Welcome to the Royal Philips Electronics First Quarter Results 2011 Conference Call on Monday, 18th of April, 2011. During the introduction hosted by Mr. Frans van Houten, President and CEO; and Mr. Ron Wirahadiraksa, CFO, all participants will be in a listen-only mode. After the introduction, there will be an opportunity to ask questions. (Operator Instructions) Please note that this call will be recorded and is available by webcast on the website of Royal Philips Electronics. I will now hand the conference over to Abhijit Bhattacharya, Head of Investor Relations. Please go ahead, sir.

Good morning, ladies and gentlemen. Welcome to this conference call on the first quarter results for 2011 for Royal Philips Electronics. I am here with Philips’ President and CEO, Frans van Houten; and our CFO, Ron Wirahadiraksa. In a moment Frans will take you through his introductory remarks followed by Ron who will shed more light on the financial performance during the quarter. After this, both Frans and Ron will be happy to take your questions. As usual, our press release and accompanying information slide deck were published at 7:00 AM this morning. Both documents are now available for download from our Investor Relations website. We will also make available of full transcript of this conference call on the Investor Relations website by tomorrow at the latest. And with that, let me hand over to Frans to make his introductory remarks.

Thanks you Abhijit. Good morning to you all, and let me welcome you to my first analyst conference call as CEO of Philips. As you have seen in our press release issued earlier this morning, today is a very important day for Philips. In the last few months, we have clearly stated that resolving the profitability of TV is our absolute priority. Already late last year in fact following my return to Philips, Pieter Nota and I initiated a team to research robust solutions for TV going forward. We are all aware that TV has a proud history at Philips since 1928. In recent years however TV has not performed well amidst theoretically changing industry dynamic. At the same time as you know Philips is shifting its strategic portfolio to health and well-being. Consequently TV had become a value detractor for Philips. Today we have announced our plan to separate our entire TV business and move it into a joint venture with TPV technology, thereby TPV will have a 70% stake and Philips will own a 30% stake. This partnership is good news for our trade partners and consumers as continuity of Philips TV in the market is assured. It will help create to focus, scale and business model to enable the return to profitability in the very dynamic TV industry. The joint venture will leverage Philips’ strengths such as the brand, our brand innovation power and trade and market access with the additional scale and manufacturing strengths of TPV. TPV has in the past years acquired our monitors business and has been successful in running it. Philips’ will receive a deferred payment for the transaction as well as a brand license fee. We have disclosed details of the term sheet in our press release hence I will not go…

Thank you, Frans. Good morning and welcome to all of you on the call. Let me start by talking about the development in the markets we serve. I will start with Healthcare, where in the U.S. we see continued strong drive from hospitals to reduce operating expenses and become more efficient. We see the positive effectiveness to the growth in patient monitoring market where hospital strive for higher efficiency by investing in newer technologies. We do not expect major increases in capital expenditures compared to last year, although access to capital does not seem to be a major concern. With regards to Healthcare Reform, there is some concern among hospital CEOs on further reimbursement cuts. Larger, strategic and multiyear deals continue to remain important as we see increasing interest. Some pent-up demand was visible in the quarter but uncertainty remains as to the future economic and market developments in the U.S. In Europe, we do see some affects of the difficult economic climates in Southern Europe as well austerity measures affecting short-term growth in the U.K. The recovery in Germany and Northern Europe continues to remain on course. We continued to see momentum in our growth markets as more investments continue to be directed at these markets resulting in robust demand. In the Consumer Lifestyle markets, Western Europe and the U.S. demonstrates continued cautious consumer sentiment. In the areas, where we invested for growth, we saw markets responding well. Personal care, health and wellness and domestic appliances markets grew appreciably. Also our growth markets showed robust demand in the quarter. The Home Audio and DVD markets continued to shrink, while price erosion in the television markets was severe. The Lighting market overall saw a reasonable growth which was strongest in our growth markets and for LED related product category. Given…

Thanks. (Operator Instructions) Our first question comes from Simon Smith from Credit Suisse. Please go ahead with your question. Simon Smith – Credit Suisse: Hi thank you, I’d like to ask – I guess, before I ask the question, I’d say you congratulations on getting a transaction done on the TV side. It wasn’t actually what I was going to speak about but very nice to see that happen at an early stage. My question was really with relation to margins, I mean we’ve had a quarter here which if we break it down in to underlying, underlying level, we’ve seen margins come in light in your core divisions of Healthcare and Lighting, anywhere from sort of a 100 and 140 to sort of 100 to 240 basis points. So quite significant under share margin there. And then if I look at the outlook statement, I think you’ve already said you’re not going to quantify but you talk about the Japan effect and then you talk about the investment effects. So it doesn’t sort of feel that if we should expect an improvement in those trends going forward. And yet we have these statements alongside margin guidance which for the Healthcare business would imply significant step up, and if you’re able to get to the middle of the range in the Lighting business at least maintenance that where margins have been in the past. So clearly it’s still at an early stage but I wonder if you can give us any assistance in understanding where we should be placing margins going forward?

Yes. Simon, Frans here. Thanks very much for your congratulations, I appreciate that. In fact, let me just say a few words on it. We started late last year on it and I think we have now created a construction that’s good for the future of TV, but also it allows Philips to focus on health and well-being. As to your question on margins, I think we need to take this straight, you know the Vision 2015 is a good roadmap and it contains an excellent set of targets, which we aspire to achieve. Both Ron and I are quite ambitious and eager to get on that run rate. At the same time today that run rate is not yet in sight. And we have a lot of work to do to get there. We believe that we do need to step up performance and it will require some targeted investments. We have launched a granular business management system to get much more insight in where we are performing and where we leave money on the table. And as we do that in the next and go through all these businesses in the next quarters, we think we’ll be in the better shape in the second half of this year to give you all an update on our trajectory to achieve our financial aspirations. So not in a short room but definitely eager to get there.

May be to answer that Frans, is if you look at our gross margin we have seen about an 18% [ph] basis points decline. About EUR19 million of that was related to what I said earlier on a legal settlement in Q1 of last year in our favor. And I would say the other half is related to some small material cost increase that we have seen. In furthermore in the comparison with last year, we have invested somewhat for growth. So thanks to your question on the margins. On the outlook for Japan, as I said we’re not in a position right now. We have not seen a lot of impact in the first quarter, but we expect to see and are assessing the impact that it will have in the next quarter and probably mostly in Q3. So we need to update you at a later stage on where we stand with that. I hope I had provided an answer to the question you raised. Simon Smith – Credit Suisse: Can I just have a follow-up clarification on the margin side, I mean from what you’re saying there we should really then be thinking about margins on an underlying basis for the Healthcare and the Lighting business to the down on where they were last year, I mean obviously you don’t as yet have the full understanding of the plan that you’ll be putting in place, but I just got a feel from what you’ve said would that be fair?

Well Simon, we are not giving a guidance. In fact we are committed to long-term value creation. And we think there is work to be done to accelerate our performance. We’d like to talk about the business in terms of trajectory. I see a lot of unlocked potential in Philips in all the sectors. And with that I think we can give you an update in the second half of the year as with regard to our long-term strategic aspirations. Simon Smith – Credit Suisse: Thank you.

Thank you. Our next question comes from Mark Troman from Bank of America Merrill Lynch. Please proceed with your question. Mark Troman – Bank of America Merrill Lynch: Yes, thank you very much. It’s Mark Troman here from Bank of America Merrill Lynch. Just following on from Simon’s question, obviously you’ve decided to ramp-up the investments in SG&A and R&D in Q1. Is it fair to say that that’s going to accelerate or is that a reasonable indication of run rate subject to more detailed business assessments. And I’ll just leave with that one. Thank you.

I’d like to reiterate a few points as Ron and I have gone through the business in our kind of startup period. We are really quite excited about the potential that Philips has and we are very eager to accelerate the run rate. I don’t think, we should not be – we would not be talking about acceleration if we would not believe that that potential is there. We have looked at 400 business market combinations across our businesses and geographies. And it is clear that some are performing very nicely, very beautifully and some others are behind. And so as we go into deep dive in those, I think we’ll find corrective action. This is why the give the heads up that some targeted investments maybe needed. At the same time, we can be positive about what we call the Green Units that are performing very well. So overall it may take us some quarters, but we do believe that an acceleration of the both growth and profitability trajectory is possible. Mark Troman – Bank of America Merrill Lynch: Okay. Can I just follow-up on that. Could you just comment on the pricing trends, I mean we know about TV, I guess but within the Healthcare, Lighting and other parts of Consumer, Frans, what pricing trends are there and what you think you can manage?

I think this is different in various sectors. I think we talked a little bit about Lighting. I think Ron did, where we saw a good growth in professional luminaires but it is somewhat depressed margin. And the lower margin in that business is partially because of higher cost of materials which we will pass onto customers, think about copper, phosphor and steel. And we also believe that going forward, we can improve that. The margin in Healthcare actually is normal. And Lifestyle as well, we don’t see any pressure on the margins. And of course, on TV you know the story and that is why we dealt with it. Mark Troman – Bank of America Merrill Lynch: Okay, thank you very much.

Maybe a little color on that, you know on the gross margin side to put it in perspective. So in Q1 the gross margin in Healthcare was flat year-on-year. The gross margin of Lifestyle was down by six points because of TV. Mark Troman – Bank of America Merrill Lynch: Okay.

TV impact. And in Lighting as I elaborated earlier, it has about 1% decline. Yes. Mark Troman – Bank of America Merrill Lynch: Thank you very much.

Thank you. Our next question comes from Andreas Willi from JP Morgan. Please proceed with your question. Andreas Willi – JP Morgan: Good morning. My question is on the license income which you guide down for the second half as well in the second quarter and then flat for the second half. That still leaves the year at kind of roughly EUR100 million lower license income, than last year in the Consumer business. Previously we have been guided to maybe a gentle decline overtime, it seems to drop both by EUR100 million in one go. Maybe you could give us some more information there and where that’s going in the median term excluding potential license income that’s coming from TV.

Yes. Thanks for the question Andreas. As we said in – over the earnings of the last quarter, for this quarter Q1 guided down for EUR50 million. We have also guided down for the second quarter of the year. And for the second half that it will be inline with last year, that in aggregate indeed constitutes a EUR100 million down compared to the last year. It remains difficult to predict license income as we have experienced. Rest assured that we’re doing everything to accelerate also the innovation machine that Philips is and drive this to higher levels going forward.

Yes, Frans here. Some of the license income is related to optical patents. Those optical patents are in the future going to yield lower returns as consumers are taking to the internet rather than to optical disc. So I think we need to take a cautious stand to the future with regard to license income. Andreas Willi – JP Morgan: And my follow-up question on Japan, whether you said you can't say too much but I am surprised that you see a bigger impact only by Q3 rather than Q2, it’s because it takes that long for your supply chain to use up fixing inventories but maybe if you can just give us a bit more color on that. Why it will take until Q3 to really see the worst of Japan?

Yes, with pleasure Andreas. We have put a dedicated team to assess the impact of the supply base. And we have gone quite granular in the analysis, with granular you should imagine that we have gone five to six layers deep in understanding suppliers of suppliers of suppliers if you follow. And so it is not our immediate suppliers that are the biggest issue. But some compound and material suppliers, you know it will cause a ripple effect in the supply chain later on. So for Q2 – in the later part of Q2 we may see some of that coming but as Ron said primarily in Q3.

Yes, actually Andreas, maybe to clarify, what I said is we’ll see it in the quarters going forward. So we’ll see a main impact in Q3. But yes, you’re absolutely right, they’ll already start in Q2. Andreas Willi – JP Morgan: Thank you.

Thank you. Our next question comes from Martin Wilkie from Deutsche Bank. Please proceed with your question. Martin Wilkie – Deutsche Bank: Hi. Good morning, it’s Martin Wilkie from Deutsche Bank. Just a question, you talked about improving operational performance and listed some things that you’re looking at. One of thing you mentioned was past acquisitions, hopefully two of the larger ones you’ve done have been Genlyte and Respironics. So if you could just clarify, was that comment you made sort of reviewing the prices that you paid and how you identify accessing strategy in the future or are there still integration issues with those two deals in terms of where you could see synergies still to be executed on those two transactions? Thanks.

Okay, thank you. Ron and I have done a detailed analysis of all the acquisitions. We have compared them to our original assumptions on the acquisitions. The cases are as such are sound. But we have not delivered everywhere on the sales synergies, whereas we have delivered on cost synergies. So I think that implies already that this is something that we think we can fix by ensuring that we step up the sales synergies of those businesses within Philips. We have again some good examples, and some bad examples and we need to make sure that we deliver on all the cylinders as all our favorite automotive comparison is. So we’ll see whether we can on a regular basis talk about this a bit. And there is another reason of course why and some of the return on the acquisitions is disappointing that is we have just gone through the biggest economic crisis. Compensate [ph] balancing for that the picture is somewhat more positive. Martin Wilkie – Deutsche Bank: Thanks and then just a follow-up, you talked about reviewing over hedge. And obviously there has been some cost reallocated out of television into both consumer and at the corporate level. Is that the over hedge you’re thinking of addressing or is there a wider opportunity of the group to look at overall overhead costs?

You should see our comments on costs two fold. First of all, in executing flawlessly on the TV deal, yes there will be some standard costs and some disentanglement costs. And we will deal with that fully. Secondly, we make the observation about overhead cost at group, at sector level. And here is where we think that not all the cost is fully productive. And we would like to unlock that so that we can invest in growth through innovation and market facing investments. Ron, you have some more to add to this?

Yes, absolutely. So as we said, we’re not on the trajectory. Yes, we are making some spend to get us quicker on trajectory and improve the performance in growth and profitability. At the same time, rest assure that we’ll walk all avenues to see about cross productivity as Frans said particularly from the complexity related unrewarded costs and whether this cost bring us and how efficient can we make them. So it applies in general to the cost chapter I would say. Martin Wilkie – Deutsche Bank: Okay, thank you very much.

Yes.

Thank you. Our next question comes from Ben Uglow from Morgan Stanley. Please proceed with your question. Ben Uglow – Morgan Stanley: Good morning. A couple of questions, one was on the Consumer Lifestyle division. I think on the last conference call, Pierre-Jean gave us an idea in terms of sort of margin ranges, what was going on in Audio/Visual and Accessories versus DAP, health and wellness and the remainder. Could you just give us a sense of what the margin trend is sequentially between AV and Accessories and DAP, health and wellness and – health and wellness and personal care. That was question number one. Question number two is just returning to the Lighting margin, I mean even if I strip out the EUR19 million, that’s a 2.5 percentage point underlying decline. What I’d really like to know is how much of that is simply due to increased S&G and how much of it is down to pricing. Is the pricing pressure you’ll see in professional luminaires or even in LED. Is that what is driving the bulk of this or is it a cost increase?

So for your first question on the AVM, margins are in the mid single-digits and for Accessories in the high single-digits. Yes, so that’s for that business. Ben Uglow – Morgan Stanley: So basically unchanged quarter-on-quarter?

Yes. So [inaudible] quarter-on-quarter, yes. Ben Uglow – Morgan Stanley: Yes.

Okay. And on Lighting. Yes, if you only strip out the EUR19 million, you come to that conclusion. I’ve also said there is going to slight increase in the material cost. And the remainder is for investments in R&D and selling expenses. Ben Uglow – Morgan Stanley: Okay. So the effect of price during the quarter was essentially insignificant.

Well, if you look at material cost and then passing on prices, and as I said in the prepared remarks, there has been some pressure, price pressure on the professional luminaires side. Ben Uglow – Morgan Stanley: Okay.

We’ve grown there very well. But passing on prices, its something that we still have to look at. Ben Uglow – Morgan Stanley: Okay and we can safely assume that the situation in LED on the pricing side is not what’s driving this?

No, no. We’ll make shift [ph] but no, I would say its more related on the cost side to the growth and the R&D and on the margin side, as I’ve explained. Ben Uglow – Morgan Stanley: Thank you.

Thank you. Our next question comes from Simon Schafer from Goldman Sachs. Please go ahead with your question. Simon Schafer – Goldman Sachs: Yes, thanks so much. Just actually I was going to ask a clarifier on the statement of investments will be required to achieve your targets. Are you thinking majority of that is basically an increase in organic spend, or you talking acquisitions as well, I guess, I am just trying to find a balance as to how much of these investments do you think will be organically possible versus how much of them M&A driven?

Our first priority was to deal with TV. Our second priority is to accelerate the run rate performance in growth and profitability of our existing business. With that said, yes it is organically meant. We will focus very much on boosting the performance of our existing business. At the same time in Q1 we announced three acquisitions, smaller ones. This may happen in the future, but Ron and my focus is on boosting organic performance. Simon Schafer – Goldman Sachs: Got it, thanks. And my second question for Ron actually would be slightly more on the TV business, just to get a sense by how much you annualized operating expenses may fall assuming a successful transition or disposal of the TV business? Thank you.

Yes, well thanks for that question. As you’ve seen, we have reported the TV business and we’ll do so from now on as a discontinued operation and assets held for sale. The cost related to that partly stayed with the remainder of the Lifestyle and with the remainder of Philips. And we call that stranded cost and rest assured that we’ll address those costs. And then you have for the cost that we will face from the disentanglement. And so we will take the measures to address those costs and right now we’re first working through the further solidification of the agreement, we have with TPV. And we’ll update you on that later. Simon Schafer – Goldman Sachs: Okay, thanks so much.

Yes.

Thank you. Our next question comes from Gaël de-Bray from Société Générale. Please go ahead with your question. Gaël de-Bray – Société Générale: Yes, thank you very much. Good morning everyone. My first question relates to the cash flow development in Q1. How do you extend a large the very substantial decline you saw in payables this quarter and how do you expect the rest of the year to plan out in this respect? The second question is about the Audio/Video business. So you plan to merge that business with Accessories. And so do you expect this merger will eventually accelerate the portfolio choices, you will have to make and maybe lead to some substantial restructuring pretty soon. And well obviously in relation to that, what benefits do you expect from this combination and maybe from the headquarters relocation to Hong Kong. And may be a final question if I may, just looking at the cost which was formerly reported as part of the TV business and that are now included in the Group’s EBITA, that’s about EUR30 million this quarter. What are exactly these costs related to? And what can we use as an annual run rate, please? Thank you.

Okay. First question on the free cash flow. So this is mainly related to payables. We have a normal seasonality of about EUR600 million to EUR700 million. This quarter we had some higher cash outflow. So higher cash out due to paying our bills in Consumer Lifestyle. I would put that around EUR100 million. And then we paid also pensions and tax. So that is EUR250 million. So that explains the difference on the free cash flow. On AVM and Accessories, Frans do you want to comment on that?

Yes, sure. The AVM and Accessories supply chain are all entirely in Asia, much of which is outsourced to suppliers. There is a benefit in merging the units being closed to that supply chain and sharing an overhead structure. We are naming the combined unit Lifestyle Entertainment. With that we are shifting the portfolio gradually to more of the well-being side of Lifestyle. Its about a two point – its just slightly over EUR2 billion in size. We think we can make good money in that business going forward.

And your last question. The cost of TV and annual run rate, we can't tell you the annual run rate yet because this will depend on the definitive agreement with the TVP. But we thought we gave – we have given you a very good indication by reporting it separately, very transparently I would say. The costs are typically for management costs and running services. So that’s what these costs are for. Gaël de-Bray – Société Générale: Okay, thank you.

And as I said, we are really going to address that.

Thank you. Our next question comes from Ilan Chaitowitz from Redburn Partners. Please proceed with your question. Ilan Chaitowitz – Redburn Partners: Good morning, this is Ilan Chaitowitz from Redburn Partners. Thank you taking the questions. Just two from me, firstly, just wanted to hit the nail in the head with regard to the LEDs business. We’ve been hearing some quite concerning commentary from respectable peers with regard to both volumes and pricing. Philips is still coming out with pretty high growth in this division. And I was just wondering if you could help us reconcile the different fortunes, perhaps that you’ll see in compared to some of your competitors. That’s the first question. The second question relates to your cash position. And actually I guess as partly as a function of a TVs JV you’re going to be even more cash generative, than you have been thus far. And my question is you’ve got over EUR4 billion of cash in your balance sheet. That’s not an efficient use of capital. Can you give us at least any idea of where you are moving with regard to your decision on how to deploy that, and if not can you tell us when we should expect some insight into what you’re going to do at that power [ph]?

All right, let me take the first one and then Ron will take the second question. So yes, our LED business grew by about 27% in the first quarter. We are pleased with that. I think you should remember that our LED business is a combination of both the LED light source, the LEDs as well as the LED application, both in LED lamps and in LED luminaires. Especially on the LED lamps and luminaires, we saw a strong growth. And I think some of our peers in the industry are focused much more on the LED light source alone. And this is perhaps where your point of reference comes from. Going forward, of course the battle is not won yet. We are very much aware that there is a tremendous transition going on in the lighting market. Personally I think that the Philips strategy to do both light source and lighting application with services in the local market will give us a value added play in the lighting solutions market. So I am quite pleased with that direction, but at the same time I realize that there is a tremendous amount of work still to be done. Ron, the second question?

Yes, thanks for the question. Yes, we have more than EUR8 billion of cash as per Q1. As we have also disclosed, if you look at the gross debt, and you take some of the claims on that gross debt, you come to the net debt of EUR437 million. And then if you look at further down the pensions, the operating leases and credit related guarantees that brings us to an adjusted net debt of EUR2 billion actually. So I thought I’d give you that as a data point. Further to that the stated policy on how we will use cash is we do want to maintain as a first objective our A3/A- rating. Then we’re of course committed to driving higher capital efficiency and cash flow yields in the working capital turns. Stable dividend policy and that’s where the 50% payout of [inaudible] net income. And the cash we then have will be used to invest in value creating growth that will be organic as Frans explained and through some acquisitions, you’ve seen us done a few acquisitions in Q1. Some cash to mitigate risks and then we’ll consider overtime to return capital to shareholders. Ilan Chaitowitz – Redburn Partners: Thank you.

Thank you. Our next question comes from Olivier Esnou from Exane BNP Paribas. Please proceed with your question. Olivier Esnou – Exane BNP Paribas: Hello, good morning. My questions are really on the margin. It was clear that in the framework of the Vision 2015 from the beginning the growth was a challenge. But I have the feeling from your comment this morning that even the margin of at least 10% seems to be a challenge this year excluding – even excluding TV. Is that a fair understanding of what you said? And as a follow-on, I would like to focus more precisely on Healthcare margin because that’s a division where in September last year management actually increased the mid-term range for the margin of that division, which was more ambitious than your peers and at the moment it’s flat. So I was wondering if there was anything that versus September last year was not basically going the way you had anticipated? Thank you.

Okay, thank you, good question. I will take the first part and Ron the second. Vision 2015 that’s a good set of targets. I’ve also said it in the Q1 road show. However, we are not at that run rate yet. There will be work needed including some investments. Moreover the intended TV joint venture with TPV totally changes the landscape of Vision 2015. As we go and implement our granular approach to business management and try to accelerate growth and profitability, we will be able to update you all in the second half of this year with regard to our aspirations and when we can achieve those exactly.

OK, your question on excluding TV the margin as Frans just said, we will give an update on how we will deal with the financial set of aspirations. Now that landscape has changed here. But if you take out TV, the margin would come certainly higher in the range. Olivier Esnou – Exane BNP Paribas: Okay. So its higher. Thank you. And on the Healthcare?

On Healthcare, the target was over the period and not an immediate increase intended from 2010 to 2011. Olivier Esnou – Exane BNP Paribas: So you would say that the plan, so what has happened in September in terms of the performance of Healthcare is inline with what the expectations were at that time?

That performance was at that time inline with what the expectations were. That’s correct. Olivier Esnou – Exane BNP Paribas: Okay, thank you.

Thank you. Our next question comes from Sjoerd Ummels from ING. Please go ahead with your question. Sjoerd Ummels – ING: Good morning, a couple of questions from my side please. First one is on the non-recurring pension contribution. Could you divulge the amount please? And the second one is related to the AVM business. Frans, already alluded to the fact that in the licensing income drop-off is experienced this year due to lower value associated with optical. How should we see this in the AVM context as Blu-ray players and DVD players form an important part of that business mix? And maybe aside to that question, signing of these two businesses, does that also make it easier for Philips in future to actually execute on perspective portfolio actions?

Okay, Sjoerd thank you. Good to talk to you. Let me start with the second question and then Ron will come back on the pension side. So we think it’s a logical to combine AVM and accessories. And we do see the portfolio shift already away from traditional standalone DVD players. We are growing very rapidly in docking stations. We are actually with docking stations in the Apple stores. We are also seeing good growth in personal entertainment such as headsets. The tie-up is to strengthen unit to be close to the supply chain. We are committed to this business. And we expect them to make a good contribution to growth and profitability. It is true that the licensing income is under pressure in this area. But in my mind, separate license income from operational business as on the management team of the Lifestyle Entertainment unit to focus entirely on operational improvements.

On the pension question, you know normally we don’t disclose this but this time I can tell you it’s about EUR120 million. Sjoerd Ummels – ING: Okay, thank you very much.

Thank you. Our next question comes from Martin Prozesky from Sanford C. Bernstein. Please go ahead with your question. Martin Prozesky – Sanford C. Bernstein: Good morning, gentlemen. Just two questions please. The first is getting back to TV. Can you just explain to us what functions you retain relative to your licensees? Do you retain any obligation in terms of R&D and what kind of costs would therefore be associated with that in the future, I understand that it might still be up for negotiation, but just to give us a sense in terms of TPV and also in terms of the other licensees? And then the other question just on the construction cycle of U.S. and can you just give us your expectations there and how that will impact luminaires?

Okay, well let me start with TV. And I am glad that you asked the question because I think there was a tendency that people think there is still a lot of negotiations to do. Actually the term sheet is quite comprehensive. And we will move into confirmatory due diligence already in a few weeks from now which should lead to the definitive agreement. So quite firm. Then with regard to what we transfer into the JV. Well we basically transfer everything of TV into the joint venture, R&D, the marketing teams, business management, our factories, our sales force. So everything goes. The part that is so called stranded costs relates to sector and group overhead and some shared services. And when Ron earlier indicated that the exact run rate of those costs are still to be determined is because the joint venture overtime will plan to become more cost effective in, for example its operating model with regard to IT costs and so on. And therefore some of the transitional services provided by Philips will likely decline overtime, thereby slightly increasing stranded cost overtime. We have made a very clear statement that we will deal with all the stranded cost. Therefore that should not be a long-term concern. With regard to the construction cycle, we did say I think in January that the Arch Tech [ph] building index was edging up. There is quite a lag time between that edging up and the full realization in increased sales. Ron, do we have any particular color on this or –?

At this point we don’t have particular color other than what you just said.

Okay, thank you.

There is some time left. Martin Prozesky – Sanford C. Bernstein: Thank you. One follow-up on the TV. What is your obligations with – in relation to Funai. So do you think [inaudible] cost there and how does that evolve overtime?

All right. Yes, so we have several brand license deals. We have separate brand license deal with TPV in China, with Videocon in India and with Funai in America. There is a brand license agreement between us and these parties. It obliges the license taker to certain quality criteria and positioning of the products on which the Philips brand is used. That does not evolve a lot of cost for us, but rather its an obligation for the licensee. Of course the brand is very valuable to Philips, so we want to make sure that it stays like that. These brand license agreements all provide additional income for Philips which is currently part of the Consumer Lifestyle sector. Did I answer your question? Martin Prozesky – Sanford C. Bernstein: Yes, thank you.

Thank you.

Thank you. Our next question comes from Michael Hagmann from Nomura. Please go ahead with your questions. Michael Hagmann – Nomura International: Good afternoon. In your presentation, you were talking about your evaluation of about 400 different business combinations. And I was wondering if you could share with us what pattern has been emerging. And if you conclude – if you can draw some conclusions on how long it will take to see you results out of addressing the underperforming units and how costly that maybe, is it very costly or is it something that you can actually more easily solve? Thank you very much.

Yes, thank you, maybe I can take the opportunity to say a few words on how we see Philips. We see ourself post to TV as a strong diversified industrial group. We have about 75% of our business in business to business and capital goods. Philips is a conglomerate with quite a number of individual businesses that serve 100 plus countries. So how did we come to 400? Basically if we look at the geographies, we can see about 20 relevant market clusters. And if we look at our businesses, we can see about 20 relevant business segments, 20 times 20 is 400. And so this is how we have implemented a granular and transparent approach where we compare run rate performance on top line margin, bottom line market share, net promoter score with target. And then we can say that some of these 400 cells are actually over achieving their targets and some these cells are below or even way below. Now that is a kind of inconsistent performance that we do not like and we think that we should fire on all cylinders. In fact that if you look in Q1, you already see a deviation for this plan in a relatively short timeframe, and obviously we need to learn and improve. I dare to say this is only good news and not bad news. I think people and analyst have often talked about Philips that there is always something. And we are determined to go to the root cause of that. And so rather than throwing a blanket over a business and only look at the sum total. We take the blanket off and we go granular and look at the transparency. It also allows much more entrepreneurialism and delegation empowerment because at the same time you have accountability and transparency. So I spent a few more words on it because I think it is important on how Ron and I look at improving the execution of our businesses. And as we go through that, yes, in some cases, targeted investments maybe needed to get the right products to the market or to step-up some market penetration. But overall it should be positive news because we deal with the laggards and that will be incremental sales and incremental growth and taking out in some of those cells. Michael Hagmann – Nomura International: Is there a pattern or a theme emerging in your analysis?

Yes. I forgot that. Actually it is all businesses and all markets where there are some cylinders and not a 100%. And so even the good businesses in some markets could do even better. So there is – I don’t call these scapegoats, not at all, its just that people need to be precise and learn and average result is not good enough. We need to be good in every business market combination. Michael Hagmann – Nomura International: Thank you.

Thank you. Our next question comes from Victor Bareño from SNS Securities. Please proceed with your question. Victor Bareño – SNS Securities: Yes, thank you. The double-digit revenue increase in the former DAP looks remarkably strong and the Q4 report already mentioned increased spending for this particular business. Are we now seeing an early impacts from the policy to increase spending or has the strong revenue increased in DAP been driven by other factors? Thank you.

Yes, good point. In deed when Pieter Nota came on board last year. He started to look into the health and well-being side of our Lifestyle portfolio. So the personal care, domestic appliances and health and as well-being. And clearly with some investments and some more oxygen in the system, they are able to grow faster. So I do think there is a correlation there. Victor Bareño – SNS Securities: Okay, thank you.

Thank you. Your last question comes from Piers Ouvaroff of IVI. Please go ahead with your question. Piers Ouvaroff – IVI: Gentlemen, very good morning. I have a very, very quick question for Ron which is this. Just on the EBITA for last year and this year, has TV been excluded both years, and then second question, I remember last year that you talked about having had an unusually large number of working days. And what had happened last year is that increased the EBITA particularly in the Healthcare and Lighting. So I just wanted to know is that impacting the comparison between last year’s Q1 EBITA and this year’s as well, please?

Thank you for the question. Let me clarify, there is some background noise. There is no more working days. So less working. They are the same Q-on-Q. So there is no impact. And we’ve given you the calendar and maybe we should repeat that for this year. We don’t want that to be a surprise.

TV.

On TV. Yes, TV is totally again comparable. Piers Ouvaroff – IVI: Okay so excluded from both years?

Yes, its both years excluded. And there is a reconciliation of the operating results and the discontinued operation results. Piers Ouvaroff – IVI: Okay. So working days were flat year-on-year?

Yes. Piers Ouvaroff – IVI: Excellent. Okay.

Thank you Mr. van Houten and Mr. Wirahadiraksa. And there no further questions. Please continue.

Well let me take the opportunity to thank you all for joining this call also on behalf of Ron. We look forward to meeting you in the future and have this dialog more often. Thank you very much and have a nice day.

Thank you.

This concludes the Royal Philips Electronics First Quarter Results 2011 Conference call on Monday, 18th of April 2011. Thank you for participating. You may now disconnect.