000 | 386 | 1,386 | 309 | 1,694
Total mature geographies | 7,964 | 3,741 | 11,705 | 415 | 12,120
Growth geographies | 4,178 | 856 | 5,033 | 3 | 5,036
Sales | 12,142 | 4,596 | 16,738 | 418 | 17,156
1)Other sources mainly relates to leases, including sublease income from right-of-use assets and related services of EUR 293 million 2)Represents revenue from external customers as required by IFRS 8 Operating Segments. Philips Group Disaggregation of Sales per geographical cluster in millions of EUR
| 2020
--- | ---
| Sales at a point in time | Sales over time | Total sales from contracts with customers | Sales from other sources1) | Total sales2)
Western Europe | 2,747 | 936 | 3,682 | 19 | 3,702
North America | 4,654 | 2,135 | 6,789 | 95 | 6,884
Other mature geographies | 1,035 | 373 | 1,408 | 342 | 1,750
Total mature geographies | 8,435 | 3,444 | 11,879 | 457 | 12,336
Growth geographies | 4,145 | 828 | 4,972 | 5 | 4,977
Sales | 12,580 | 4,272 | 16,851 | 462 | 17,313
1)Other sources mainly relates to leases, including sublease income from right-of-use assets and related services of EUR 325 million 2)Represents revenue from external customers as required by IFRS 8 Operating Segments. Philips Group Disaggregation of Sales per geographical cluster in millions of EUR
| 2019
--- | ---
| Sales at a point in time | Sales over time | Total sales from contracts with customers | Sales from other sources1) | Total sales2)
Western Europe | 2,359 | 931 | 3,290 | 38 | 3,328
North America | 4,901 | 1,889 | 6,789 | 114 | 6,904
Other mature geographies | 1,125 | 357 | 1,482 | 322 | 1,804
Total mature geographies | 8,385 | 3,176 | 11,561 | 474 | 12,036
Growth geographies | 4,270 | 837 | 5,107 | 5 | 5,112
Sales | 12,655 | 4,013 | 16,668 | 479 | 17,147
1)Other sources mainly relates to leases, including sublease income from right-of-use assets and related services of EUR 307 million 2)Represents revenue from external customers as required by IFRS 8 Operating Segments. #### Costs of materials used Cost of materials used represents the inventory recognized in cost of sales. #### Employee benefit expenses Philips Group Employee benefit expenses in millions of EUR
| 2019 | 2020 | 2021
--- | --- | --- | ---
Salaries and wages1) | 5,080 | 5,204 | 5,129
Post-employment benefits costs | 370 | 418 | 396
Other social security and similar charges: |  |  |
Required by law | 537 | 556 | 529
Voluntary | 111 | 111 | 192
Employee benefit expenses | 6,097 | 6,289 | 6,246
1)Salaries and wages includes EUR 115 million (2020: EUR 119 million, 2019: EUR 103 million) of share-based compensation expenses. The employee benefit expenses relate to employees who are working on the payroll of Philips, both with permanent and temporary contracts. For further information on post-employment benefit costs, refer to Post-employment benefits. For details on the remuneration of the members of the Board of Management and the Supervisory Board, refer to Information on remuneration. #### Employees The average number of employees by category is summarized as follows: Philips Group Employees in FTEs
| 2019 | 2020 | 2021
--- | --- | --- | ---
Production | 31,222 | 35,482 | 38,618
Research & development | 11,669 | 10,812 | 10,751
Other | 22,924 | 22,474 | 22,543
Employees | 65,815 | 68,769 | 71,912
3rd party workers | 5,614 | 4,998 | 4,533
Philips Group | 71,429 | 73,767 | 76,445
Employees consist of those persons working on the payroll of Philips and whose costs are reflected in the Employee benefit expenses table. 3rd party workers consist of personnel hired on a per-period basis, via external companies. Philips Group Employees per geographical location in FTEs
| 2019 | 2020 | 2021
--- | --- | --- | ---
Netherlands | 11,252 | 11,146 | 11,142
Other countries | 60,177 | 62,621 | 65,303
Philips Group | 71,429 | 73,767 | 76,445
#### Depreciation and amortization Depreciation of property, plant and equipment and amortization of intangible assets, including impairments, are as follows: Philips Group Depreciation and amortization1) in millions of EUR
| 2019 | 2020 | 2021
--- | --- | --- | ---
Depreciation of property, plant and equipment | 611 | 691 | 630
Amortization of software | 66 | 76 | 88
Amortization of other intangible assets | 344 | 377 | 322
Amortization of development costs | 323 | 319 | 284
Depreciation and amortization | 1,343 | 1,462 | 1,323
1)Includes impairments; for impairment values please refer to Property, plant and equipment and Intangible assets excluding goodwill Depreciation of property, plant and equipment is primarily included in cost of sales. Amortization of the categories of other intangible assets are reported in selling expenses for brand names and customer relationships and are reported in cost of sales for technology based and other intangible assets. Amortization of development cost is included in research and development expenses. #### Shipping and handling Shipping and handling costs are included in cost of sales and selling expenses in Consolidated statements of income. Further information on when costs are to be reported to cost of sales or selling expenses can be found in Significant accounting policies. #### Advertising and promotion Advertising and promotion costs are included in selling expenses in Consolidated statements of income. #### Audit fees The following table shows the fees attributable to the fiscal years 2019, 2020 and 2021 for services rendered by the respective Group auditors. Philips Group Agreed fees in millions of EUR
| 2019 | 2020 | 2021
--- | --- | --- | ---
| EY NL1) | EY Network | Total | EY NL1) | EY Network | Total | EY NL1) | EY Network | Total
Audit fees | 8.4 | 6.2 | 14.6 | 9.0 | 5.6 | 14.6 | 9.7 | 5.3 | 15.0
consolidated financial statements | 8.4 | 3.4 | 11.8 | 9.0 | 2.9 | 11.9 | 9.7 | 2.7 | 12.4
statutory financial statements |  | 2.8 | 2.8 |  | 2.7 | 2.7 |  | 2.6 | 2.6
Audit-related fees2) | 0.5 | 0.3 | 0.8 | 2.2 | 0.5 | 2.7 | 0.6 | 0.2 | 0.8
divestment |  |  |  | 1.5 | 0.2 | 1.7 |  |  |
sustainability assurance | 0.4 |  | 0.4 | 0.5 |  | 0.5 | 0.5 |  | 0.5
other | 0.1 | 0.3 | 0.4 | 0.2 | 0.3 | 0.5 | 0.1 | 0.2 | 0.3
Tax fees |  |  |  |  |  |  |  |  |
All other fees |  |  |  |  |  |  |  |  |
Fees | 8.9 | 6.5 | 15.4 | 11.2 | 6.1 | 17.3 | 10.3 | 5.5 | 15.8
1)Ernst & Young Accountants LLP 2)Also known as Assurance fees #### Other business income (expenses) Other business income (expenses) consists of the following: Philips Group Other business income (expenses) in millions of EUR
| 2019 | 2020 | 2021
--- | --- | --- | ---
Result on disposal of businesses: |  |  |
income | 69 | - | -
expense | (1) | - | (75)
Result on disposal of fixed assets: |  |  |
income | 4 | 2 | 24
expense | - | - | (5)
Result on other remaining businesses: |  |  |
income | 81 | 120 | 161
expense | (88) | (30) | (43)
Impairment of goodwill | (97) | (144) | (15)
Other business income (expense) | (33) | (51) | 48
Total other business income | 154 | 122 | 186
Total other business expense | (186) | (173) | (138)
The result on disposal of businesses was mainly due to divestment of non-strategic businesses. For more information refer to Acquisitions and divestments. The result on disposal of fixed assets was mainly due to the sale of real estate assets. The result on other remaining businesses mainly relates to revaluation of contingent consideration, non-core revenue and various legal matters. In 2021 revisions to EPD's forecast resulted in a EUR 67 million decrease in the fair value of the respective contingent consideration liability, comprised of EUR 41 million due to more severe short-term impacts of COVID-19 and the competitive environment and EUR 26 million due to delays in achievement of certain milestones, and is reflected in Other business income. In 2020 revisions to EPD's forecast due to delays in commercialization caused by the need to do more work on the maturity of the technology resulted in a EUR 101 million decrease in the fair value of the respective contingent consideration liability and is reflected in Other business income. For information on contingent consideration, refer to Provisions. In 2021 a gain of EUR 33 million related to a minority participation was recognized in Other business income. For information refer to Interests in entities. For information on impairment of goodwill, refer to Goodwill.

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