Nokia 2004 Annual Report Download - page 71

Profit Before Taxes
Profit before taxes and minority interests increased 9% and totaled EUR 5 345 million in 2003
compared with EUR 4 917 million in 2002. Taxes amounted to EUR 1 699 million and EUR 1 484
million in 2003 and 2002, respectively.
Minority Interests
Minority shareholders’ interest in our subsidiaries’ profits totaled EUR 54 million in 2003 compared
with EUR 52 million in 2002.
Net Profit and Earnings per Share
Net profit in 2003 increased to EUR 3 592 million, compared with EUR 3 381 million in 2002,
representing a year-on-year increase in net profit of 6% in 2003. Basic earnings per share
increased to EUR 0.75 in 2003 compared with EUR 0.71 in 2002.
Related Party Transactions
There have been no material transactions during the last three fiscal years to which any director,
executive officer or 5% shareholder, or any relative or spouse of any of them, was party. There is
no significant outstanding indebtedness owed to Nokia by any director, executive officer or 5%
shareholder.
There are no material transactions with enterprises controlling, controlled by or under common
control with Nokia or associates of Nokia.
See Notes 32 and 33 to our consolidated financial statements included in Item 18 of this
Form 20-F.
Exchange Rates
Nokia’s business and results of operations are from time to time affected by changes in exchange
rates, particularly between the euro and other currencies such as the US dollar, the Japanese yen
and the UK pound sterling. See ‘‘Item 3.A Selected Financial Data—Exchange Rate Data.’’ Foreign
currency denominated assets and liabilities, together with highly probable purchase and sale
commitments, give rise to foreign exchange exposure. In general, depreciation of another currency
relative to the euro has an adverse effect on Nokia’s sales and operating profit, while appreciation
of another currency has a positive effect, with the exception of Japanese yen, being the only
significant foreign currency in which Nokia has more purchases than sales.
During 2004, 2003 and 2002, both the US dollar as well as the Japanese yen depreciated (average
rate for the year compared with average rate for the previous year) against the euro. The
US dollar depreciated approximately 9.0%, 16.1% and 6.1%, respectively, and the Japanese yen
approximately 2.5%, 9.8% and 7.7%, respectively. The change in value of the US dollar had a
slightly negative impact on Nokia’s operating profit and the change in value of the Japanese yen
had a slightly positive impact on Nokia’s operating profit. In 2004, the UK pound sterling
appreciated approximately 2.0% against the euro. During 2003 and 2002, the UK pound sterling
depreciated by approximately 9.1% and 1.5% against the euro, respectively. The change in value of
the UK pound sterling had a slightly positive impact on Nokia’s operating profit in 2004, and
slightly negative effect in 2003 and 2002.
Nokia’s balance sheet is also affected by the translation into euro for financial reporting purposes
of the shareholders’ equity of our foreign subsidiaries that are denominated in currencies other
than the euro. In general, this translation increases our shareholders’ equity when the euro
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