NOKIA IN 2013 NOKIA IN 2013 YEAR 2013 HIGHLIGHTS ............................................................................. 2 KEY DATA ................................................................................................................. 4 REVIEW BY THE BOARD OF DIRECTORS 2012 .......................... 5 ANNUAL ACCOUNTS 2013 Consolidated income statements, IFRS ................................................................. 22 Consolidated statements of comprehensive income, IFRS ............................... 23 Consolidated statements of fi nancial position, IFRS .......................................... 24 Consolidated statements of cash fl ows, IFRS ...................................................... 25 Consolidated statements of changes in shareholders’ equity, IFRS ................ 26 Notes to the consolidated fi nancial statements .................................................. 28 Income statements, parent company, FAS ........................................................... 82 Balance sheets, parent company, FAS ................................................................... 82 Statements of cash fl ows, parent company, FAS ................................................. 83 Notes to the fi nancial statements of the parent company ................................ 84 Nokia shares and shareholders ............................................................................... 90 Nokia Group 2009 – 2013, IFRS ................................................................................ 96 Calculation of key ratios ............................................................................................ 98 Signing of the Annual Accounts 2013 and proposal for distribution of profi t .................................................................. 99 Auditors’ report ........................................................................................................ 100 ADDITIONAL INFORMATION Critical accounting policies .................................................................................... 102 Corporate governance statement Corporate governance ........................................................................................ 108 Board of Directors ............................................................................................... 114 Nokia Group Leadership Team ........................................................................... 117 Compensation of the Board of Directors and the Nokia Group Leadership Team ................................................................ 119 Auditor fees and services ....................................................................................... 140 Investor information ................................................................................................ 141 Contact information ................................................................................................. 143 YEAR 2013 HIGHLIGHTS A TRANSFORMATIVE YEAR FOR NOKIA 7.8. 3.6. Nokia completes the Nokia’s new acquisition of Siemens’ manufacturing stake in Nokia Siemens 25.2. facility in Hanoi, Networks and renames Nokia expands its Vietnam starts the business Nokia Windows Phone 8 customer Solutions and Networks, portfolio by shipments. also known as NSN. launching the Nokia 9.7. Lumia 720 and the Nokia Lumia 520 HERE introduces at Mobile World HERE Drive + Congress. for all Windows Phone 8 smartphones. 11.7. Nokia launches 25.2. 9.5. the Nokia Lumia HERE introduces Nokia introduces 1.7. 1020 in New York. LiveSightTM, Nokia’s the Nokia Asha Nokia announces set of augmented- 501 in New Delhi. its plans to acquire reality technologies in Siemens’ stake the new HERE Maps. in Nokia Siemens Networks. 1/2013 19.11. Nokia’s Extraordinary *HQHUDO0HHWLQJFRQƬUPV and approves the sale 22.10. of substantially all of 1RNLDODXQFKHVLWVƬUVW the Devices & Services Windows tablet, the Nokia business to Microsoft. Lumia 2520 with integrated +(5(0DSVDQGLWVƬUVWODUJH screen Lumia smartphones: the Nokia Lumia 1520 and the Nokia Lumia 1320. 9.9. HERE begins work with Mercedes-Benz to explore “smart maps” for self- driving cars and announces partnerships with Magneti Marelli and Continental. 31.12. The embedded navigation systems of more than 10 million new cars sold in 2013 are powered by maps from HERE, underlining the leadership of HERE in providing navigation and mapping solutions for the automotive industry. 30.10. NSN wins a deal with Sprint for the deployment of its TD-LTE network. Other major deals won by NSN in 2013 include e.g. China Mobile and China Telecommunications Corporation. 30.8. 3.9. HERE introduces Nokia announces the the Connected sale of substantially Driving solution. all of its Devices & Services business to Microsoft and changes in its leadership. 12/2013 KEY DATA Based on fi nancial Nokia continuing operations, EURm 2013 2012 Change, % statements according Net sales 12 709 15 400 – 17 to International Operating profi t/loss 519 – 821 Financial Reporting Profi t/loss before tax 243 – 1 179 Standards, IFRS. Profi t/loss attributable to equity holders’ of the parent 186 – 771 Research and development expenses 2 619 3 081 – 15 Nokia Group, % 2013 2012 Return on capital employed neg. neg. Net debt to equity (gearing) – 35 – 47 EUR 2013 2012 Change, % Nokia continuing operations Earnings per share, basic 0.05 – 0.21 Nokia Group Earnings per share, basic – 0.17 – 0.84 – 80 Dividend per share 0.37 * 0.00 Average number of shares (1 000 shares) 3 712 079 3 710 845 * Board’s proposal Nokia continuing businesses, EURm 2013 2012 Change, % Networks Net sales 11 282 13 779 -18 Operating profi t/loss 420 – 795 HERE Net sales 914 1 103 – 17 Operating loss – 154 – 301 – 49 Technologies Net sales 529 534 – 1 Operating profi t 310 325 – 5 Personnel, December 31 2013 2012 Change, % Networks 48 628 58 411 – 17 HERE 5 741 6 186 – 7 Technologies and Corporate Common Functions 875 950 – 8 Nokia continuing operations 55 244 65 547 – 16 10 major markets, net sales; EURm Continuing operations 2013 2012 USA 1 542 1 498 Main currencies, Japan 1 388 2 176 rates at the end of China 896 1 077 1 EUR USD 1.3751 India 656 757 GBP 0.8444 Germany 609 844 Finland 594 659 CNY 8.3498 Brazil 511 805 INR 85.1620 Russia 421 476 RUB 45.2264 Indonesia 410 418 JPY 141.80 Great Britain 392 540 4 NOKIA IN 2013 REVIEW BY THE BOARD OF DIRECTORS 2013 Year constituted a remarkable time in the almost - non-exclusive license to its patents and Microsoft granted year history of Nokia as two major transactions reshaped the Nokia reciprocal rights to use Microsoft patents in our HERE company. In the fi rst, Nokia purchased the remaining half of a services, our mapping and location services business. The leading telecommunications infrastructure business. In the total purchase price was EUR . billion, of which EUR . bil- second, Nokia divested its devices business which for over lion related to the purchase of substantially all of the Devices three decades had emerged to become a household name. & Services business, and EUR . billion related to the year This has been a transformative time for Nokia, its shareholders, mutual patent license agreement and the option to extend people and other stakeholders. However, we believe that the this agreement in perpetuity (hereafter the transaction is changes we have pursued and executed were in the interests referred to as the “Sale of the D&S Business”). In addition, of Nokia and its shareholders, and today, we believe that the Microsoft became a strategic licensee of the HERE platform, company is on a new path and has the capability to grow a new. and separately pays Nokia for a four-year license. On November , , Nokia’s shareholders confi rmed Sale of substantially all of Devices & Services and approved the transaction at the Extraordinary General business to Microsoft Meeting in Helsinki. We were very pleased by the overwhelm- The process leading to the announcement of the proposed ingly strong support our shareholders gave for the transaction, sale of substantially all of Nokia’s Devices & Services business as total of over % of the votes cast were in favour of the to Microsoft on September , , and eventually to the clos- approval. Having received the approval of Nokia shareholders ing of the transaction on April , , started in early and regulatory authorities as well as fulfi lling other customary when Microsoft approached Nokia indicating its interest in closing conditions, the transaction closed on April , . purchasing all or part of our Devices & Services business. After this contact, we carried out an extensive strategic review and Purchase of the remaining stake in NSN considered a wide range of strategic alternatives and scenarios During the summer we were able to move forward with for the company. This review included, among other things, a negotiating the purchase of Siemens’ share of Nokia Siemens thorough assessment of what would be possible within the Networks, our infrastructure joint venture. We saw potential framework of the partnership with Microsoft, outside of it, as in its leadership in next generation technologies, such as LTE, well as the value of Nokia’s businesses and assets in diff erent as well as in its profi tability improvement, which was the result scenarios. of the focused strategy and successful implementation of During this process and throughout the negotiations, the company’s restructuring programme. We saw an oppor- we consulted with our senior management as well as with tunity to purchase Siemens’ share at what