Nokia 2015 Annual Report Download - page 59

57
Board review
NOKIA IN 2015
For the year ended December 31, 2014 compared to the year ended December 31, 2013
The following table sets forth selective line items and the percentage of net sales that they represent for the years indicated.
For the year ended December 31
2014
EURm % of net sales
2013
EURm % of net sales
Year-on-year
change %
Net sales 578 100.0 529 100.0 9
Cost of sales (8) (1.4) (14) (2.6) (43)
Gross prot 570 98.6 515 97.4 11
Research and development expenses (161) (27.9) (147) (27.8) 10
Selling, general and administrative expenses (65) (11.2) (56) (10.6) 16
Other income and expenses (1) (0.2) (2) (0.4) (50)
Operating prot 343 59.3 310 58.6 11
Net sales
Nokia Technologies net sales in 2014 were EUR 578 million, an
increase of EUR 49 million, or 9%, compared to EUR 529 million in
2013. The increase in Nokia Technologies net sales was primarily
attributable to higher intellectual property licensing income from
certain licensees, including Microsoft becoming a more signicant
intellectual property licensee in connection with the Sale of the D&S
Business. The increase was partially oset by decreases in licensing
income from certain other licensees that experienced lower levels of
business activity, as well as lower levels of non-recurring IPR income
compared to 2013.
Gross margin
Nokia Technologies gross margin in 2014 was 98.6%, compared to
97.4% in 2013. The increase in Nokia Technologies gross margin was
primarily attributable to the absence of a one-time cost related to a
patent divestment transaction which negatively aected gross margin
in 2013.
Operating expenses
Nokia Technologies R&D expenses in 2014 were EUR 161 million, an
increase of EUR 14 million, or 10%, compared to EUR 147 million in
2013. The increase in R&D expenses was primarily attributable to
investments in business activities, such as building the technology
andbrand licensing units, which target new and signicant long-term
growth opportunities.
Nokia Technologies selling, general and administrative expenses
in2014 were EUR 65 million, an increase of EUR 9 million, or 16%,
compared to EUR 56 million in 2013. The increase in selling, general
and administrative expenses was primarily attributable to increased
activities, such as building the technology and brand licensing units
related to anticipated and ongoing patent licensing cases, as well as
higher business support costs.
Nokia Technologies other income and expense in 2014 was a net
expense of EUR 1 million, a decrease of EUR 1 million, compared to
anet expense of EUR 2 million in 2013.
Operating prot
Nokia Technologies operating prot in 2014 was EUR 343 million, an
increase of EUR 33 million, or 11%, compared to an operating prot of
EUR 310 million in 2013. The increase in operating prot was primarily
attributable to an increase in gross prot. The increase was partially
oset by higher operating expenses. Nokia Technologies operating
margin in 2014 was 59.3% compared to 58.6% in 2013.
Group Common Functions
For the year ended December 31, 2015 compared to the year ended
December 31, 2014
Group Common Functions operating loss in 2015 was EUR 127 million,
a decrease of EUR 15 million, or 11%, compared to an operating loss
of EUR 142 million in 2014. The decrease in Group Common Functions
operating loss was primarily attributable to change in other income
and expense, partially oset by an increase in selling, general and
administrative expenses. Other income and expense in 2015 included
net income of approximately EUR 100 million related to investments
made through unlisted venture funds, a signicant portion of which
resulted from Nokia Growth Partners selling its holdings in Ganji.com
to 58.com for a combination of cash and shares. The increase in
selling, general and administrative expenses was primarily attributable
to transaction and other related costs. In 2015, Group Common
Functions included transaction-related costs of EUR 99 million
compared to EUR 25 million in 2014.
For the year ended December 31, 2014 compared to the year ended
December 31, 2013
Group Common Functions operating loss in 2014 was EUR 142 million,
an increase of EUR 85 million, or 149%, compared to an operating loss
of EUR 57 million in 2013. The increase in operating loss was primarily
attributable to the absence of a distribution from an unlisted venture
fund-related to the disposal of the fund’s investment in Waze Ltd of
EUR 59 million that beneted Group Common Functions in 2013. In
2014, Group Common Functions included transaction-related costs
ofEUR 25 million. In 2013, Group Common Functions included
restructuring charges and associated impairments of EUR 10 million,
as well as transaction-related costs ofEUR 18 million related to the
Sale of the D&S Business.