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Innovation and possibilities
Nokia in 2015

Table of contents

  • Page 1
    Innovation and possibilities Nokia in 2015

  • Page 2
    ... on seizing major opportunities to positively impact people's lives each day and improve how we access and tap the power of connectivity. Our two main businesses in 2015, Nokia Networks, a top provider of mobile connectivity infrastructure and services, and Nokia Technologies, our driver of future...

  • Page 3
    ... Employees Shares and share capital Board of Directors and Management Dividend Nokia's outlook Risk factors Corporate governance Corporate governance statement Compensation General facts on Nokia History of Nokia Memorandum and Articles of Association Selected financial data Shares and shareholders...

  • Page 4
    ... business Our acquisition of Alcatel Lucent, announced in April 2015, has produced a new leader in next-generation technologies for the Programmable World. It was made possible due to the hard work and dedication of our employees who ensured that we were able to close the deal in early January, 2016...

  • Page 5
    ... 2015 by business Net sales 2015 by region 2 5 6 1 A B 4 3 2 1 1 Nokia Networks A Mobile Broadband B Global Services 2 Nokia Technologies â,¬11 490m (+3%) â,¬ 6 064m (0%) â,¬ 5 422m (+6%) â,¬ 1 024m (+77%) 1 2 3 4 5 6 Europe(1) Middle East & Africa Greater China Asia-Pacific North America...

  • Page 6
    ... in 2016 The acquisition of Alcatel Lucent closed in early January 2016. After the closing, we have approximately 106 000 employees, and we have organized our networks-oriented businesses into four business groups: Mobile Networks, Fixed Networks, IP/Optical Networks and Applications & Analytics...

  • Page 7
    Overview Applications & Analytics Our communications software and applications help network operators, enterprises and governments accelerate innovation, gain revenue from services and give their customers a better experience. Nokia Technologies Nokia Technologies focuses on advanced technology ...

  • Page 8
    ... creators and the first in a planned portfolio of digital media products. January 4&7, 2016 Nokia announced that it had gained control over Alcatel Lucent and the closing of the transaction following a successful public exchange offer for all outstanding Alcatel Lucent securities. 06 NOKIA IN 2015

  • Page 9
    ...sell its HERE digital mapping and location services business to a German automotive industry consortium at an enterprise value of EUR 2.8 billion. August 5, 2015 Nokia announced its new stock symbol trading code, NOKIA, on Nasdaq Helsinki, as part of recognizing Nokia's 150th anniversary. September...

  • Page 10
    ... margin Financial income and expenses Income tax (expense)/benefit Profit Earnings per share ("EPS"), EUR diluted Average number of employees Nokia Networks Nokia Technologies Group Common Functions Total Net sales by region Europe Middle East & Africa Greater China Asia-Pacific North America...

  • Page 11
    ...". NOKIA IN 2015 672 0.07 Operating profit Operating margin 2 309 Organizational structure and reportable segments in 2016 In 2016, we have five business groups: Mobile Networks, Fixed Networks, IP/Optical Networks and Applications & Analytics; as well as Nokia Technologies. In China, Alcatel...

  • Page 12
    Business overview A global leader in technology and services for a connected world 10 NOKIA IN 2015

  • Page 13
    ...CEO Nokia's role in the Programmable World Our values Nokia's strategy Operational governance and leadership Nokia in 2016 Networks business in 2016 Market overview Business overview and organization Mobile Networks Fixed Networks IP/Optical Networks Applications & Analytics Bell Labs Services Sales...

  • Page 14
    ...in China we are the largest vendor headquartered outside the country; in Europe, Latin America and Middle East and Africa we have roughly doubled our size. Another critical development in 2015 was the sale of HERE―our digital mapping and location services business―to a German automotive industry...

  • Page 15
    Business overview "Our acquisition of Alcatel Lucent is an industry-changing event and opens exciting new opportunities for us and our customers. It enables us to pursue our vision to expand the human possibilities of the connected world." Nokia Networks recorded a 2015 net sales increase of 3%, ...

  • Page 16
    ...allows new services and applications to flow without constraint. transform the way The network needs distributed and networks, data, and interconnected intelligence, with enormous versatility in how its resources are controlled, technology intelligently and the cognitive ability to self-organize and...

  • Page 17
    ...3. Integrity of design and execution Our technology, networks, and data, are resilient and dependable. Privacy and security are built-in from the start, not as an afterthought. Quality is designed into everything we do, from our systems, processes, and software interfaces, to the service we provide...

  • Page 18
    Nokia's strategy With the acquisition of Alcatel Lucent, we have the innovation capability, the portfolio, and the global scale to lead in shaping and deploying the technologies that are at the heart of an increasingly connected world. Developing the world's most demanding mobile market The South ...

  • Page 19
    ... by some key trends: â- Unprecedented increase of data, driven by consumer demand for video, social networking and other Cloud-based services that are increasingly accessed through mobile devices; â- Ongoing digitization of business processes as well as people's lives, generating vast quantities...

  • Page 20
    ... that will help our customers extract greater value from their network infrastructure. We are building a coherent suite of software and services that bring together Network Function Virtualization ("NFV"), SDN, and advanced applications and analytics, to enable customers to more easily manage, scale...

  • Page 21
    ... the waste of precious resources such as water and energy; smart cities, optimizing traffic flows and energy consumption; digital health applications to offer patients remote monitoring and preventive care benefits; increasing the well-being of humans; traffic management systems for drones to...

  • Page 22
    ... in next-generation technology and services in recent years. The Nokia Group Leadership Team is responsible for all group-level issues, including our strategy and the overall business portfolio. Rajeev Suri President and Chief Executive Officer Samih Elhage President of Mobile Networks Federico...

  • Page 23
    ... Human Resources Officer Kathrin Buvac Chief Strategy Officer Ashish Chowdhary Chief Customer Operations Officer Barry French Chief Marketing Officer Marc Rouanne Chief Innovation and Operating Officer Maria Varsellona Chief Legal Officer Ramzi Haidamus President of Nokia Technologies NOKIA...

  • Page 24
    ... in diverse global markets and creating and implementing strategies for growth and sustained profitability. He joined Nokia Siemens Networks in 2012 as Chief Operating Officer and added the role of Chief Financial Officer of Nokia Solutions and Networks to his responsibilities in 2013. Samih holds...

  • Page 25
    ... Center for Creative Leadership in the United States. Timo Ihamuotila b. 1966 Chief Financial Officer Timo is responsible for financial matters of the Nokia Corporation including external and internal reporting, business performance reviews and capital allocation. He also oversees Investor Relations...

  • Page 26
    Nokia in 2016 After the closing of the Alcatel Lucent transaction, we have five business groups: Mobile Networks, Fixed Networks, IP/Optical Networks and Applications & Analytics (the Networks business); and Nokia Technologies. This section presents an overview of the Networks business and the ...

  • Page 27
    ...on a global scale, we have a strong competitive position to capitalize on these opportunities. Business overview and organization Our Networks business is conducted through four business groups: Mobile Networks, Fixed Networks, IP/Optical Networks and Applications & Analytics. These business groups...

  • Page 28
    ..., operation and maintenance of mobile networks, adding value to customers through the breadth, quality, efficiency and innovation of its services across five business areas: Network Planning & Optimization, Network Implementation, Systems Integration, Managed Services and Care. 26 NOKIA IN 2015

  • Page 29
    ... customer. It consists of advanced copper based solutions such as very high rate digital subscriber line ("VDSL2"), and innovative vectoring technology to reduce cross-talk interference and improve performance. The Fixed Networks business group is leading in the development of next-generation copper...

  • Page 30
    ... business in 2016 continued IP/Optical Networks Optimizing IP and optical networks for the Cloud. The IP/Optical Networks business group provides the key IP routing and optical transport systems, software and services to build high capacity network infrastructure for the internet and global...

  • Page 31
    ... group offers carrier-grade software applications and platforms to provide operations and business support systems, build, deliver, and optimize services, enable their monetization, and to improve customer experience. These include: customer and network operations software, such as device management...

  • Page 32
    Networks business in 2016 continued Bell Labs Creating the technologies shaping the future of connectivity. Bell Labs, our research arm, produces disruptive innovations for the next phase of human existence. This human challenge has been the charter for Bell Labs for 90 years and led to a wealth ...

  • Page 33
    ...("CO") organization is responsible for sales and account management across the four networkoriented business groups. The teams are active in approximately 130 countries. They ensure that we are close to our customers, both physically and in terms of understanding the local markets, and help us build...

  • Page 34
    ... IP networking, ultra-broadband access, and Cloud technology solutions to a wide arrange of customers, including local service providers, cable operators, large enterprises, state and local governments, utilities, and many others. North America is also home to the company's most important and...

  • Page 35
    .... These Technology Centers are located in China, Finland, France, Germany, India, the Philippines and the United States, among others. We believe that the geographical diversity of our R&D network is an important competitive advantage for us. In addition, the ecosystem around each R&D site helps us...

  • Page 36
    ... limited risk of infringing SEPs owned by others. Competition At present, we consider Cisco, Ericsson, Huawei and ZTE to be our main competitors in the operator infrastructure business. We also compete with technology-focused companies such as Adtran (fixed access networks), Ciena (optical network...

  • Page 37
    ... business group, Nokia Technologies, was established with two main objectives: â- to drive growth and renewal in the existing patent licensing business; and â- to build new businesses for us, based on breakthrough innovation in key Programmable World technologies and products. NOKIA IN 2015...

  • Page 38
    ... connect people to digital solutions that can improve their health. â- Labs: Through the R&D unit of Nokia Technologies, we seek to continue our track record of R&D leadership and innovation. Labs primarily supports the long-term Digital Media and Digital Health offering, and drives the renewal of...

  • Page 39
    ..., to help our customers leverage the value of the Nokia brand in consumer devices; and 4) incubation, focused on developing new products and solutions in the areas of Digital Media and Digital Health; all of these activities are supported by Labs, its world-class R&D team. Sales and marketing Nokia...

  • Page 40
    ... machine learning-based analytics of health data. Nokia Technologies has R&D activities in Finland, the United Kingdom and the United States. Patents and licenses Intellectual property assets are fundamental to Nokia, which now controls three distinct IP portfolios: the Nokia Networks, Alcatel...

  • Page 41
    ... was completed on April 25, 2014 (the "Sale of the D&S Business"). We granted Microsoft a ten-year non-exclusive license to our patents and patent applications. The announced purchase price of the transaction was EUR 5.44 billion, of which EUR 3.79 billion related to the purchase of substantially...

  • Page 42
    ... customers, to software solutions supporting the efficient interaction of networks, as well as services to plan, optimize, implement, run and upgrade networks. The Networks business is conducted through four business groups: Mobile Networks, Fixed Networks, IP/Optical Networks and Applications...

  • Page 43
    ...an annual outlook for the Networks business at the present time, and we intend to provide our full year outlook in conjunction with our first quarter interim results announcement in May 2016. The 2016 net sales and operating margin, excluding special items and purchase price accounting-related items...

  • Page 44
    ... new products and solutions in the areas of Digital Media and Digital Health. All of these activities are supported by Labs, its world-class R&D team. For more information on the Nokia Technologies business, refer to "Business overview- Nokia in 2016-Nokia Technologies". Monetization strategies...

  • Page 45
    ... acquire Alcatel Lucent, we announced plans to target approximately EUR 900 million of net operating cost synergies to be achieved in full year 2018, compared to the combined operating costs of Nokia and Alcatel Lucent for full year 2015, excluding special items and purchase price accounting-related...

  • Page 46
    Board review Our 2015 operations in a nutshell 44 NOKIA IN 2015

  • Page 47
    ... Nokia Technologies Group Common Functions Liquidity and capital resources Financial position Cash flow Financial assets and debt Capital structure optimization program Structured finance Venture fund investments and commitments Material subsequent events Sustainability and corporate responsibility...

  • Page 48
    ... potential long-term capital structure requirements, and focuses on shareholder distributions and de-leveraging, while maintaining Nokia's financial strength. In December, our shareholders showed their overwhelming support for the Alcatel Lucent acquisition at our Extraordinary General Meeting; and...

  • Page 49
    ...patent portfolio costs and higher investments in digital health. R&D expenses included purchase price accounting-related items of EUR 35 million in 2015 compared to EUR 32 million in 2014. Europe(1) Middle East & Africa Greater China Asia-Pacific North America Latin America Total 3 813 1 177 1 712...

  • Page 50
    ...from Group Common Functions, partially offset by lower operating profit in Nokia Networks. Our operating profit in 2015 included purchase price accounting-related items, restructuring charges and other special items of EUR 261 million compared to EUR 188 million in 2014. Our operating margin in 2015...

  • Page 51
    ... licensing units, which target new and significant long-term growth opportunities. In 2014, R&D expenses included EUR 13 million of transaction-related personnel costs related to the Sale of the D&S Business compared to EUR 15 million in 2013. R&D expenses included purchase price accounting-related...

  • Page 52
    ...in Group Common Functions and Nokia Technologies. The decrease in selling, general and administrative expenses in Nokia Networks was primarily attributable to structural cost savings from Nokia Networks global restructuring program. The decrease was partially offset by headcount increases related to...

  • Page 53
    ...sets forth selective line items and the percentage of net sales that they represent for the years indicated. For the year ended December 31 2015 EURm % of net sales 2014 EURm % of net sales Year-on-year change % Net sales Cost of sales Gross profit Research and development expenses Selling, general...

  • Page 54
    ...31, 2014 compared to the year ended December 31, 2013 As the Sale of the D&S Business closed on April 25, 2014, the financial results of Discontinued operations in 2014 are not comparable to the financial results of Discontinued operations in 2013. The following table sets forth selective line items...

  • Page 55
    ... in the network implementation business line, including the benefit from the acquisition of SAC Wireless. The lower net sales in Mobile Broadband was primarily attributable to lower net sales in overall radio technologies. In Europe, net sales decreased 4% in 2015 compared to 2014, primarily driven...

  • Page 56
    ... and network planning and optimization business lines, partially offset by higher gross margin in the care business line. The increase in gross margin in Mobile Broadband was primarily attributable to higher gross margin in overall radio technologies. In addition, Nokia Networks gross margin was...

  • Page 57
    ... of managed services and a higher proportion of systems integration in the sales mix, as well as margin improvement in systems integration. The increase was partially offset by lower gross margin in care, network implementation and network planning and optimization. Europe Middle East & Africa...

  • Page 58
    ...sets forth selective line items and the percentage of net sales that they represent for the years indicated. For the year ended December 31 2015 EURm % of net sales 2014 EURm % of net sales Year-on-year change % Net sales Cost of sales Gross profit Research and development expenses Selling, general...

  • Page 59
    ... 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 significant long-term growth opportunities. Nokia Technologies selling, general and administrative expenses...

  • Page 60
    ... items of capital expenditure in 2015 included investments in production lines, test equipment and computer hardware used primarily in R&D, office and manufacturing facilities as well as services and software related intangible assets. In 2014, our cash flow from investing activities equaled EUR 886...

  • Page 61
    ... outflows relating to share repurchases. We also acquired subsidiary shares from a non-controlling interest holder and paid dividends to non-controlling interest holders in 2014 equaling approximately EUR 60 million. Capital structure optimization program In 2015, we announced plans for a two-year...

  • Page 62
    ... commitments to network operators. Refer to Note 35, Risk management, of our consolidated financial statements included in this annual report for further information relating to our committed and outstanding customer financing. We expect our customer financing commitments to be financed mainly from...

  • Page 63
    ... in the 2015 financial statements as far as it relates to the years presented. â- On February 21, 2016, Nokia Growth Partners (NGP) announced the closing of a new USD 350 million fund for investments in IoT companies. The fund is sponsored by Nokia and will serve to identify new opportunities to...

  • Page 64
    ...efficiency of networks and creating base station site offerings that enhance the use of renewable energy. In order to support gender equality, we are enhancing access to education and promoting technical literacy and confidence through our corporate social responsibility programs. 62 NOKIA IN 2015

  • Page 65
    ...emission base station site offering can reduce an operator's total cost of ownership for a base station by up to 30%. The Nokia Code of Conduct also sets the standard for labor conditions and our comprehensive human resources policies and promotes fair employment. Good health and safety performance...

  • Page 66
    ...://company.nokia. com/en/sustainability/downloads. Partnering with NGOs Through our corporate social responsibility programs, we work with NGOs to improve people's lives around the world. In 2015, our cooperation focused on promoting children's rights, empowering young people and supporting those...

  • Page 67
    ... business and geographical location: Business Average number of employees Nokia Networks Nokia Technologies Group Common Functions Total Region 55 509 596 585 56 690 Average number of employees Finland Other European countries Middle East & Africa China Asia-Pacific North America Latin America...

  • Page 68
    ... the Board in 2015 to issue shares and special rights entitling to shares, transfer shares and repurchase own shares, as well as information on related party transactions, the shareholders, stock options, shareholders' equity per share, dividend yield, price per earnings ratio, share prices, market...

  • Page 69
    ... shareholders for a term ending at the end of the next Annual General Meeting, which convenes annually by June 30. The Board has the responsibility for appointing and discharging the President and CEO, Chief Financial Officer and other members of the Group Leadership Team. For information on Nokia...

  • Page 70
    ... Board proposes an ordinary dividend of EUR 0.16 per share for 2015. Additionally, the Board proposes a special dividend of EUR 0.10 per share. The proposed dividend is in line with our distribution policy. We distribute retained earnings, if any, within the limits set by the Finnish Companies Act...

  • Page 71
    ... year 2015, excluding special items and purchase price accounting related items. Expected to be derived from a wide range of initiatives related to operating expenses and cost of sales, including: â- Streamlining of overlapping products and services, particularly within the Mobile Networks business...

  • Page 72
    ... value of our shares and ADSs, and we may be unable to fully realize the anticipated benefits of the public exchange offer for all outstanding Alcatel Lucent securities. â- We may be materially and adversely affected by general economic and market conditions and other developments in the economies...

  • Page 73
    ... inherent risks relating to applicable regulatory regimes, cybersecurity breaches and other unauthorized access to network data or other potential security risks that may adversely affect our business. â- Our Nokia Technologies business group aims to generate net sales and profitability through...

  • Page 74
    Corporate governance The way we operate, for our shareholders 72 NOKIA IN 2015

  • Page 75
    ... Contents Corporate governance statement 74 Regulatory framework 74 Main corporate governance bodies of Nokia 74 Members of the Board of Directors 76 Members of the Nokia Group Leadership Team 82 Risk management, internal control and internal audit functions at Nokia 86 Main procedures relating to...

  • Page 76
    ... of the Finnish Limited Liability Companies Act (2006/624, as amended) (the "Finnish Companies Act") and Nokia's Articles of Association, the control and management of Nokia is divided among the shareholders at a general meeting, the Board, the President and CEO and the Group Leadership Team...

  • Page 77
    ... Nokia and Alcatel Lucent. Elizabeth Doherty had informed that she would step down from the Board following the completion of the initial public exchange offer for all outstanding Alcatel Lucent securities and the Extraordinary General Meeting elected, based on the proposal of the Board's Corporate...

  • Page 78
    ... General Meeting on December 2, 2015. Chair Risto Siilasmaa b. 1966 Chair of the Nokia Board. Board member since 2008. Chair since 2012. Chair of the Corporate Governance and Nomination Committee. Master of Science (Eng.), Helsinki University of Technology, Finland. President and CEO of F-Secure...

  • Page 79
    ... of the Board of Directors of Alma Media Corporation 2005-2011. The following individuals served on the Board until the close of the Annual General Meeting held on May 5, 2015 MÃ¥rten Mickos b. 1962 Board member 2012-2015. Dennis F. Strigl b. 1946 Board member 2014-2015. Served as a member of the...

  • Page 80
    ... description of our risk management policies and processes, refer to "-Risk management, internal control and internal audit functions at Nokia-Main features of risk management systems" below. The Board has the responsibility for appointing and discharging the President and CEO and the other members...

  • Page 81
    ... 2, 2015. The Finnish Corporate Governance Code 2010 recommended that the Chair of the Board and a sufficient number of directors attend the general meeting of shareholders to ensure the possibility for the shareholders to exercise their right to present questions to both the Board and management...

  • Page 82
    ... Stadigh. As of January 8, 2016, following the completion of the initial offer period of the public exchange offer for all outstanding Alcatel Lucent securities, the Corporate Governance and Nomination Committee has consisted of the following five members of the Board: Risto Siilasmaa (Chair), Bruce...

  • Page 83
    ... oversee the personnel-related policies and practices at Nokia, as described in the Committee charter. It assists the Board in discharging its responsibilities in relation to all compensation, including equity compensation, of the company's executives and their terms of employment. The Committee has...

  • Page 84
    Corporate governance statement continued Members of the Nokia Group Leadership Team Set forth below are the current members of the Group Leadership Team and their biographical details. Information about the shares and share-based rights of the members of the Group Leadership Team is disclosed in ...

  • Page 85
    ...States. BA Mathematics from University of Delhi, India. Executive Vice President and Chief Business Officer at Nokia Networks 2015-2016. Head of Customer Operations Asia, Middle East & Africa (AMEA), Nokia Networks 2011-2015. Head of Global Services, Nokia Siemens Networks 2009-2010. Head of Managed...

  • Page 86
    ... de Montréal, Canada. Chief Financial and Operating Officer, Nokia Networks 2013-2016. Chief Operating Officer, NSN 2012-2013. Senior Advisor, leading private equity and global management consulting firms 2011-2012. President, Carrier Voice over IP and Applications Solutions (CVAS) division, Nortel...

  • Page 87
    ...our website at company.nokia. com/en/about-us/ corporate-governance. Furthermore, we have a Code of Conduct which is equally applicable to all our employees, directors and management and, in addition, we have a Code of Ethics applicable to the President and CEO, Chief Financial Officer and Corporate...

  • Page 88
    ...our financial statements covering significant accounts, processes and locations, corporate level controls and information systems' general controls. As part of its assessment the management documented: â- the corporate-level controls, which create the "tone from the top" containing the Nokia values...

  • Page 89
    Corporate governance Main procedures relating to insider administration Audit Committee pre-approval policies Our insider administration is organized according to the applicable and procedures European Union and Finnish laws and regulations as well as the Nokia Insider Policy which sets out Group-...

  • Page 90
    ...2015, as resolved by shareholders at the Annual General Meeting on May 5, 2015. For more details on Nokia shares held by the members of the Board, refer to "-Share ownership of the Board of Directors , the President and Chief Executive Officer and the Nokia Group Leadership Team" below. Compensation...

  • Page 91
    ...until the closing of the Annual General Meeting in 2016. For more details on the composition of the Board, refer to "Corporate Governance Statement-Main corporate governance bodies of Nokia" above. The new members of the Board were not paid any compensation during the fiscal year 2015. The following...

  • Page 92
    ...for the achievement of key business metrics by meeting financial and strategic targets during the fiscal year. Short-term incentive Long-term incentive To reward for delivery of sustainable long-term performance, align the executives' interests with those of shareholders and aid retention. There...

  • Page 93
    ... philosophy in the event that there is any material restatement of financial results both short-term and long-term variable compensation is subject to a clawback policy. Overall compensation for 2015 was set in relation to the market as opposite: For 2016, the Board has approved the increase...

  • Page 94
    ... shares to a value equaling two times the member's base salary. The share ownership policy, which is effective from January 1, 2015, requires these executives to amass the requisite shareholding within five years of becoming subject to the policy. They are not permitted to sell any vesting equity...

  • Page 95
    ... for the President and Chief Executive Officer The President and CEO participates in the statutory Finnish pension system, as regulated by the Finnish Employees' Pension Act (395/2006, as amended) (the "Finnish TyEL"), which provides for a retirement benefit based on years of service and earnings...

  • Page 96
    ... plans applicable to employees in the country of residence. Executives based in Finland participate in the statutory Finnish pension system, as regulated by the Finnish TyEL. Refer to "-Pension arrangements for the President and Chief Executive Officer" above. Executives based in the United States...

  • Page 97
    ...2015 and 2014, in aggregate. Compensation paid to the President and CEO is presented under "-Compensation of the President and Chief Executive Officer" above. Compensation paid to Group Leadership Team: EUR 2015 2014 Salary Short-term variable compensation(1) Stock awards(2) Change in pension value...

  • Page 98
    ... the annual grant process are linked to the company's performance management framework and the performance of Nokia against our long-term revenue and EPS targets. Additionally, we have a restricted share plan in place, which is targeted at retention of key employees and new hires in countries where...

  • Page 99
    ... the performance share plans for 2013 through to 2016. Targets are set by reference to the company's long-term plans and in the context of investment analysts' forecasts for the business. 2016 2015 2014 2013 Average annual net sales Nokia Group Average annual EPS Nokia Group Minimum settlement...

  • Page 100
    ... will be made later this year than in previous years in order to be able to consider all relevant financial information available for the new combined Nokia group so that targets are set appropriately. The remuneration statement required by the Finnish Corporate Governance Code will be updated to...

  • Page 101
    ... the value of the business falls below a certain level. There is also a cap that limits potential gain for all plan participants. 2015 2012 2013 2014 Long-term incentive plan year, at December 31 Achieved Overachieved Nokia Total Shareholder Return (TSR) Legacy equity compensation programs Stock...

  • Page 102
    ... as director compensation, refer to Note 34, Related party transactions, of our consolidated financial statements included in this annual report. Share ownership of the President and Chief Executive Officer and the Nokia Group Leadership Team The following table sets forth the share ownership of...

  • Page 103
    ... that the President and CEO will meet the shareholding requirements of Nokia when the long-term incentive 2014 awards vest assuming that they vest at or above target. (1) At maximum performance under the performance share plans 2014 and 2015, the number of shares deliverable equals four times the...

  • Page 104
    General facts on Nokia 2015 marked our anniversary as a 150-year old company, being yet another year of fundamental change for us 102 NOKIA IN 2015

  • Page 105
    General facts on Nokia Contents History of Nokia Memorandum and Articles of Association Selected financial data Shares and shareholders Production of infrastructure equipment and products Key ratios 104 106 108 110 117 118 NOKIA IN 2015 103

  • Page 106
    ... Sale of the D&S Business. The Microsoft transaction was announced on September 3, 2013 and was completed on April 25, 2014, following which we relocated our headquarters to the Karaportti campus in Espoo, Finland. In April 2015, we announced the acquisition of Alcatel Lucent, in a deal that closed...

  • Page 107
    ... generation technology and services. The deal was agreed on the basis of EUR 0.55 of a new Nokia share for every Alcatel Lucent share. On January 4 and 5, 2016, we published and confirmed that we had gained control of Alcatel Lucent through the successful public exchange offer for all outstanding...

  • Page 108
    ...to attend the general meeting. Each of our shares confers equal rights to share in the distribution of the company's funds. For a description of dividend rights attaching to our shares, refer to "-Shares and shareholders". Dividend entitlement lapses after three years if a dividend remains unclaimed...

  • Page 109
    ...of trade. This price can be deviated from for a specific reason. Under the Finnish Companies Act, a shareholder whose holding exceeds nine-tenths of the total number of shares or voting rights in Nokia has both the right and, upon a request from the minority shareholders, the obligation to purchase...

  • Page 110
    ... information Research and development expenses % of net sales Capital expenditures(4) % of net sales Salaries and social expenses Average number of employees Key financial indicators Cash dividends per share, EUR(5) Dividends(6) Return of capital employed, % Return on shareholders' equity, % Equity...

  • Page 111
    ... rate For the year ended December 31 (unless otherwise specified) Average rate (USD per EUR) Highest rate Lowest rate 2011 2012 2013 2014 2015 September 30, 2015 October 30, 2015 November 30, 2015 December 21, 2015 January 29, 2016 February 29, 2016 On March 24, 2016, the noon buying rate was USD...

  • Page 112
    ...Based on Nokia closing share price at year-end. In 2015, based on Board of Directors proposal for 2015, subject to shareholders approval at the Annual General Meeting convening on June 16, 2016. Maximum amount to be distributed as dividends based on the number of shares at March 31, 2016, excluding...

  • Page 113
    ... 3.02/8.18 4.82 8.11 1.63/5.87 3.41 3.95 4.46/11.75 7.14 4.82 Nokia share prices on Nasdaq Helsinki (EUR), Euronext Paris (EUR) and the New York Stock Exchange (USD) 2011-2015 14 12 10 8 6 10 4 2 0 09 13 12 11 Jan 11 Nasdaq Helsinki NYSE Jan 12 Euronext Jan 13 Jan 14 Jan 15 Dec 15 Source...

  • Page 114
    General facts on Nokia continued Stock option exercises 2011-2015 Year Stock option category Subscription price EUR Number of new shares 000s Date of payment Net proceeds EURm New share capital EURm 2011 2012 Nokia Stock Option Plan 2006 1Q Nokia Stock Option Plan 2006 2Q Nokia Stock Option Plan...

  • Page 115
    General facts on Nokia Year Stock option category Subscription price EUR Number of new shares 000s Date of payment Net proceeds EURm New share capital EURm 2013 2014 2015 Nokia Stock Option Plan 2008 1Q Nokia Stock Option Plan 2008 2Q Nokia Stock Option Plan 2008 3Q Nokia Stock Option ...

  • Page 116
    ... only one registered shareholder. Largest shareholders registered in Finland at December 31, 2015(1) Shareholder Total number of shares 000s % of all shares % of all voting rights Varma Mutual Pension Insurance Company Ilmarinen Mutual Pension Insurance Company The State Pension Fund Schweizerische...

  • Page 117
    ...At the Annual General Meeting held on May 5, 2015, Nokia shareholders authorized the Board to repurchase a maximum of 365 million Nokia shares. The amount corresponds to less than 10% of the total number of Company's shares. The shares may be repurchased in order to optimize the capital structure of...

  • Page 118
    ... prices for the ADSs, as reported on the NYSE composite tape. Nasdaq Helsinki price per share High EUR Low New York Stock Exchange price per ADS High USD Low Euronext Paris price per share(1) High EUR Low 2011 2012 2013 2014 First Quarter Second Quarter Third Quarter Fourth Quarter Full year 2015...

  • Page 119
    ... agreed to reimburse us USD 4 567 796.00 mainly related to contributions towards our investor relations activities, including investor meetings and conferences and fees of investor relations service vendors, and other miscellaneous expenses related to the US listing of our ADSs. NOKIA IN 2015 117

  • Page 120
    ... 31) x closing share price at December 31 Share turnover % Number of shares traded during the year Average number of shares during the year Interest-bearing liabilities Long-term interest-bearing liabilities (including the current portion thereof) + short-term borrowings Return on capital employed...

  • Page 121
    ... the management of the company 27. Notes to the statement of cash flows 28. Principal Group companies 29. Shares of the Parent Company 30. Risk management 31. Subsequent events Signing of the Annual Accounts 2015 and proposal by the Board of Directors for distribution of profit Auditor's report 186...

  • Page 122
    ... Operating profit Share of results of associated companies and joint ventures Financial income and expenses Profit before tax Income tax (expense)/benefit Profit for the year from Continuing operations Attributable to: Equity holders of the parent Non-controlling interests Profit for the year from...

  • Page 123
    ... statements Consolidated statement of comprehensive income For the year ended December 31 Notes 2015 EURm 2014 EURm 2013 EURm Profit/(loss) for the year Other comprehensive income Items that will not be reclassified to profit or loss: Remeasurements on defined benefit plans Income tax related...

  • Page 124
    ... financial assets Investments at fair value through profit and loss, liquid assets Available-for-sale investments, liquid assets Cash and cash equivalents Total assets SHAREHOLDERS' EQUITY AND LIABILITIES Capital and reserves attributable to equity holders of the parent Share capital Share issue...

  • Page 125
    ... activities Acquisition of businesses, net of acquired cash Purchase of current available-for-sale investments, liquid assets Purchase of investments at fair value through profit and loss, liquid assets Purchase of non-current available-for-sale investments (Payment of)/proceeds from other long-term...

  • Page 126
    ... in shareholders' equity EURm Notes Number of shares outstanding (000s) Fair value Share issue Treasury Translation and other Share shares differences reserves capital premium Reserve for invested NonEquity nonrestricted Retained holders of controlling equity earnings the parent interests...

  • Page 127
    Financial statements EURm Notes Number of shares outstanding (000s) Fair value Share issue Treasury Translation and other Share shares differences reserves capital premium Reserve for invested NonEquity nonrestricted Retained holders of controlling equity earnings the parent interests Total ...

  • Page 128
    ... Euronext Paris stock exchange. The Group is a leading global provider of network infrastructure and related services, with a focus on mobile broadband, as well as advanced technology development and licensing. On March 31, 2016 the Board of Directors authorized the financial statements for 2015 for...

  • Page 129
    ... of expected future benefit. Employee benefits Pensions The Group companies have various pension plans in accordance with the local conditions and practices in the countries in which they operate. The plans are generally funded through payments to insurance companies or contributions to trustee...

  • Page 130
    ... and accounted for as a defined benefit arrangement as described in the pensions section above. Share-based payment The Group offers three types of global equity-settled share-based compensation plans for employees: stock options, performance shares and restricted shares. Employee services received...

  • Page 131
    ... presented as current year amounts in the prior year financial statements in a stable currency are not restated. Assessment of the recoverability of long-lived assets, intangible assets and goodwill The Group assesses the carrying value of goodwill annually or more frequently if events or...

  • Page 132
    ... models at the statement of financial position date. Investments in publicly quoted equity shares are measured at fair value using exchange quoted bid prices. Other available-for-sale investments carried at fair value include holdings in unlisted shares. Fair value is estimated using a number...

  • Page 133
    ... sales and purchases The Group applies hedge accounting for 'qualifying hedges'. Qualifying hedges are those properly documented cash flow hedges of foreign exchange rate risk of future forecast foreign currency denominated sales and purchases that meet the requirements set out in IAS 39, Financial...

  • Page 134
    ...of treasury shares is recognized in retained earnings. Dividends Dividends proposed by the Board of Directors are recognized in the consolidated financial statements when they have been approved by the shareholders at the Annual General Meeting. Use of estimates and critical accounting judgments The...

  • Page 135
    ... Equity Securities for Nokia shares on the basis of 0.55 of a new Nokia share for every Alcatel Lucent share. The initial Exchange Offer period closed in December 2015. On January 7, 2016 the Exchange Offer was completed and shares were exchanged, which created legal standing for the acquisition...

  • Page 136
    ... Group's financial assets and introduces a new hedge accounting model. The Group is currently assessing the impact of IFRS 9. IFRS 15, Revenue from Contracts with Customers, was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers...

  • Page 137
    ... charges, purchase price accounting-related charges and certain other items not directly related to these segments. Mobile Broadband provides mobile operators with flexible network solutions for mobile voice and data services through its Radio and Core business lines. The Radio business consists of...

  • Page 138
    ... consolidated financial statements continued Segment data Segment EURm Mobile Broadband(1) Nokia Networks Global Other Services(1) Nokia Networks Nokia Total Technologies(1) Group Common Functions Eliminations Non-IFRS(2) Non-IFRS(2) total exclusions Total Continuing operations 2015 Net sales to...

  • Page 139
    Financial statements Net sales to external customers by geographic location of customer EURm 2015 (1) 2014 2013 Finland United States China India Japan Russia United Kingdom Taiwan Saudi Arabia Italy Other Total (1) All Nokia Technologies net sales are allocated to Finland. 1 100 1 489 1 323 1 ...

  • Page 140
    ... business EURm 2015 2014 2 722 115 151 14 174 87 56 3 319 286 55 306 5 652 2 667 2013 Net sales Cost of sales Gross profit Research and development expenses Selling, general and administrative expenses Other income and expenses(1) Operating profit/(loss) Share of results of associated companies...

  • Page 141
    ... the HERE strategy and the related new long-range plan, which incorporated the slower-than-expected increase in net sales directly to consumers, and the Group's plans to curtail its investment in certain higher-risk and longer-term growth opportunities. This represented a triggering event resulting...

  • Page 142
    ...381 2 220 1 013 4 728 - - 2014 2013 Net sales Cost of sales Gross (loss)/profit Research and development expenses Selling, general and administrative expenses Other income and expenses Operating loss Financial income and expenses Loss before tax Income tax benefit/(expense)(1) Loss for the period...

  • Page 143
    ...-generating units expected to benefit from the synergies of the combination. Refer to Note 10, Impairment. Acquisition-related costs of EUR 3 million (EUR 3 million in 2014) have been charged to selling, general and administrative expenses in the consolidated income statement. NOKIA IN 2015 141

  • Page 144
    ...recognition EURm 2015 2014 2013 Continuing operations Revenue from sale of products and licensing Nokia Networks Nokia Technologies Revenue from services Nokia Networks Contract revenue recognized under percentage of completion accounting Nokia Networks Eliminations and Group Common Functions Total...

  • Page 145
    ... and EUR 143 million in 2013). Expenses related to defined benefit plans are EUR 51 million (EUR 43 million in 2014 and EUR 46 million in 2013). Refer to Note 8, Pensions. Average number of employees 2015 2014 2013 Nokia Networks(1) Nokia Technologies Group Common Functions(1) Total 55 509 596 585...

  • Page 146
    ... financial statements continued 8. Pensions The Group operates a number of post-employment plans in various countries including both defined contribution and defined benefit plans. These plans expose the Group to actuarial risks such as investment risk, interest rate risk, and life expectancy...

  • Page 147
    ... liability of end of service benefits that have previously been reported as other long-term employee liabilities in certain countries in the Middle East and Africa region. Present value of obligations include EUR 428 million (EUR 407 million in 2014) of wholly funded obligations, EUR 1 337 million...

  • Page 148
    ... determining the defined benefit obligation: % 2015 2014 Discount rate for determining present values Annual rate of increase in future compensation levels Pension growth rate Inflation rate 3.0 2.6 1.3 1.4 2.6 1.9 1.4 1.6 Assumptions regarding future mortality are set based on actuarial advice...

  • Page 149
    ... the defined benefit plans of the Continuing operations: EURm 2016 2017 2018 2019 2020 2021-2025 Pension benefits 64 47 48 72 46 285 9. Depreciation and amortization by function EURm 2015 2014 2013 Continuing operations Cost of sales Research and development expenses(1) Selling, general and...

  • Page 150
    ... testing analysis for the CGUs: 2015 Key assumption % Radio Access Networks group of CGUs in Mobile Broadband 2014 2015 Global Services group of CGUs 2014 Terminal growth rate Post-tax discount rate 1.0 9.2 2.6 9.4 1.0 8.7 1.6 9.1 Terminal growth rates reflect long-term average growth rates...

  • Page 151
    ... EURm 2015 2014 2013 Continuing operations Other income Realized gains from unlisted venture funds VAT and other indirect tax refunds and social security credits Profit on sale of other property, plant and equipment Divestment of businesses Indemnification and settlement related to acquisition of...

  • Page 152
    ... bonds issued to Microsoft when the Sale of the D&S Business was completed and one-time expenses of EUR 123 million relating to the redemption of materially all Nokia Networks borrowings. (2) Includes distributions of EUR 25 million (EUR 14 million in 2014 and EUR 44 million in 2013) from private...

  • Page 153
    ...In 2013, the tax authorities in India commenced an investigation into withholding tax in respect of payments by Nokia India Private Limited to Nokia Corporation for the supply of operating software. Subsequently, the authorities extended the investigation to other related tax consequences and issued...

  • Page 154
    ... supported by offsetting deferred tax liabilities, earnings history and profit projections in the relevant jurisdictions. Majority of recognized deferred tax assets relate to the Group's Finnish tax losses, unused tax credits and temporary differences for which deferred tax was re-recognized in 2014...

  • Page 155
    ...17) Basic earnings per share is calculated by dividing the profit/loss attributable to equity holders of the parent by the weighted average number of shares outstanding during the year, excluding shares purchased by the Group and held as treasury shares. Diluted earnings per share is calculated by...

  • Page 156
    ... financial statements continued In 2014, convertible bonds issued to Microsoft in September 2013 were fully redeemed as a result of the closing of the Sale of the D&S Business. 116 million potential shares were included in the calculation of diluted shares to reflect the part-year effect...

  • Page 157
    ... acquisition cost of EUR 3 million disposed as part of the Sale of the HERE Business. In 2014, the tax authorities in India placed a lien which prohibited the Group from transferring the mobile devices-related facility in Chennai to Microsoft as part of the Sale of the D&S Business. NOKIA IN 2015...

  • Page 158
    ... equity shares Available-for-sale investments, carried at fair value Available-for-sale investments, carried at cost less impairment Long-term loans receivable Accounts receivable Current portion of long-term loans receivable Other current financial assets Investments at fair value through profit...

  • Page 159
    ... equity shares Available-for-sale investments, carried at fair value Available-for-sale investments, carried at cost less impairment Long-term loans receivable Accounts receivable Current portion of long-term loans receivable Other current financial assets Investments at fair value through profit...

  • Page 160
    ... data (level 3) EURm Total 2015 Available-for-sale investments, publicly quoted equity shares Available-for-sale investments, carried at fair value Other current financial assets, derivatives(1) Investments at fair value through profit and loss, liquid assets Available-for-sale investments...

  • Page 161
    .... Reconciliation of the opening and closing balances on level 3 financial assets: Other available-for-sale investments carried at fair value EURm At January 1, 2014 Net gain in income statement Net gain in other comprehensive income Purchases Sales Other transfers At December 31, 2014 Net gain in...

  • Page 162
    ... Derivatives not designated in hedge accounting relationships carried at fair value through profit and loss: Forward foreign exchange contracts Currency options bought Currency options sold Interest rate swaps Other derivatives Total 2014 Hedges on net investment in foreign subsidiaries: Forward...

  • Page 163
    ...EURm 2015 2014 Social security, VAT and other indirect taxes Divestment-related receivables Deposits Deferred cost of sales Accrued revenue Prepaid insurances Accrued and prepaid interest Prepaid rental expenses Other Total 258 160 83 28 21 21 17 15 146 749 362 206 59 30 2 22 37 20 175 913 NOKIA...

  • Page 164
    ...193 new Nokia shares as consideration for the Alcatel Lucent securities tendered into the reopened Public Exchange Offers. Authorizations Authorization to issue shares and special rights entitling to shares At the Annual General Meeting held on June 17, 2014, the shareholders authorized the Board of...

  • Page 165
    ... General Meeting held on May 5, 2015, the shareholders authorized the Board of Directors to repurchase a maximum of 365 million shares. The amount corresponds to less than 10% of the total number of Parent Company's shares. The shares may be repurchased in order to optimize the capital structure...

  • Page 166
    ... following the Sale of the D&S Business in 2014 have been forfeited. Restricted shares In 2015, the Group administered four global restricted share plans: the Restricted Share Plan 2012, 2013, 2014 and 2015. The Restricted Share Plan 2015 introduced a new vesting schedule for the 2015 Plan year as...

  • Page 167
    ... in 2014 for their accrued share purchases under the 2013 Plan. Legacy equity compensation programs Stock options In 2015, the Group administered two global stock option plans, the Stock Option Plans 2007 and 2011, approved by the shareholders at the Annual General Meeting in the year when the plan...

  • Page 168
    ... Nokia Solutions and Networks B.V. shares were granted to selected key employees and Nokia Networks' senior management, some of whom became members of the Group Leadership Team in 2014. Following the Group's acquisition of Siemens' stake in Nokia Networks and the Sale of the D&S Business, the Board...

  • Page 169
    ...as adjustment to net sales Available-for-sale investments: Net fair value gains/(losses) Transfer to income statement on impairment Transfer to income statement on disposal At December 31, 2014 Pension remeasurements: Disposal of businesses(1) Remeasurements of defined benefit plans Cash flow hedges...

  • Page 170
    ... liability, sales and marketing practices, commercial disputes, employment, and wrongful discharge, antitrust, securities, health and safety, environmental, tax, international trade and privacy matters. As a result, the Group may incur substantial costs that may not be covered by insurance and could...

  • Page 171
    ...luxury mobile phones. The Group divested the Vertu business to Crown Bidco Ltd in 2013. In 2014, Crown Bidco Ltd served a claim in the commercial court in London alleging breach of contract in relation to the transfer of IT assets and breach of warranties under the sale agreement. The Group disputes...

  • Page 172
    ... fund capital expenditure relating to purchases of network infrastructure equipment and services. Venture fund commitments of EUR 230 million (EUR 274 million in 2014) are financing commitments to a number of funds making technology-related investments. As a limited partner in these funds, the Group...

  • Page 173
    ... shares before redemption. The conversion did not have a cash impact. In 2014, the convertible bonds issued to Microsoft in 2013 have been netted against the proceeds from the Sale of the D&S Business. The Group did not engage in any material non-cash investing activities in 2013. NOKIA IN 2015...

  • Page 174
    ... Share of results income/(expense) Dividend income Share of shareholders' equity Sales Purchases Payables 29 2 84 (1) (233) (37) (12) - 51 1 (305) (35) 4 5 53 6 (178) (12) The Group has guaranteed a loan of EUR 15 million (EUR 13 million in 2014) for an associated company. 172 NOKIA IN 2015

  • Page 175
    ...3, 2013 to May 1, 2014 due to changes in the leadership structure following the Sale of the D&S Business. The following table presents compensation information for the President and CEO of the Group: Base salary/ Cash incentive fee(1) payments Share-based payment expenses Pension expenses EUR 2015...

  • Page 176
    ... of Directors' compensation The annual remuneration structure paid to the members of the Board of Directors, as decided on by the Annual General Meetings in the respective years: 2015 Gross annual fee(1) EUR Shares received number 2014 Gross annual fee(1) EUR Shares received number 2013 Gross annual...

  • Page 177
    Financial statements 35. Risk management General risk management principles The Group has a systematic and structured approach to risk management across business operations and processes. Key risks and opportunities are identified primarily against business targets either in business operations or ...

  • Page 178
    ... are sensitive to foreign exchange risks are presented in the table below. The VaR calculation includes foreign currency denominated monetary financial instruments such as: available-for-sale investments, loans and accounts receivable, investments at fair value through profit and loss, cash, loans...

  • Page 179
    ...Sensitivities to credit spreads are not reflected in the below numbers. EURm 2015 2014 At December 31 Average for the year Range for the year 23 29 23-36 31 32 25-54 Equity price risk The Group's exposure to equity price risk is related to certain publicly listed equity shares. The fair value of...

  • Page 180
    ..., or potential liabilities, such as product liabilities, are insured optimally taking into account both cost and retention levels. The Group purchases both annual insurance policies for specific risks as well as multi-line and/or multi-year insurance policies where available. 178 NOKIA IN 2015

  • Page 181
    ... Treasury-related policies and procedures. As a result of this investment policy approach and active management of outstanding investment exposures, the Group has not been subject to any material credit losses in its financial investments in the years presented. Breakdown of outstanding fixed-income...

  • Page 182
    ... credit lines. At December 31, 2015, the Group's committed revolving credit facilities totaled EUR 1 500 million (EUR 1 500 million in 2014). Significant current long-term funding programs at December 31, 2015: Issuer: Program: Issued Nokia Corporation Euro Medium-Term Note Program, totaling...

  • Page 183
    ... their convertible bonds into Nokia shares before redemption. (3) Includes mainly fair value adjustments for bonds that are designated under fair value hedge accounting and in 2014 also the difference between convertible bond nominal value and carrying value of the financial liability component...

  • Page 184
    ... between 3 and 5 years Due beyond 5 years 2015 Non-current financial assets Long-term loans receivable Current financial assets Current portion of long-term loans receivable Short-term loans receivable Investments at fair value through profit and loss Available-for-sale investments, including cash...

  • Page 185
    ... between 3 and 5 years Due beyond 5 years 2014 Non-current financial assets Long-term loans receivable Current financial assets Current portion of long-term loans receivable Short-term loans receivable Investments at fair value through profit and loss Available-for-sale investments, including cash...

  • Page 186
    ... exchange offers, the total number of Nokia shares outstanding would equal approximately 6 billion shares. Alcatel Lucent announced on February 11, 2016 that its Board of Directors has resolved to voluntarily delist ALU ADS from the New York Stock Exchange. On March 17, 2016 the Group announced...

  • Page 187
    ... of Alcatel Lucent stock options and performance shares attributable to pre-combination services that will be settled with Nokia shares. The fair value of the purchase consideration is based on the closing price of Nokia share of EUR 6.58 on Nasdaq Helsinki on January 4, 2016, and the exchange offer...

  • Page 188
    ... the year ended December 31 Notes 2015 EURm 2014 EURm Net sales Cost of sales Gross profit Research and development expenses Selling, general and administrative expenses Other income Other expenses Operating profit/(loss) Financial income and expenses Income from long-term investments Interest...

  • Page 189
    Financial statements Parent Company statement of financial position At December 31 Notes 2015 EURm 2014 EURm ASSETS Non-current assets Intangible assets Intangible rights Property, plant and equipment Land and water areas Buildings Machinery and equipment Other tangible assets Advance payments...

  • Page 190
    ... 2014 EURm SHAREHOLDERS' EQUITY AND LIABILITIES Capital and reserves Share capital Share issue premium Treasury shares at cost Fair value and other reserves Reserve for invested non-restricted equity Retained earnings Profit for the year Total equity Provisions Non-current liabilities Long-term...

  • Page 191
    ... assets Net cash from investing activities Cash flow from financing activities Purchase of treasury shares Stock option exercise Proceeds from short-term borrowings Repayments of long-term borrowings Dividends paid Support to the Foundation of Nokia Corporation Group contributions Net cash from...

  • Page 192
    ... 1, 2014 Nokia Asset Management Oy, formerly a fully owned entity of the Parent Company, was merged into the Parent Company. In 2014, substantially all of the Devices & Services business was sold to Microsoft. This is referred to as "the Sale of the D&S Business". The transaction was completed on...

  • Page 193
    ... are reported in financial items. Foreign exchange option contracts are valued using an option valuation model on the statement of financial position date and reported in financial items. Fair values of forward rate agreements, interest rate options, futures contracts and exchange traded options...

  • Page 194
    Notes to Parent Company financial statements continued 2. Net sales by segment EURm 2015 2014 Nokia Technologies Devices & Services Total 949 - 949 572 2 569 3 141 3. Personnel expenses EURm 2015 2014 Salaries and wages Share-based payment expense Pension expense Other social expenses Total ...

  • Page 195
    ...of shares and loans receivable from other investments Losses on onerous contracts Restructuring charges Other miscellaneous expenses Total - - - (20) (20) (44) (16) 10 (30) (80) 8. Financial income and expenses EURm 2015 2014 Income from long-term investments Dividend income from Group companies...

  • Page 196
    ... Net book value at December 31, 2014 Acquisition cost at January 1 , 2015 Accumulated cost at December 31, 2015 Accumulated amortization at January 1, 2015 Accumulated amortization at December 31, 2015 Net book value at January 1, 2015 Net book value at December 31, 2015 157 2 7 (24) (137) 5 (150...

  • Page 197
    ...December 31, 2014 Net book value at January 1, 2014 Net book value at December 31, 2014 Acquisition cost at January 1 , 2015 Additions Disposals and retirements Reclassifications Acquisition cost at December 31 , 2015 Accumulated depreciation at January 1, 2015 Disposals and retirements Depreciation...

  • Page 198
    ... (1) In 2014, related to the formation of Nokia Technologies Oy. (2) In 2014, the carrying values of shareholdings in subsidiaries were reviewed resulting in impairment charges in Nokia Inc. and the HERE business. (3) In 2015, relates to the Sale of the HERE Business. In 2014, relates to the Sale of...

  • Page 199
    .... Relates mainly to the Sale of the D&S Business. 135 15 13 12 6 181 - 3 1 55 59 118 16. Shareholders' equity EURm Share capital Share issue premium Treasury shares Reserve for invested Fair value and other non-restricted equity reserves Retained earnings Total At January 1, 2014 Settlement...

  • Page 200
    Notes to Parent Company financial statements continued 17. Distributable earnings EURm 2015 2014 Reserve for invested non-restricted equity Retained earnings Profit for the year Total retained earnings Treasury shares at cost Total 3 805 5 275 1 087 10 167 (711) 9 456 3 067 826 5 383 9 276 (988)...

  • Page 201
    ... 2014 Available-for-sale investments Accounts receivable from Group companies Accounts receivable from other companies Current loans receivable from Group companies Other financial assets from Group companies, derivatives Short-term investments Cash and cash equivalents Total financial assets Long...

  • Page 202
    ... hedge accounting relationships carried at fair value through profit and loss: Forward foreign exchange contracts, Group companies Forward foreign exchange contracts Currency options bought Currency options sold, Group companies Currency options sold Interest rate swaps Total 2014 Fair value hedges...

  • Page 203
    Financial statements 21. Provisions EURm 2015 2014 Divestment-related Other Total 106 13 119 103 5 108 22. Long-term interest-bearing liabilities EURm 2015 2014 Bonds Convertible bond Liabilities to Group companies Total Nominal value million Nominal interest % 1 946 - - 1 946 1 813 745 283 ...

  • Page 204
    ... to Nokia shares, resulting in no cash impact. In 2014, the convertible bonds issued to Microsoft in 2013 have been netted against the proceeds from the Sale of the D&S Business. 28. Principal Group companies Refer to Note 33, Principal Group companies of the consolidated financial statements. Full...

  • Page 205
    ...the Board of Directors for distribution of profit The distributable funds in the statement of financial position of the Parent Company at December 31, 2015 amounted to EUR 9 456 million. The Board proposes to the Annual General Meeting that from the retained earnings a dividend of EUR 0.16 per share...

  • Page 206
    Auditor's Report To the Annual General Meeting of Nokia Corporation We have audited the accounting records, the financial statements, the review by the Board of Directors and the administration of Nokia Corporation for the year ended 31 December 2015. The financial statements comprise the ...

  • Page 207
    Other information Other information Contents Forward-looking statements Glossary of terms Investor information Contact information 206 208 211 212 NOKIA IN 2015 205

  • Page 208
    ...implement our organization and operational structure efficiently; 3) our ability to complete the purchases of the remaining outstanding Alcatel Lucent securities and realize the benefits of the public exchange offer for all outstanding Alcatel Lucent securities; 4) our dependence on general economic...

  • Page 209
    ... of information technology systems; 22) our ability to optimize our capital structure as planned and re-establish our investment grade credit rating or otherwise improve our credit ratings; 23) uncertainty related to the amount of dividends and equity return we are able to distribute to shareholders...

  • Page 210
    ...Alcatel Lucent, a subsidiary of Nokia Corporation. API (Application Programming Interface): A set of routines, protocols, and tools for building software applications, specifying how software components should interact. Applications & Analytics: Nokia's business group offering carrier-grade software...

  • Page 211
    ...in 2015 focused on mobile network infrastructure software, hardware and services. After the closing of the public exchange offer for all outstanding Alcatel Lucent securities, this business is conducted through Networks' four business groups: Mobile Networks, Fixed Networks, Applications & Analytics...

  • Page 212
    ... not under the operator's exclusive control. SON (Self-Organizing Network): An automation technology designed to make the planning, configuration, management, optimization and healing of mobile radio access networks simpler and faster. TD-LTE (Time Division Long Term Evolution, also known as TDD...

  • Page 213
    ... and social information, including our Sustainability Report, Code of Conduct, Corporate Governance Statement and Remuneration Statement. Investor Relations contacts [email protected] Annual General Meeting Date: Place: Thursday, June 16, 2016 Helsinki, Finland Dividend The Board...

  • Page 214
    Contact information Nokia Head Office Karaportti 3 FI-02610 Espoo, Finland FINLAND Tel. +358 (0) 10 44 88 000 Fax +358 (0) 10 44 81 002 212 NOKIA IN 2015

  • Page 215
    ... inks. Both the manufacturing paper mill and printer are registered to the Environmental Management System ISO 14001 and are Forest Stewardship Council® (FSC) chain-of-custody certified. CPI Colour is also a Carbon Neutral Printing Company and reduces its CO2 omissions to net zero in accordance...

  • Page 216
    Copyright © 2016 Nokia Corporation. All rights reserved. Nokia is a registered trademark of Nokia Corporation. company.nokia.com