Nokia 2004 Annual Report Download - page 142

Notes to the Consolidated Financial Statements (Continued)
2. Restatement of previously issued financial statements
In 2003 and earlier, the Group maintained its excess cash in a single pool of highly liquid, low risk
instruments with varying maturity dates. These pooled instruments were originally presented as
cash equivalents irrespective of the instruments’ maturities. During 2004, cash management
practices were revised, such that this single pool was divided into two—one of instruments with
maturities of 90 days or less at the date of acquisition and the other of instruments with
maturities of more than 90 days at the date of acquisition.
This change was made in order for the Group to better manage its excess liquidity by enabling the
use of longer dated instruments where appropriate and by facilitating a wider range of
benchmarks for performance measurement and interest risk management purposes. Both pools
remain available to meet the Group’s cash commitments, and initially, both have similar highly
liquid and low risk profiles, with the pool of 90 day and under instruments treated as cash
equivalents and the pool of over 90 day instruments treated as available-for-sale investments,
liquid assets.
In the future the risk profile of the two pools may be different in line with the revised cash
management practices.
In connection with this change in its cash management practice, the Group re-evaluated its policy
for determining cash equivalents and concluded that EUR 8,512 million and EUR 5,678 million in
2003 and 2002, respectively, previously presented as cash equivalents should have been excluded
from that classification and instead presented as current available-for-sale investments, liquid
assets. For the purpose of this Annual Report on Form 20-F the Group has defined the change in its
accounts (IFRS) for this item as a restatement of prior period balances and the related activity in
the statement of cash flows for this item. For all other purposes of the publication of its annual
accounts under IFRS to shareholders, the Group concluded that the change did not constitute a
fundamental error as defined in IAS 8, but has reclassified cash equivalents in prior years to be
consistent with the 2004 classification. Accordingly, there are no differences in the classification of
cash equivalents between the annual accounts (IFRS) contained in this Form 20-F or otherwise
published by the Group.
Further details of the Group’s risk management principles in relation to its excess liquidity are
provided in Note 35.
3. Segment information
Until January 1, 2004, Nokia’s organizational and reporting structure consisted of three primary
business segments: Nokia Mobile Phones, Nokia Networks, and Nokia Ventures Organization.
Effective January 1, 2004, Nokia’s structure was reorganized in a move to further align the Group’s
overall structure with its strategy. Nokia’s revised structure includes four business segments,
which form the main reporting structure: Mobile Phones; Multimedia; Enterprise Solutions; and
Networks. Nokia’s reportable segments represent the strategic business units that offer different
products and services for which monthly financial information is provided to the Board. The
comparative figures have been regrouped accordingly.
Mobile Phones currently offers mobile phones and devices based on the three global cellular
technologies: GSM/EDGE, CDMA and TDMA.
The Multimedia business group focuses on bringing connected and mobile multimedia to
consumers in the form of advanced mobile devices and solutions.
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