Welcome to the Royal Philips Fourth Quarter and Annual Results 2013 Conference Call on Tuesday, 28th of January 2014. [Operator Instructions] Please note that this call will be recorded and is available via webcast on the website of Royal Philips. I will now hand the conference over to Mr. Robin Jansen, Head of the Investor Relations. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen. Welcome to this conference call on the fourth quarter and full year results for 2013 of Royal Philips. I'm here with Frans van Houten, our CEO; and Ron Wirahadiraksa, our CFO. In a moment, Frans will make his opening remarks and will take you through our strategic achievements, as well as through our main financial performance highlights for the period. Ron will then provide more details of the financial performance during the quarter. After this, both Frans and Ron will be happy take your questions. And as usual, our press release and the accompanying information slide deck were published at 7 a.m. this morning. Both documents are now available for download from our Investor Relations website. A full transcript of this conference call will be made available by tomorrow on our Investor Relations website. And before I give the word to Frans, I would like to remind you of 2 things. Following the decision in Q1 2013 to sell the Audio, Video, Multimedia and Accessories business, or the AVM&A business, we reported a profit and loss on this business on the discontinued operations, and the net assets for the business in the balance sheet's underlying assets held for sale. The cash flow of the Audio, Video, Multimedia and Accessories business is reported on the cash flow from discontinued operations. Therefore, all commentary that will follow in terms of sales and earnings at both the group level, as well as at the Consumer Lifestyle sector level, does not include Audio, Video, Multimedia and Accessories-related information. As of October 25, 2013, the agreement to transfer the AVM&A business to Funai was terminated, as you know. Since then, we've received interest in the business from various parties, both strategic, as well as financial investors. And we…

Thank you, Frans. Good morning, and welcome to all of you on this call. Let me take you through a greater level of detail of our financial performance for the fourth quarter and full year 2013. Comparable group sales in the fourth quarter increased by 7% when adjusted for currency and portfolio changes. On a nominal basis, group sales increased by 1% due to negative currency effects of 6%. In our growth geographies, comparable sales increased by 15% in the fourth quarter and represented 37% of the group sales compared to 35% in Q4 of last year. Our growth geographies are defined as all markets, excluding the U.S., Canada, Western Europe, Australia, New Zealand, South Korea, Japan and Israel. In Western Europe, all 3 sectors delivered comparable sales growth in the low- to mid-single-digit range. The other mature geographies also delivered a solid sales performance, with a comparable sales growth of 5% supported by a particularly strong performance in Consumer Lifestyle. Sales in North America remained stable on a comparable basis in the quarter as U.S. market conditions for health care remain challenging, with hospitals working through the implications of the sequestration in healthcare reform. This has led to delays in purchasing decisions and lower order intake. Consumer Lifestyle sales in North America grew low-single digit in the fourth quarter, largely reflecting a reduced selling period of 4 instead of 5 weeks, as well as stock reduction initiatives at some of the larger U.S. retailers. U.S. market shares for Consumer Lifestyle, however, sustained or improved in the period. Lighting sales in North America remained flat, where good performance by LS&E was offset by a decline in sales in Professional Lighting Solutions. In terms of profitability at the group level, reported EBITA was EUR 884 million, or 13% of sales, compared…

[Operator Instructions] Our first question comes from Andreas Willi from JPMorgan. Andreas P. Willi - JP Morgan Chase & Co, Research Division: My first question is to clarify your guidance for '14. You said you expect a modest improvement on '13. Basically, does this mean that given the 10.5% EBITA margin, reported EBITA margin in '13, we should see a modest improvement from that level for '14 as part of your guidance? Second question on payables and the weak performance here in Q4, maybe you could give us some explanation in terms of timing of payments you made and whether we should get some are recovery as we go through '14? And the third question on Healthcare, if we look at orders, you have now underperformed Siemens and GE for 2 quarters in a row on equipment order growth, are you concerned about market share innovation there, or is that something you are confident is basically stable if we look through larger orders and the usual fluctuations? François Adrianus van Houten: Let's share the questions between Ron and myself. I'll give you some color on the guidance of 2014. When we talk about modest improvement, we do not only talk about the overall profitability number, but we look also at the quality of our underlying businesses, which we expect can each improve. Of course, in the mix, we also need to look at the guidance that Ron already gave in December around IG&S, so that also goes into the equation. And you need to take into the equation that we will make some step-up investments in growth, as well as restructuring. Some of that will mean only a modest step on our trajectory for the 2016 targets in terms of profitability. On Healthcare, we need to, in terms of comparability,…

Yes, Andreas, your question was on the payables, where indeed, we have seen quite a lumpy pattern over quarters. This is driven by seasonality, but also by the fact that we have our own calendar. As I many times say, payments fell in- or outside the quarter, and I know that's not a very satisfactory answer and it's probably something that we are going to look at, holding our Philips calendar, which has a pattern of 5 weeks, 4 weeks, 4 weeks. If you break it up, that's influencing this too much, we can think of further improvements. But payments tend to come in lumpy. There is seasonality, and also we've been working on better payment discipline over the past years. It's not an excuse, but this is just an explanation of why the pattern sometimes comes in erratic. Of course, at the end of last year, we had quite high payables, which were partly driven by the CRT fine, EUR 509 million, and we signed in the provision parts by -- but that's not payables, by restructuring. So that influenced the working capital and we've disbursed some of those restructurings, as I've said, earlier in the year. Maybe shed a little bit of a light on the full year free cash flow development, the last year, we had EUR 1.6 billion. This year, it's EUR 0.2 billion, you round it off, and it's exactly what I've been talking about throughout this year. Because last year, had EUR 600 million of good incidentals, the High Tech Campus sales and the Senseo brand sales, and this year, mainly the EUR 509 million CRT fine that we paid out and about EUR 280 million, EUR 300 million in the restructuring provisions that we had an outlay for. So that is about the gap of EUR 1.4 billion. And, of course, we look forward to drive cash flow structurally every year between EUR 1 billion and EUR 1.5 billion.

Our next question comes from Martin Wilkie from Deutsche Bank.

It's Martin from Deutsche Bank. A couple of questions. The first one on Lighting, very, very strong organic revenue growth, driven by LED, but the margin on a clean basis just going up by about 20 basis points quarter-on-quarter. I'm assuming there's lots of moving parts in there with cost savings coming through, but just if you could let us know if -- has that been tempered somewhat by a mix with LED or is it foreign exchange or if you could just let us know a little bit more detail about that margin development in Lighting sequentially in the quarter? That was the first question. And secondly, just to clarify, on Healthcare you talked about a facility closure that could have an impact on EBIT in the first half of 2014. Just to clarify, was there any cost of that included in Q4, just to understand that development? François Adrianus van Houten: Okay. Well, thanks for the question. So if you look actually on adjusted EBITA basis, the margin expansion has been the same, 10.4%, 10.4%. We had good sales growth, as we reported. Also, there has been influence of ForEx in that number, and somewhat less of an operational leverage than anticipated. If you look at the reported EBITA number, actually, you see somewhat better number, 8.5% and 9.5%, which is also because last year we took quite some restructuring provisions. So, yes, it's a good point that the operational leverage could have been better. It's something that we're increasingly working on. But I would also mention that if you look, compared, even excluding the big restructuring we took last year, that there's a significant quarter-on-quarter for the year improvement. So even though the quarter was versus quarter progression does not mean that much, I would also say that we have been able to sustain the year-on-year performance and overcame quite significant headwinds, particularly also in currency.

But -- so it's not mixed in LED? It's much more attributable to the currency side?

It's not the mix in LED. In fact, the mix in LED has gotten somewhat better as we are growing in volume and more of the operational leverage of the expenses we're making to develop innovation and go-to-market there pay off.

And the second question [indiscernible]...

[indiscernible] Healthcare, yes, that's...

So the question in Healthcare was, you'd mentioned about facility closure impacting the outlook in the first half of '14 by EUR 60 million or EUR 70 million. I just wanted to clarify if there was any cost at all in Q4 that would have impacted the EBIT in Q4 of '13?

No, that's not the case. It's 2014 even.

Our next question comes from Gael de Bray from Societe Generale.

Two questions, please. The first one is on Healthcare. Given all the headwinds in terms of the negative FX impact, the softer order intake and also now, the manufacturing issues, so is there a chance that Healthcare sales and profit actually turned negative in 2014 in terms of development? The second question is, I mean, selling expenses dropped by 160 bps as a percentage of sales in Q4. I think that's been a common feature throughout the year now. So maybe what's driving this decline in selling expenses? François Adrianus van Houten: Okay. On Healthcare and the down trend, we're not giving guidance. I agree with you that with the ForEx headwinds, which also will impact Healthcare in the uncertainties in the economy, not the least also the ongoing uncertainties in the U.S. health care and a hospital system that is reconfiguring itself, we need to see throughout the year how we will deal with this. We also, as he have announced, are reconfiguring our sales organization to have a better, more effective ratio of order intake and become more efficient and better geared to customer needs serving these large integrated delivery networks, I would say. The FDA, as we said, this is -- will be a EUR 60 million to EUR 70 million impact in the first half, but we expect to recover most of that with additional measures in the second half of 2014. And if not all overcome, we'll work very hard to try to neutralize the full impact for the year. The sellex and 160 basis points, yes, bear in mind that last year also there was quite some restructuring in that number. And that if you look at it on a comparable basis, the trend is not -- it's a downward one. A similar argumentation holds true for R&D. We are definitely not achieving our mid-term targets by cutting back on either go-to-market spend or innovation. I would argue the contrary, that since 2010, we have spent significantly more money in R&D and in go-to-market, so you're selling expenses. But of course, it is also true that we will look at productivity there. And some of the overhead savings are also coming in, in that area, a normal pattern, I would say.

Our next question comes from Olivier Esnou from Exane BNP Paribas.

Yes, few questions, please. First, maybe just to clarify the guidance again -- sorry, I'm coming back to that. But when you say that the margin will only moderately improve from 10.5% this year in 2014, you do actually include -- I mean, it's an all-in margin. You Include the restructuring, also the negative impact of the Healthcare disruption in H1 and potentially going in H2. I just want to clarify that it's an all-in number. And certainly, on your comment earlier about the introduction about the health initiatives [ph], maybe, do you have the number of project launch in 2014 that you have? I remember you gave '13, it was about 50. And third question on the -- I mean, backwards on the FDA disruption, I remember this happened to one of your competitor in the past. And could be -- sometimes it can last a bit longer than we think. So I was just wondering your level of confidence on the limited disruption for the year, if you have any visibility at this stage to be really confident to recover? François Adrianus van Houten: Well, okay, Olivier, we'll look up the number of new product introductions. I'm looking at my team here whether we have that. Let me start with the other questions. Yes, on the guidance on margin, obviously, we don't give specific guidance. Andreas also asked there, that question. And my response was that when we talk about making another step is that we look at the underlying quality of the performance of each of our sectors. We would like to improve every sector performance. There's also IG&S to consider, the IT income to consider, the extra investments in innovation and restructuring. So we give a qualified statement that the underlying quality of the performance will increase with modest step taking all of that into account. And therefore, we don't give guidance on exactly the profitability last year versus this year. Sorry, but I cannot help you there in a precise manner. The FDA question, of course, we are very much aware of -- that these things can be severe. This is also why we take it very seriously. And at the moment, as we observed the manufacturing control efficiency in Cleveland, we immediately took proactive action with a voluntary close of the manufacturing operation so that we can immediately remediate the efforts. This work has already started, and we expect this to happen in the first half of 2014. And then recuperate significantly the effects of that in the second half. So at this stage, that is all I can say about it. We have full attention to it, and we look then with confidence to fix this. And let me...

Maybe just a quick follow-up. On your introductory remarks, you also said that Philips was gradually shifting from product to solutions. François Adrianus van Houten: Yes.

In your mind, is it something which is structurally positive or negative for the margin? Because it means different things to different companies, so I just want to have an idea of what are the implication for you, for Philips? François Adrianus van Houten: Well, first of all, I believe that hospital systems require a technology partnership, and they are fed up with buying individual products, all of individual makers that make their life complex in terms of training and efficiency and integration. Of course, when you go to larger deals, customers may expect better terms. On the other hand, it's, for us, more efficient to have a multiyear deal in which we help each other. So overall, I believe that by moving to solutions, we will shield ourselves against competition on point solutions, thereby avoiding commoditization. And by adding the clinical informatics and the software and systems integration, we can provide unique solutions to every individual hospital. And again, that adds a lot of value to our customers. And that's in line with our ambition to be locally relevant and close to our customers. So overall, to sum it up, we think it will have a positive effect on our margin potential.

Our next question comes from Simon Toennessen from Credit Suisse. Simon Toennessen - Crédit Suisse AG, Research Division: Two questions from my side. I mean, a few people have asked already about group margins in '14 and I acknowledge obviously that you don't want to give any specific guidance. I'm just a bit more interested in the margins in Healthcare. I mean, one of your key competitors in Healthcare flagged in the past that they're seeing margins peaking in Healthcare. You obviously have quite a lot of competitors in Japan, which have a substantial FX benefit. I mean, your last CMD was obviously mainly about consumer and lighting and not so much about Healthcare. So I would just appreciate a bit more color, how you think margins in Healthcare can improve apart from just overhead cost savings, which you flagged as a key contributor to this 100 basis point margin improvement in Q4. Just looking at consensus numbers and, obviously, you don't need to comment about those, but looking at those, their consensus is implying almost 120 basis point margin improvement in '14 on an underlying basis versus what you've just reported. So it looks quite challenging, so I would just appreciate a bit more color around that. And the second question is just on FX. Maybe, Ron, if you could give us maybe a bit more guidance about -- for Q1 and maybe Q2, what we should think about the FX impact there? François Adrianus van Houten: Okay, very good question. Thank you. Of course, in Healthcare, we peaked under the influence of Accelerate! working on more operational excellence. There was much more potential, I would say, with the 1% growth, strong margin improvement in Healthcare. We have, as we mentioned, also, the DfX initiatives. There's a ramp to…

Yes, on the ForEx, I just kind of implied it already in what I said earlier, but it's a good point, Frans. So ForEx, of course, this year, we've been, of course, impacted by ForEx. We've seen a 600 basis points, and there's been an impact in the results. We overcame that. First of all, we were partly hedged, and I say partly because these things roll on and off. So it's not that you're 100% immune to it. That's why we've also been working on cost-out in the areas where it hits on improving, of course, and further driving intimacy in customer relationships. We make sure the business is ongoing. And where we could, we have increased prices. With all of that, and also, of course, with Accelerate!, we've been able to overcome all these headwinds. We mentioned them, but we don't excuse the result for it. That's been an achievement, I think. Now go-forward for 2014, even at today's currency rates, the ForEx headwind will get stronger. And that is not only because there's pressure on exchange rates, but also because more of these hedges are going to roll off. We'll work towards overcoming them, but it's exactly why we mentioned that there is ongoing currency headwind, particularly in the first half of the year.

Our next question comes from Fredric Stahl from UBS.

It's Fredric here from UBS. I just -- actually, I wanted to start with a fairly detailed question. I'm just curious on the air purifier. Could you give us an indication how big that is as a part of your consumer business, and how fast it's growing? And then the second question, again, more detail on the Professional Lighting Solutions growth, it accelerated compared to last quarter. Could you give us some color on what geographies drove that growth? François Adrianus van Houten: Peter, Personal Lighting Solutions.

Okay, Fredric, thanks for that question on air purification. It's nice how Philips benefits from the unfortunate environmental issues in the world. Air purification business is a business that has been started 3 years or so ago, and from 0 grew to EUR 100 million in that time frame. So it's a nice example of entrepreneurship. It may not move the needle for the totality of Philips, but it's an example of what I like to see more. It's a spirit that we encourage in the rest of Philips, and the growth rate is fantastic. So we can hopefully continue and see more of that. I'm confident that we can. And by the way, air purifiers will now connect to smartphones. And then through you smartphone, you can remotely monitor the air quality in your apartment. Who doesn't want to have that? Then Professional Lighting Solutions, as you know, we are dealing with a transformation in PLS in North America, where we are finally consolidating the various brands coming from our Genlyte acquisition and the sales force integration and the manufacturing footprint. Arguably, we should have done that earlier, but we have made a major progress in 2013. We have lost a little bit of ground in 2013 versus our competitors. We aim to get that back in the next period. We saw very good traction in both Europe and in the emerging markets. The premise, the value proposition of PLS is very, very strong. Energy efficiency becomes increasingly the theme. I was in Davos last week, we -- as you know, we have this deal with the city of Buenos Aires, where we do 125,000 city lights with our CityTouch. We were in a gathering of city mayors last week. The city mayor of Buenos Aires stood up and gave a glowing story on how Philips is helping turn around the financials of Buenos Aires. Many other city mayors, after the meeting, came to us and say, "Can we please also do this?" So you see that Davos is not only about high-level talk, but actually, we go there for business leads. I'm quite optimistic that PLS is on the right track to become the future of lighting. I mean, strategically that is where we want Lighting to end up. And LED part in PLS is more profitable than the conventional part in PLS. So also structurally, it is a highly attractive segment to operate in.

Our next question comes from Aaron Ibbotson from Goldman Sachs.

I have 2 questions, if I may, both on Lighting. So the first one was just, I was curious at your -- you expensed slower growth in the U.S. than Europe overall in the Lighting division. I was just wondering if you could comment a bit on that and if this was something general or anything specific related to more intense competition on the LED side, for instance, in the U.S.? And secondly, also on Lighting, I was hoping that you could potentially give some update on the gross margin development in LED versus non-LED. And specifically, if it's okay, I am very curious to hear your thoughts on Automotive LED, which is both growing faster and expected to continue to grow faster, whether that is sort of dilutive to Lighting margins overall? François Adrianus van Houten: Okay. Well, let's start with the first one. The slower growth in U.S. versus Europe, I think that's specifically also a Philips issue. I mean, I've just explained to Fredric that PLS North America is undergoing quite some change and, therefore, was not growing. Whereas in Europe, we have good traction. I would also point out to the fact that energy efficiency in Europe is high on the agenda. And we play into that opportunity. Energy costs in Europe are much higher than the United States, and therefore, we see good chances to advance our energy efficient lighting solutions in Europe, and the same applies to emerging markets. To the gross margin comparison, I think we have talked about this at the Capital Markets Day several times. I've already, just now, said that PLS is comparatively better. Overall, LED margins are up from 2012 to 2013, reflecting the good work that we are doing to improve profitability of LED. Differentiation of the value proposition mix, of course, a big difference, so connected lighting and all the features that we bring out help us in that respect. We do the same in Automotive, where your question is. In Automotive, we see strong interest in higher-level assemblies of LED, including the light guides and similar points so versus selling just a naked light bulb, we see actually that we can supply simple assembly, but from a margin point of view is also good. We have very good traction, even though the overall proportion of LED sales in Automotive is still very, very small. So the conventional -- even though a lot of people talk about it, and it is highly aspirational to have these sexy LEDs in your car, the vast bulk of cars is still unconventional. And that will stay for at least the next 10 years as the mainstream of the Automotive business. I think that is about as much as I can say about it right now.

Okay. I had one quick follow-up just on Healthcare in Europe. It had been asked quite a bit in relation to GE and Siemens, but I was also curious if you believe sort of emerging market competitors is having an impact on pricing and potentially on your volumes or order intake in Europe. Is that something you're seeing, or is that still basically a non-event in your view? François Adrianus van Houten: Yes, that is something that is not very prevalent. And I don't see that as a big risk, especially given the fact that there's a trend towards larger deals, more holistic partnership deals and less opportunism on individual single product sales. So overall, this is not a big threat to us at this time.

Our next question comes from Philip Wilson from Redburn.

I have 3 questions, if I may. Firstly, on FX. Siemens talked today for the first time about 40 basis points of margin dilution in the quarter from FX as their hedges wore off. Can you help, perhaps, what you saw as the margin impact of FX for the fourth quarter for yourselves, and how that impacts in 2014 as the hedges roll off? Secondly, on G&A. G&A expenses, if I look around your basis, increased from 3.6 in 2012 to 4.0 despite the EUR 500 million overhead savings in the year. Can you explain why this increased? And can you give some commentary today on R&D and selling expenses? And can you help with how G&A will trend in 2014 as a percentage of sales, and should we expect it to come down given the further overhead savings? And finally, on Lighting, obviously very strong growth. But within that, Consumer Luminaires has been in decline for the past 2 quarters now and relatively no growth for the past 2 years. Can you outline what growth expectations you have for Consumer Luminaires for 2014, and what the strategy is to improve the growth there? François Adrianus van Houten: Okay. On the ForEx, as I said, there's been a significant impact. I don't believe we have quantified it in the way you articulate. But definitely in Q4, there's been a significant impact in the margin, as I said, that we overcame. I can only tell you that go-forward, as I said earlier, in the first half, this will be a further headwind for the whole of 2014, but particularly in the first half for reasons mentioned. You asked why the G&A increases, and how this would trend. So bear in mind that we are still doing restructuring in a number of areas also in our so-called global service units. And if that hits there at some point, plus a number of other restructurings and also the IP aggregate investments come in that line are the ones that we do to create the Philips integrated landscape away from the legacy systems, around the 4 standardized business models that we have outlined there, that we want to operationalize by 2016-17, for which we will do the first implementation in the second half of 2014. But...

With regard to your Consumer Luminaires -- oh, you were still on the G&A. François Adrianus van Houten: On the G&A, bear in mind that in 2012, there was also a pension gain in G&A that is diluted, elaborated on that also at that time.

Okay. Then your last question on Consumer Luminaires. We have made a lot of progress in 2013 in improving the profitability, still not totally there yet. What we see in the world is that the traction in Asia with Consumer Luminaires is very, very strong and also well profitable. In Europe, we see very weak consumer demands for Consumer Luminaires, and we are still seeing the effect of the adaptation of our business model. And nevertheless, we are confident that we can make further progress on the Consumer Luminaires in 2014.

Your next question comes from Peter Olofsen from Kepler.

I have 3 questions, if I may. First of all, on the comparable sales growth in Lighting, the 3.2 percentage you reported for the full year. Could you provide the split between volume and pricing/mix? And then on the home health-care business, Respironics, I think one of your main competitors there reported quite weaker quarterly results. I think they were impacted also by competitive bidding. Could you shed some light on the market circumstances and pricing environment in that particular business, also because your competitors seem to suggest that they might become a bit more aggressive on pricing? And then finally, on the Dutch pension plan, the EUR 600 million that you will contribute, can you shed some light on how much of this amount will be cash, and how much will be noncash? François Adrianus van Houten: Let's start with the third question on the pension plan. And, Ron, if you would take that, please?

Yes, the EUR 600 million contribution, we don't give out the specific details on that usually. But we think about half, a little less than half will be in cash. François Adrianus van Houten: Okay. Then on Respironics versus competition, couple of things at play. I think, first of all, the implied message was, of our competitor, was that somebody else was gaining traction. I think that was us because we are gaining traction on the patient interface on the mask. So new products are doing very well, and we are pleased that we have been able to come with some very attractive patient masks that is -- allows us to gain some market share back in that place. Competitive bidding is changing the landscape. The DMEs are consolidating. It creates a massive transformation of the marketplace. We also see that there's an opportunity to move into a more direct-to-consumer play. Pricing is challenging. So far we are managing margins, and we believe that structurally we continue to regard this business as a very good business.

If you felt that, then why are you not putting [indiscernible] on that? François Adrianus van Houten: In the breakout for the Lighting sales?

Yes, so the Lighting sales, it's mostly volume. We've seen price erosion, still quite manageable. Going forward with a LED lamps, particularly, the price erosion will somewhat increase do drive it to a better price point. But that is something that we have anticipated and we are working, of course, in the cost of goods to drive that to a good margin, so that's on the Lighting split.

And when you say that it will accelerate on the bulb side, to what kind of levels? François Adrianus van Houten: Well, as you see that subsidized for now in the U.S., it's about $5. So it will gravitate to that point, at some point in other areas. And, of course, then it has to become nonsubsidized. So we've always said around EUR 5 in our case. It's a good data point to think on, and from then onwards, it probably will erode a little more.

Our next question comes from Andrew Carter from RBC.

I had 2 questions, please. The first is just regarding some of your growth geographies. And I wondered if you could just talk a little bit more about what you've been seeing? I mean, I thought it was particularly interesting that given -- well, obviously, you've had a couple of quarters were things have been a bit more difficult, at least, in the macro terms. You've actually just had, I think, a record quarter in terms of sales growth out of those growth geographies, so I just wondered what you were seeing and whether you thought that, that was sustainable as we go into 2014? And the second question was just a very quick one, I guess, on Lighting. And one of the things that people have been looking out for is starting to see some construction activity picking up, particularly, I think, in Western markets. And I was wondering if you had any comment as to whether you've seen that yet and whether you've got any sort of lead indicators that it might be coming? François Adrianus van Houten: Yes, let me give some color on the growth geographies. We are very happy to report 15% sales growth in the fourth quarter. At the same time, the order intake in the fourth quarter was a little bit weaker because of the uncertainty in those markets, so growth markets are not invulnerable for the effects that we have been talking about. Structurally, Philips is well positioned for growth markets, and that has to do with our strategy. We are addressing the health-care needs in those markets. Most emerging markets need more light. There is urbanization. There is demand for energy efficiency and we play into that. By choosing different business models, such as selling light as a service and making it a multiyear recurring revenue deal rather than an upfront investment, we can also overcome the hurdle of a big investment. Regional development banks are also supporting us in that in order to do different deals. So all in all, I think we can continue to be cautiously optimistic even though I hasten to say that social unrest, like in the Ukraine or in Turkey, as well as the currency movements, like in Indonesia, of course, in the near term are not helping us. Your second point on construction in Lighting. Actually, we see the retail market in the U.S. pick up a bit. But there, the Lighting content is very, very low. The professional construction or the commercial construction is still very low, and we do not really see a pickup. So far, the success in the Lighting has a lot to do with the renovation or the retrofit market, where [Technical Difficulty] François Adrianus van Houten: You should turn your microphone on mute. So building owners are interested to upgrade their existing buildings with LED Lighting, okay?

Our next question comes from Hans Slob from Rabobank.

Two questions. The press release states that you saw higher IP royalties related to onetime patent settlements for Blu-ray NTC. Could you disclose the impacts of this onetime settlement? And secondly, could you shed some further light on the performance of the Lumileds business, your underlying performance and if you see room to improve that further in '14? François Adrianus van Houten: The higher IP, one-off settlement is EUR 70 million. The Lumileds has increased its performance over the year. As you know, last year, we were close to a breakeven for Q4. In Q4, we were breakeven. This year for the full year, we have increased our profitability. That's on the back of good business development. As you know, Lumileds does more than only generate illumination. The other parts in the portfolio are like flash, and Automotive's been -- these have also performed very well. Looking to improve Lumileds further for this year. And it will be mostly geared towards the second half of the year, that improvement.

Our next question comes from David Vos from Barclays.

One more question, please, or actually 2 maybe, if I may. The first one on Lighting, could you perhaps talk about the license income part of the portfolio there, and how you see that developing. I think you've added about 100 license fees to the program and recently, a couple of high-profile ones. So it will be interesting to hear a bit more about that. And secondly, just a housekeeping, what do you see in terms of tax rate and financial charges for next year, please?

The license income, we said earlier and it also turns out that way, as I said earlier in my speech. So we have expected that in about 4 years' time, license income would come down structurally by EUR 15 million a year. So it's about EUR 60 million. So about EUR 15 million per year will come down. And then the second question -- oh, the financial charges, sorry about that.

And the tax rate, please?

The tax rate guidance is for 30% to 32% go forward. On financial income and expenses, we expect to be within the same bandwidth as this year. If you take the financial income expenses on total average growth, that's 7.7 [ph]. And, of course, a little bit more in that than just interest costs are -- the interest cost of the loans are between 5% and 6%.

Our next question comes from Mark Davies Jones from Agency Partners.

Could I just go back quickly to the reorganization of the sales infrastructure in the U.S. Healthcare business? A little bit more on the rationale for that would be great, but also any financial implications for that? Are you actually reducing related headcount or increasing headcount? Is there restructuring cost associated with that process?

Yes, okay, I'm happy to take that question. You have heard me talk about a trend of hospital consolidation and also that we are moving more from a product sales company to a solutions sales company, a partnering company. The 2 trends go together, obviously, and give us an opportunity to engage more at the enterprise level with large hospital chains and also make a different pitch. So whereas in the past, we would make a pitch just to sell a more efficacious scanner, we now are making the pitch that we can drive productivity for the entire hospital. Obviously, that requires different setup, different skills, different -- also reporting lines in the sales organization, so we are creating teams, hunting teams that will support hospitals in their quest for driving productivity and efficiency. So that is behind the transformation. So it's not a transformation that is driven out of cost, but much more a transformation in the light of a changing health-care landscape. Of course, as we are focused on competencies and capabilities, there can always be some consequences for individuals. But then again, that's not the driver of this change. In terms of financial implications, I would consider that to be minor and not really influencing the results. Of course, there can always be some turmoil as you implement these changes. But at this moment, I don't expect that.

Due to the time, the last question is a follow-up question from Andreas Willi from JPMorgan. Andreas P. Willi - JP Morgan Chase & Co, Research Division: Just wanted to clarify on your guidance again -- sorry to have to come back to that. But it's clearly also affecting your share price during the conference call. In the statement, it clearly reads that the improvement is targeted on a reported basis because you mentioned that you take into account restructuring and investments. And on the call, you say it's underlying. And I think that if you could just clarify that once again because it's clearly a material difference here on what you're trying to say. Maybe you're not trying to say much on what you expect for '14, but that's clearly an issue here. François Adrianus van Houten: Okay. No, clearly, Andreas, I mean, thanks, first of all, to coming back on it. And I know you want to have clarity. So obviously, we strive to improve the profitability on a reported basis overall for the company. I thought I was helping you by talking about the underlying effects because that is what makes a business grow better. As you wrote in your own piece, there was some one-off effects in health care of last year in 2013. We want to drive the operational results better every year, and that is why I gave you color on what is happening. And then, of course, some of the investments that are happening, so that you can form a more balanced and integrated picture. But, of course, we are committed to drive towards our 2016 targets. Those targets are higher than our achievements in 2013, and we will make step-by-step progress on that journey. No doubt about it. Andreas P. Willi - JP Morgan Chase & Co, Research Division: But, I mean, you have targets on a reported basis, so if you say we want to make progress, the market assumes it's on a reported basis. François Adrianus van Houten: Exactly. That's what I'm just saying, on a reported basis. We are fully in agreement.

Thank you, Mr. van Houten and Mr. Wirahadiraksa. There are no further questions. Please continue. François Adrianus van Houten: Thank you very much for attending, and I look also forward to seeing some of you on the roadshow that both Ron and I will do in parallel over the next few days. Thank you.

This concludes the Royal Philips Fourth Quarter and Annual Results 2013 Conference Call on Tuesday, 28th of January, 2014. Thanks for participating. You may now disconnect.