Nokia Oyj — Annual Report 2011

Mar 29, 2012

Nokia in 2011

REVIEW BY THE BOARD OF DIRECTORS AND NOKIA ANNUAL ACCOUNTS 2011

Key data 2
Review by the Board of Directors 2011 3
Annual Accounts 2011
Consolidated income statements, IFRS 20
Consolidated statements of comprehensive income, IFRS 21
Consolidated statements of fi nancial position, IFRS 22
Consolidated statements of cash fl ows, IFRS 23
Consolidated statements of changes in shareholders' equity, IFRS 24
Notes to the consolidated fi nancial statements 26
Income statements, parent company, FAS 72
Balance sheets, parent company, FAS 72
Statements of cash fl ows, parent company, FAS 73
Notes to the fi nancial statements of the parent company 74
Nokia shares and shareholders 78
Nokia Group 2007–2011, IFRS 84
Calculation of key ratios 86
Signing of the Annual Accounts 2011 and proposal for distribution of profi t 87
Auditors' report 88

Additional information

Critical accounting policies 90
Corporate governance statement
Corporate governance 98
Board of Directors 104
Nokia Leadership Team 107
Compensation of the Board of Directors and the Nokia Leadership Team 110
Auditors fees and services 132
Investor information 133
Contact information 135

KEY DATA

Based on fi nancial statements according to International Financial Reporting Standards, IFRS

Nokia, EURm	2011	2010	Change, %
Net sales	38 659	42 446	– 9
Operating profi t	– 1 073	2 070
Profi t before tax	– 1 198	1 786
Profi t attributable to equity holders' of the parent	– 1 164	1 850
Research and development expenses	5 612	5 863	– 4
%	2011	2010
Return on capital employed	neg.	11
Net debt to equity (gearing)	– 40	– 43
EUR	2011	2010	Change, %
Earnings per share, basic	– 0.31	0.50
Dividend per share	0.20 *	0.40	– 50
Average number of shares (1 000 shares)	3 709 947	3 708 816
* Board's proposal
Nokia businesses, EURm	2011	2010	Change, %
Devices & Services
Net sales	23 943	29 134	– 18
Operating profi t	884	3 540	– 75
Location & Commerce
Net sales	1 091	869	26
Operating profi t	– 1 526	– 663
Nokia Siemens Networks
Net sales	14 041	12 661	11
Operating profi t	– 300	– 686
Personnel, December 31	2011	2010	Change, %
Devices & Services	49 406	58 712	– 16
Location & Commerce	6 659	7 232	– 8
Nokia Siemens Networks	73 686	66 160	11
Corporate Common Functions	299	323	– 7
Nokia Group	130 050	132 427	– 2
10 major markets, net sales; EURm	2011	2010
China	6 130	7 149
India	2 923	2 952
Brazil	1 901	1 506
Russia	1 843	1 744
Germany	1 606	2 019
Japan	1 539	730
USA	1 405	1 630
UK	996	1 470
Italy	982	1 266
Spain	907	1 313
10 major countries, personnel, December 31	2011	2010
India	22 279	22 734
China	22 165	20 668
Finland	16 970	19 841
Brazil	11 887	10 925
Germany	10 992	11 243
USA	7 980	7 415
Hungary	5 198	5 931
UK	3 237	3 859
Poland	2 541	2 122
Mexico	1 970	2 554

Main currencies,
	rates at the end of 
1 EUR	USD	1.3059
	GBP	0.8391
	CNY	8.2723
	INR	69.0430
	RUB	41.7680
	JPY	101.70

REVIEW BY THE BOARD OF DIRECTORS 2011

Before the statutory information and other disclosures of the review by the Board of Directors, the Nokia Board of Directors notes that year was a year of transition for Nokia, and that year is expected to continue to be a year of transition. The Board continues to closely monitor the implementation of the strategy as well as the execution of operational activities, all with the goal of improving shareholder value. In the following, the Board of Directors outlines a brief summary of the key developments and actions in and early .

• » New strategy and operational structure. In February , Nokia outlined its new strategic direction, including changes in leadership and operational structure to accelerate the company's speed of execution in a dynamic competitive environment. In connection with the new Nokia strategy, Nokia and Microsoft announced plans to form a partnership that brings together their complementary strengths and expertise to create a new global mobile ecosystem. Under the partnership, Windows Phone serves as Nokia's primary smartphone platform. Nokia and Microsoft signed a defi nitive agreement on the partnership in April .
• » Changes to Nokia's operations. Nokia announced a number of planned changes to Nokia's operations during and in connection with the implementation of the new strategy in Nokia's Devices & Services business and the creation of Nokia's new Location & Commerce business. The planned changes include substantial personnel reductions, site and facility closures and reconfi guration of certain facilities. Nokia expects personnel reductions to occur in phases until the end of . Nokia also launched a comprehensive social responsibility program for employees and communities likely to be aff ected by the personnel reductions.
• » Collaboration with Accenture. In April , Nokia announced a strategic collaboration with Accenture resulting in the transfer of Nokia's Symbian-based software development and support services to Accenture. At the same time Accenture will provide mobility software services to Nokia for future smartphones. As a result of the transaction, approximately employees transferred to Accenture.

• » Lumia products. Eight months after the announcement of Nokia's new strategic direction, at the Nokia World event in October, Nokia demonstrated clear progress on its strategy by unveiling a portfolio of innovative devices, services and accessories, including the fi rst smartphones in its Windows Phone-based Nokia Lumia range, Nokia Lumia and . In early , Nokia added to the Lumia range and announced the Nokia Lumia and .

• » Symbian transition and Nokia N. During the transition to Windows Phone as Nokia's primary smartphone platform, Nokia announced and started shipping various new Symbian devices and made available Symbian smartphone software updates. Nokia also announced and started shipping the N, the outcome of eff orts in Nokia's MeeGo program.

• » Location & Commerce. As a natural next step in Nokia's services journey, Nokia announced in June its new Location & Commerce business, which was formed by combining NAVTEQ with Nokia's social location services operations from Devices & Services. The Location & Commerce business develops a new class of integrated social location products and services for consumers, as well as platform and local commerce services for device manufacturers, application developers, Internet services providers, merchants and advertisers.
• » Nokia Siemens Networks. Some of the main events regarding Nokia Siemens Networks during include the completion of Nokia Siemens Networks' acquisition of Motorola Solutions' Networks assets, which strengthened Nokia Siemens Networks' position in key regions, particularly North America and Japan, as well as with some of the world's major service providers. Further, in November , Nokia Siemens Networks announced its strategy to focus on mobile broadband and services and the launch of an extensive global restructuring program.
• » Proposal for new Chairman of the Board of Directors. The current Chairman of the Board of Directors, Jorma Ollila, informed that he will no longer be available to serve on the Nokia Board of Directors after the Annual General Meeting . In January , the Corporate Governance and Nomination Committee announced that it will propose in the assembly meeting of the new Board of Directors after the Annual General Meeting on May , that Risto Siilasmaa be elected as Chairman of the Board.

CHANGES IN OPER ATING AND REPORTABLE SEGMENTS

Nokia adopted its current operational structure during and has three businesses: Devices & Services, Location & Commerce and Nokia Siemens Networks. As of April , , Nokia's Devices & Services business includes two operating and reportable segments – Smart Devices, which focuses on smartphones, and Mobile Phones, which focuses on mass market feature phones – as well as Devices & Services Other. Devices & Services Other includes net sales of Nokia's luxury phone business Vertu, spare parts and related cost of sales

and operating expenses, as well as intellectual property related royalty income and common research and development expenses.

Location & Commerce focuses on the development of location-based services and local commerce. NAVTEQ, which Nokia acquired in July , was a separate reportable segment of Nokia from the third quarter until the end of the third quarter of . As of October , , the Location & Commerce business was formed as a new operating and reportable segment by combining NAVTEQ and Nokia's Devices & Services social location services operations.

For IFRS fi nancial reporting purposes, Nokia has four operating and reportable segments: Smart Devices and Mobile Phones within Devices & Services, Location & Commerce and Nokia Siemens Networks. Prior period results have been regrouped and recast for comparability purposes according to the new reporting format that became eff ective on April , and October , , respectively.

RESULTS OF OPERATIONS

Nokia Group

The following table sets forth selective line items for the fi scal years and .

EURm	2011	2010	YoY change
Net sales	38 659	42 446	– 9%
Cost of sales	– 27 340	– 29 629	– 8%
Gross profi t	11 319	12 817	– 12%
Research and development expenses	– 5 612	– 5 863	– 4%
Selling and marketing expenses	– 3 791	– 3 877	– 2%
Administrative and general expenses	– 1 121	– 1 115	1%
Other operating income and expenses	– 1 868	108
Operating profi t	– 1 073	2 070

NET SALES

Although the mobile device industry continued to see volume growth in , Nokia's net sales and profi tability were negatively aff ected by the increasing momentum of competing smartphone platforms relative to Nokia's Symbian smartphones in all regions as Nokia embarked on Nokia's platform transition to Windows Phone, as well as Nokia's pricing actions due to the competitive environment in both the smartphone

and feature phone markets. In addition, during the fi rst half of Nokia's net sales and profi tability were adversely affected by Nokia's lack of dual SIM products, which continued to be a growing part of the market. For Nokia Siemens Networks, net sales growth was driven primarily by the contribution from the acquired Motorola Solutions network infrastructure assets, which was completed in April . On a year-on-year basis the movement of the euro relative to relevant currencies had almost no impact on Nokia's overall net sales.

The following table sets forth the distribution by geographical area of Nokia's net sales for the fi scal years and .

Distribution of net sales by geographic area

%	2011	2010
Europe	31	34
Middle East & Africa	14	13
Greater China	17	18
Asia-Pacifi c	23	21
North America	4	5
Latin America	11	9
Total	100	100

The markets in which Nokia generated the greatest net sales in were, in descending order of magnitude, China, India, Brazil, Russia, Germany, Japan, the United States, the United Kingdom, Italy and Spain, together representing approximately % of total net sales in . In comparison, the markets in which Nokia generated the greatest net sales in were China, India, Germany, Russia, the United States, Brazil, the United Kingdom, Spain, Italy and Indonesia, together representing approximately % of total net sales in .

GROSS MARGIN

Nokia's gross margin in was .%, compared to .% in . The lower gross margin in resulted primarily from the decrease in gross margin in Devices & Services compared to , which was partially off set by increased gross margin in Nokia Siemens Networks.

OPERATING EXPENSES

Nokia's research and development ("R&D") expenses were EUR million in , compared to EUR million in . Research and development costs represented .% of Nokia's net sales in compared to .% in . The increase in R&D expenses as a percentage of net sales largely resulted from a relative decline in net sales in compared to an increase in net sales and a decrease in research and development expenses in . R&D expenses included purchase price accounting items and other special items of EUR million in compared to EUR million in . At December , , Nokia employed people in R&D, representing approximately % of Nokia's total workforce, and had a strong R&D presence in countries.

In , Nokia's selling and marketing expenses were EUR million, compared to EUR million in . Selling and marketing expenses represented .% of Nokia's net sales in compared to .% in . The increase in selling and marketing expenses as a percentage of net sales refl ected a decline in net sales in compared to an increase in net sales and a decrease in selling and marketing expenses in . Selling and marketing expenses included purchase price accounting items and other special items of EUR million in compared to EUR million in .

Administrative and general expenses were EUR million in , unchanged compared to . Administrative and general expenses were equal to .% of Nokia's net sales in compared to .% in . The increase in administrative and general expenses as a percentage of net sales refl ected the decrease in net sales in . Administrative and general expenses included special items of EUR million in compared to EUR million in .

In , other income and expenses included restructuring charges of EUR million, impairment of assets of EUR million, consideration related to the Accenture transaction of EUR million, impairment of shares in an associated company of EUR million and a benefi t from a cartel claim settlement of EUR million in . In , other income and expenses included restructuring charges of EUR million, a prior yearrelated refund of customs duties of EUR million, a gain on sale of assets and businesses of EUR million and a gain on sale of the wireless modem business of EUR million.

OPERATING MARGIN

Nokia's operating loss was EUR million, compared with an operating profi t of EUR million in . The decreased operating profi t resulted primarily from an impairment of goodwill of EUR . billion in Nokia's Location & Commerce business and a decrease in the operating profi t in Nokia's Devices & Services business, which was partially off set by a decrease in the operating loss in Nokia Siemens Networks. Nokia's operating margin was – .% in , compared to .% in . Nokia's operating profi t in included purchase price accounting items and other special items of net negative EUR million compared to net negative EUR million in .

CORPORATE COMMON

Corporate Common Functions' expenses totaled EUR million in , compared to EUR million in .

NET FINANCIAL INCOME AND EXPENSES

Financial income and expenses, net, was an expense of EUR million in compared to an expense of EUR million in . The lower net expense in was primarily driven by lower net costs related to hedging Nokia's cash balances and favorable fl uctuations in certain foreign exchange rates. Nokia expects fi nancial income and expenses, net, in to be an expense of approximately EUR million primarily due to higher expected net costs related to hedging Nokia's cash balances, as well as higher costs related to Nokia Siemens Networks' fi nancing.

Nokia's net debt to equity ratio was negative % at December , , compared with a net debt to equity ratio of negative % at December , .

PROFIT BEFORE TAXES

Loss before tax was EUR million in , compared to profi t of EUR million in . Taxes amounted to EUR million in and EUR million in . The eff ective tax rate decreased to negative .% in , compared with .% in . In , Nokia's taxes continued to be unfavorably aff ected by Nokia Siemens Networks taxes as no tax benefi ts are recognized for certain Nokia Siemens Networks deferred tax items due to uncertainty of utilization of these items.

NON-CONTROLLING INTERESTS

Loss attributable to non-controlling interests totaled EUR million in , compared with loss attributable to non-controlling interests of EUR million in . This change was primarily due to a decrease in Nokia Siemens Networks' losses.

PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT AND EARNINGS PER SHARE

Loss attributable to equity holders of the parent in totaled EUR million, compared with profi t of EUR million in . Earnings per share in decreased to EUR – . (basic) and EUR – . (diluted), compared with EUR . (basic) and EUR . (diluted) in .

Nokia Group cash flow and financial position

EURm	2011	2010	YoY change
Net cash from operating activities	1 137	4 774	– 76%
Total cash and other liquid assets	10 902	12 275	– 11%
Net cash and other liquid assets 1	5 581	6 996	– 20%

Total cash and other liquid assets minus interest-bearing liabilities.

Net cash and other liquid assets decreased by EUR . billion primarily due to payment of the dividend, cash outfl ows related to the acquisition of Motorola Solutions' networks assets, and capital expenditures, partially off set by positive overall net cash from operating activities and a EUR million equity investment in Nokia Siemens Networks by Siemens. In , capital expenditure amounted to EUR million compared with EUR million in .

Nokia's agreement with Microsoft includes platform support payments from Microsoft to us as well as software royalty payments from us to Microsoft. In the fourth quarter of , Nokia received the fi rst quarterly payment of USD million (approximately EUR million). Nokia has started to recognize a portion of the platform support payments as a benefi t to Nokia's Smart Devices cost of goods sold. The total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitments.

IMPAIRMENT OF GOODWILL IN LOCATION & COMMERCE BUSINESS

In the fourth quarter , Nokia conducted annual impairment testing to assess if events or changes in circumstances indicated that the carrying amount of Nokia's goodwill may not be recoverable. As a result, Nokia recorded a charge to operating profi t of EUR . billion for the impairment of goodwill in Nokia's Location & Commerce business. The impairment charge was the result of an evaluation of the projected fi nancial performance of Nokia's Location & Commerce business. This took into consideration the market dynamics in digital map data and related location-based content markets, including Nokia's estimate of the market moving long-term from feebased towards advertising-based models especially in some more mature markets. It also refl ected recently announced results and related competitive factors in the local search and advertising market resulting in lower estimated growth prospects from Nokia's location-based assets integrated with diff erent advertising platforms. After consideration of

all relevant factors, Nokia reduced the net sales projections for Location & Commerce which, in turn, reduced projected profi tability and cash fl ows.

RESULTS BY SEGMENTS

Devices & Services

The following table sets forth selective line items for Devices & Services for the fi scal years and .

EURm	2011	2010	YoY change
Net sales 1	23 943	29 134	– 18%
Cost of sales	– 17 303	– 20 412	– 15%
Gross profi t	6 640	8 722	– 24%
Research and development expenses	– 2 441	– 2 694	– 9%
Selling and marketing expenses	– 2 180	– 2 270	– 4%
Administrative and general expenses	– 362	– 388	– 7%
Other operating income and expenses	– 773	170
Operating profi t	884	3 540	– 75%

Includes Intellectual Property Rights ("IPR") royalty income recognized in Devices & Services Other net sales.

NET SALES

The following table sets forth Nokia's Devices & Services net sales and year-on-year growth rate by geographic area for the fi scal years and .

Devices & Services net sales by geographic area

EURm	2011	2010	YoY change
Europe	7 064	9 736	– 27%
Middle East & Africa	4 098	4 046	1%
Greater China	5 063	6 167	– 18%
Asia– Pacifi c	4 896	6 014	– 19%
North America	354	901	– 61%
Latin America	2 468	2 270	9%
Total	23 943	29 134	– 18%

The % year-on-year decline in Devices & Services net sales in resulted from lower volumes and Average Selling Prices ("ASP") in both Smart Devices and Mobile Phones discussed below, partially off set by higher IPR royalty income discussed below.

During the second quarter of , Devices & Services net sales were negatively aff ected by unexpected sales and inventory patterns, resulting in distributors and operators purchasing fewer of Nokia's devices across Nokia's portfolio as they reduced their inventories of Nokia devices. Devices & Services net sales were also aff ected during the second quarter of by a negative mix shift towards devices with lower average selling prices and lower gross margins. Nokia's actions enabled us to create healthier sales channel dynamics during the latter weeks of the second quarter . Devices & Services net sales increased sequentially in the fourth quarter , supported by broader product renewal in both Mobile Phones, for example dual SIM devices, and Smart Devices as well as overall industry seasonality.

Nokia's overall Devices & Services net sales in benefi ted from the recognition in Devices & Services Other of approximately EUR million (approximately EUR million in ) of non-recurring IPR royalty income, as well as strong growth in the underlying recurring IPR royalty income. Nokia believes these developments underline Nokia's industry leading patent portfolio. During the last two decades, Nokia have invested more than EUR billion in research and development and built one of the wireless industry's strongest and broadest IPR portfolios, with over patent families. Nokia is a world leader in the development of mobile device and mobile communications technologies, which is also demonstrated by Nokia's strong patent position.

VOLUME

The following chart sets out the mobile device volumes for Nokia's Devices & Services business and year–on-year growth rates by geographic area for the fi scal years and . The IPR royalty income referred to in the paragraph above has been allocated to the geographic area contained in this chart.

Devices & Services mobile device volumes by geographic area

	2011	2010	YoY
Million units			change
Europe	87.8	112.7	– 22%
Middle East & Africa	94.6	83.8	13%
Greater China	65.8	82.5	– 20%
Asia– Pacifi c	118.9	119.1	0%
North America	3.9	11.1	– 65%
Latin America	46.1	43.7	5%
Total	417.1	452.9	– 8%

On a year-on-year basis, the decline in Nokia's total Devices & Services volumes in was driven by lower volumes in both Smart Devices and Mobile Phones discussed below.

AVERAGE SELLING PRICE

Nokia's mobile device ASP represents total Devices & Services net sales divided by total Devices & Services volumes.

Nokia's mobile device ASP in was EUR , down % from EUR in . The decrease in Nokia's Devices & Services ASP in was driven primarily by the increase in the proportion of Mobile Phone sales partially off set by the positive eff ect of higher IPR royalty income and the lower deferral of revenue related to services sold in combination with Nokia's devices. On a year-on-year basis, the impact from the appreciation of the euro against certain currencies had a slightly negative impact, almost entirely off set by the positive impact from foreign currency hedging.

GROSS MARGIN

Nokia's Devices & Services gross margin in was .%, compared to .% in . On a year-on-year basis, the decline in Nokia's Devices & Services gross margin in was driven primarily by gross margin declines in both Smart Devices and, to a lesser extent, in Mobile Phones, as discussed below, which was partially off set by higher IPR royalty income.

OPERATING EXPENSES

Devices & Services R&D expenses in decreased % to EUR million, compared with EUR million in . In , R&D expenses represented .% of Devices & Services net sales, compared with .% in . The decrease in Devices & Services R&D expenses was primarily due to declines in Smart Devices and Devices & Services Other R&D expenses, partially off set by an increase in Mobile Phones R&D expenses. The decreases in Smart Devices and Devices & Services Other R&D expenses were due primarily to a focus on priority projects and cost controls. The increase in Mobile Phones R&D expenses was due primarily to investments to accelerate product development to bring new innovations to the market faster and at lower price-points, consistent with the Mobile Phones "Internet for the next billion" strategy. This increase was partially off set by a focus on priority projects and cost controls. Devices & Services R&D expenses included amortization of acquired intangible assets of EUR million and EUR million in and , respectively.

In , Devices & Services selling and marketing expenses decreased % to EUR million, compared with EUR million in . The decrease was primarily due to lower Smart Devices sales and marketing expenses. In , selling and marketing expenses represented .% of Devices & Services net sales, compared with .% of its net sales in .

Devices & Services administrative and general expenses in decreased % to EUR million, compared with EUR million in . The decrease in Devices & Services administrative and general expenses was primarily driven by lower Smart Devices administrative and general expenses which more than off set an increase in Devices & Services Other administrative and general expenses. In , administrative and general expenses represented .% of Devices & Services net sales, compared with .% in .

Other operating income and expenses were expense of EUR million in and included restructuring charges of million, impairment of assets of EUR million, Accenture deal consideration related to the Accenture transaction of EUR million, impairment of shares in an associated company of EUR million and a benefi t from a cartel claim settlement of EUR million. In , other operating income and expenses were EUR million and included restructuring charges of EUR million, a prior year-related refund of customs duties of EUR million, a gain on sale of assets and business of EUR million and a gain on sale of the wireless modem business of EUR million.

COST REDUCTION ACTIVITIES AND PLANNED OPERATIONAL ADJUSTMENTS

Nokia is targeting to reduce Nokia's Devices & Services operating expenses by more than EUR billion for the full year , compared to Devices & Services operating expenses of EUR . billion for the full year , excluding special items and purchase price accounting related items. This reduction is expected to come from a variety of diff erent sources and initiatives, including a planned reduction in the number of employees and normal personnel attrition, a reduction in the use of outsourced professionals, reductions in facility costs, and various improvements in effi ciencies.

As of December , , Nokia had recognized cumulative net charges in Devices & Services of EUR million related to restructuring activities in , which included restructuring charges and associated impairments. While the total extent of the restructuring activities is still to be determined, Nokia currently anticipates cumulative net charges in Devices & Services of around EUR million before the end of . Nokia also believes total cash outfl ows related to Nokia's Devices & Services restructuring activities will be below the level of the cumulative charges related to these restructuring activities.

OPERATING MARGIN

Devices & Services operating profi t decreased % to EUR million in , compared with EUR million in . Devices & Services operating margin in was .%, compared with .% in . The year-on-year decrease in operating margin in was driven primarily by the lower net sales and

gross margin compared to in both Smart Devices and Mobile Phones as well as higher restructuring charges and Accenture transaction related consideration.

Smart Devices

The following table sets forth selective line items for Smart Devices for the fi scal years and .

Smart Devices results summary

	2011	2010	YoY change
Net sales (EURm) 1	10 820	14 874	– 27%
Smart Devices volume (million units)	77.3	103.6	– 25%
Smart Devices ASP (EUR)	140	144	– 3%
Gross margin (%)	23.7%	30.8%
Operating expenses (EURm)	2 974	3 392	– 12%
Contribution margin (%)	– 3.8%	9.3%

Does not include IPR royalty income. IPR royalty income is recognized in Devices & Services Other net sales.

NET SALES

Smart Devices net sales decreased % to EUR million in , compared to EUR million in . The year-onyear decline in Nokia's Smart Devices net sales in was primarily due to signifi cantly lower volumes and, to a lesser extent, lower ASPs.

VOLUME

Smart Devices volume decreased % to . million units in , compared to . million units in . The year-onyear decrease in Nokia's Smart Device volumes in was driven by the strong momentum of competing smartphone platforms relative to Nokia's higher priced Symbian devices, particularly in Europe and Asia Pacifi c, as well as pricing tactics by certain of Nokia's competitors. During the second quarter of , Nokia's Smart Device volumes were also negatively aff ected by distributors and operators purchasing fewer of Nokia's smartphones as they reduced their inventories of those devices, which were slightly above normal levels at the end of the fi rst quarter of , particularly in China. During the second half of , Nokia's Symbian competitiveness continued to be challenged across the portfolio driving the signifi cant year-on-year volume decline.

AVERAGE SELLING PRICE

Smart Devices ASP represents Smart Devices net sales divided by Smart Devices volumes.

Smart Devices ASP decreased % to EUR in , compared to EUR in . The year-on-year decline in Nokia's Smart Devices ASP in was driven primarily by price actions due to the competitive environment and the negative impact from foreign currency hedging, partially off set by a positive mix shift towards higher priced smartphones, such as the Nokia N, Nokia N and Lumia devices, and the lower deferral of revenue related to services sold in combination with Nokia's devices, particularly in the second half of .

Although Smart Devices ASP declined progressively during the fi rst three quarters of , Smart Devices ASP increased sequentially in the fourth quarter of , supported by sales of the higher priced Nokia N and Nokia Lumia devices.

GROSS MARGIN

Smart Devices gross margin was .% in , down from .% in . The year-on-year decline in Nokia's Smart Devices gross margin in was driven primarily by greater price erosion than cost erosion due to the competitive environment, Nokia's tactical pricing actions during the second and third quarters of and an increase in Symbian-related allowances during the fourth quarter of .

Following the announcement of Nokia's partnership with Microsoft in February , Nokia expected to sell approximately million more Symbian devices in the years to come. However, changing market conditions have put increasing pressure on Symbian and contributed to a faster decline of Nokia's Symbian volumes than Nokia anticipated. Nokia expect this trend to continue in . As a result of the changing market conditions, combined with Nokia's increased focus on Lumia, Nokia believes Nokia will sell fewer Symbian devices than previously anticipated. Thus, in the fourth quarter , Nokia recognized allowances related to excess component inventory and future purchase commitments, and Nokia may need to recognize additional allowances in the future.

Mobile Phones

The following table sets forth selective line items for Mobile Phones for the fi scal years and .

Mobile Phones results summary

	2011	2010	YoY change
Net sales (EURm) 1	11 930	13 696	– 13%
Mobile Phones volume (millions units)	339.8	349.2	– 3%
Mobile Phones ASP (EUR)	35	39	– 10%
Gross margin (%)	26.1%	28.0%
Operating expenses (EURm)	1 640	1 508	9%
Contribution margin (%)	12.4%	17.0%

Does not include IPR royalty income. IPR royalty income is recognized in Devices & Services Other net sales.

NET SALES

Mobile Phones net sales decreased % to EUR million in , compared to EUR million in . On a year-onyear basis, Nokia's Mobile Phones net sales decrease in was due to lower ASPs and, to a lesser extent, lower volumes.

VOLUME

Mobile Phones volume decreased % to . million units in , compared to . million units in . The year-on-year decline in Nokia's Mobile Phones volumes in was driven by the challenging competitive environment, especially during the fi rst half of the year due to Nokia's lack of dual SIM phones, which continued to be a growing part of the market, and pressure from a variety of price aggressive competitors, which adversely aff ected Nokia's Mobile Phones volumes. During , Mobile Phones volumes were also negatively aff ected by Nokia's reduced portfolio of higher priced feature phones, as well as by distributors and operators purchasing fewer of Nokia's feature phones during the second quarter of as they reduced their inventories of those devices which were slightly above normal levels at the end of the fi rst quarter of .

During the second half of , Nokia's Mobile Phones volumes increased year-on-year, driven by the introduction and broader availability of Nokia's fi rst dual SIM devices and the ongoing product renewal across the feature phones portfolio, which more than off set Nokia's reduced portfolio of higher priced feature phones.

AVERAGE SELLING PRICE

Mobile Phones ASP represents Mobile Phones net sales divided by Mobile Phones volumes.

Mobile Phones ASP decreased % to EUR in , compared to EUR in . The year-on-year decline in Nokia's Mobile Phones ASP in was primarily due to a higher proportion of sales of lower priced devices driven by a reduced portfolio of higher priced feature phones and Nokia's tactical pricing actions across the portfolio, which partially aff ected the second quarter of and fully aff ected the third quarter of . In addition, the appreciation of the euro against certain currencies contributed to the decline, which was partially off set by the positive impact from foreign currency hedging.

GROSS MARGIN

Mobile Phones gross margin was .% in , down from .% in . The year-on-year decline in Nokia's Mobile Phones gross margin in was due primarily to greater price erosion than cost erosion due to the competitive environment and Nokia's tactical pricing actions across the portfolio which partially aff ected the second quarter of and fully aff ected the third quarter of , a negative impact from foreign currency hedging and the appreciation of the euro against certain currencies, which were partially off set by a product mix shift towards higher margin feature phones.

Location & Commerce

The following table sets forth selective line items for Location & Commerce for the fi scal years and .

EURm	2011	2010	YoY change
Net sales	1 091	869	26%
Cost of sales	– 214	– 169	27%
Gross profi t	877	700	25%
Research and development expenses	– 958	– 1 011	– 5%
Selling and marketing expenses	– 259	– 274	– 5%
Administrative and general expenses	– 68	– 75	– 9%
Other operating income and expenses	– 1 118	– 3
Operating profi t	– 1 526	– 663	– 130%

NET SALES

The following table sets forth Location & Commerce net sales and year-on-year growth rate by geographic area for the fi scal years and .

Location & Commerce net sales by geographic area

EURm	2011	2010	YoY change
Europe	488	380	28%
Middle East & Africa	74	44	68%
Greater China	128	57	125%
Asia-Pacifi c	74	50	48%
North America	284	322	– 12%
Latin America	43	16	169%
Total	1 091	869	26%

Location & Commerce net sales increased % to EUR million in , compared to EUR million in . The year-on-year increase in net sales in was primarily driven by higher sales of map content licenses to vehicle customers due to increased consumer uptake of navigation systems and higher recognition of deferred revenue related to sales of map platform licenses to Smart Devices.

GROSS MARGIN

On a year-on-year basis the gross margin in Location & Commerce was virtually unchanged. In , the gross margin benefi ted from an increased proportion of higher gross margin sales compared to , which were off set by a reclassifi cation of certain data related charges from operating expenses to cost of sales in the fourth quarter of .

OPERATING EXPENSES

Location & Commerce R&D expenses decreased % to EUR million, compared to EUR million in . The decrease was primarily driven by a focus on cost controls, lower project spending and a shift of R&D operating expenses to cost of sales as a result of the divestiture of the media advertising business.

Location & Commerce selling and marketing expenses decreased % to EUR million, compared to EUR million in . The decrease was primarily driven by a focus on cost controls and lower product marketing spending.

Location & Commerce administrative and general expenses decreased % to EUR million, compared to EUR million in . The decrease was primarily driven by a focus on cost controls, partially off set by increased depreciation costs related to closure of offi ces.

OPERATING MARGIN

Location & Commerce operating loss increased to EUR million in , compared with a loss of EUR million in .

Location & Commerce operating margin in was negative .%, compared with negative .% in . The year-onyear decrease in operating margin in was driven primarily by the higher other operating expenses due to the impairment of Location & Commerce's goodwill of EUR . billion off set to some extent by higher net sales and lower operating expenses compared to .

In the fourth quarter of , Nokia conducted Nokia's annual impairment testing to assess if events or changes in circumstances indicated that the carrying amount of Nokia's goodwill may not be recoverable. As a result, Nokia recorded the above-noted impairment of goodwill in Nokia's Location & Commerce business.

The impairment charge was the result of an evaluation of the projected fi nancial performance of Nokia's Location & Commerce business. This took into consideration the market dynamics in digital map data and related location-based content markets, including Nokia's estimate of the market moving long-term from fee-based towards advertising-based models especially in some more mature markets. It also refl ected recently announced results and related competitive factors in the local search and advertising market resulting in lower estimated growth prospects from Nokia's location-based assets integrated with diff erent advertising platforms. After consideration of all relevant factors, Nokia reduced the net sales projections for Location & Commerce which, in turn, reduced projected profi tability and cash fl ows.

Nokia Siemens Networks

Nokia Siemens Networks completed the acquisition of the majority of Motorola Solutions' wireless network infrastructure assets in April . Accordingly, the results of Nokia Siemens Networks for are not directly comparable to .

The following table sets forth selective line items for Nokia Siemens Networks for the fi scal years and .

EURm	2011	2010	YoY change
Net sales	14 041	12 661	11%
Cost of Sales	– 10 239	– 9 266	11%
Gross profi t	3 802	3 395	12%
Research and development expenses	– 2 213	– 2 156	3%
Selling and marketing expenses	– 1 350	– 1 328	2%
Administrative and general expenses	– 553	– 553	0%
Other income and expenses	14	– 44
Operating profi t	– 300	– 686	– 56%

NET SALES

The following table sets forth Nokia Siemens Networks net sales and year-on-year growth rate by geographic area for the fi scal years and .

Nokia Siemens Networks net sales by geographic area

EURm	2011	2010	YoY change
Europe	4 469	4 628	– 3%
Middle East & Africa	1 391	1 451	– 4%
Greater China	1 465	1 451	1%
Asia-Pacifi c	3 848	2 915	32%
North America	1 077	735	47%
Latin America	1 791	1 481	21%
Total	14 041	12 661	11%

Nokia Siemens Networks' net sales increased % to EUR million in , compared to EUR million in . The year-on-year increase in Nokia Siemens Networks' net sales in was driven primarily by the contribution from the acquired Motorola Solutions networks assets, which was completed in April . Excluding the acquired Motorola Solutions networks assets, net sales would have increased % year-on-year, primarily driven by growth in services, which represented approximately % of Nokia Siemens Networks' net sales in .

GROSS MARGIN

Nokia Siemens Networks' gross margin was .% in , compared to .% in . Nokia Siemens Networks gross margin in refl ected the positive impact from the acquired Motorola Solutions networks assets off set to a large extent by the negative eff ects of the competitive industry environment and an unfavorable sales mix towards lower gross margin revenues.

OPERATING EXPENSES

Nokia Siemens Networks' research and development expenses increased % to EUR million, compared to EUR million in . The increase was primarily due to the addition of R&D operations relating to the acquired Motorola Solutions networks assets as well as investments in strategic initiatives.

Nokia Siemens Networks' selling and marketing expenses, as well as administrative and general expenses, were virtually fl at year-on-year in as the increase from the acquired Motorola Solutions networks was off set by ongoing cost control initiatives.

OPERATING MARGIN

Nokia Siemens Networks' operating loss in was EUR million, compared with an operating loss of EUR million in . Nokia Siemens Networks' operating margin in was negative .%, compared with negative .% in primarily because of higher net sales, which were off set by higher operating expenses.

NEW STRATEGY AND RESTRUCTURING PROGRAM

On November , , Nokia Siemens Networks announced its strategy to focus on mobile broadband and services and the launch of an extensive global restructuring program. Nokia Siemens Networks expects substantial charges related to this restructuring program in .

The key fi nancial data, including the calculations of key ratios, for the years , and are available in the Annual Accounts section.

MAIN EVENTS IN 2011

Nokia

• » In , Nokia announced a new strategy for its mobile products business, with three core elements: i) to win in smartphones; ii) to connect the "next billion" consumers to the Internet and information; and iii) to continue to invest in long-term exploratory research into the future of mobility and computing. Nokia outlined this new strategy in conjunction with an announcement of changes to its leadership team and operational structure designed to accelerate the company's speed of execution. Nokia switched to a structure featuring two distinct business units within Nokia's Devices & Services business–Smart Devices and Mobile Phones–and formed a new business, Location & Commerce.

• » As of October , Location & Commerce was formed by the combination of Nokia's NAVTEQ business with Nokia's social location services operations and is focusing on the development of integrated social location products and services for consumers, as well as platform services and local commerce services for device manufacturers, application developers, Internet services providers, merchants, and advertisers. Nokia also announced plans for changes to its R&D operations, including personnel reductions, to support the execution of Nokia's new strategy.

• » In February , Nokia announced the new Nokia Leadership Team (formerly the Group Executive Board) composed of the following members: Stephen Elop (Chief Executive Offi cer), Esko Aho (Corporate Relations and Responsibility), Juha Äkräs (Human Resources), Jerri DeVard (Chief Marketing Offi cer), Colin Giles (Sales), Richard Green (Chief Technology Offi cer), Jo Harlow (Smart Devices), Timo Ihamuotila (Chief Financial Offi cer), Mary McDowell (Mobile Phones), Kai Öistämö (Chief Development Offi cer), Tero Ojanperä (Services & Developer Experience, acting), Louise Pentland (Chief Legal Offi cer) and Niklas Savander (Markets). Michael Halbherr, who was appointed as Executive Vice President to lead the new Location & Commerce business, also became a member of the Nokia Leadership Team, effective July , . Henry Tirri was appointed Executive Vice President and Chief Technology Offi cer, eff ective September , , replacing Richard Green. Tero Ojanperä left the Nokia Leadership Team at the end of his contract on September , .

• » Nokia decided to delist its shares from the Frankfurt Stock Exchange, and the fi nal day of trading was March , .
• » In September , Nokia and Siemens announced the appointment of Jesper Ovesen as Executive Chairman of the Board of Nokia Siemens Networks. As Executive Chairman, Ovesen assumed a full-time role with a special emphasis on overseeing the strategic direction of Nokia Siemens Networks as it seeks to strengthen its position as a leader in the industry and become a more independent entity.
• » In September , Nokia and Siemens announced that they each provided capital of EUR million to Nokia Siemens Networks to further strengthen the company's fi nancial position.
• » In the third quarter, Nokia was again selected as a component of the Dow Jones Sustainability World Index (DJSI) and Dow Jones Sustainability Europe Index in the DJSI Review.
• » In June , Nokia announced that it has signed a patent license agreement with Apple. The agreement resulted in settlement of all patent litigation between the companies, including the withdrawal by Nokia and Apple of their respective complaints to the US International Trade Commission.

Devices & Services

» In March , Nokia announced plans to establish a new manufacturing site near Hanoi in northern Vietnam with a targeted opening in early .

» To focus feature phone production in locations closest to suppliers and key markets, Nokia ended production at its manufacturing facility in Cluj, Romania in November . In January , Nokia and De' Longhi, a global leader in household appliances, announced that they have agreed terms for De' Longhi to acquire the facility.

SMART DEVICES

• » To support its eff ort to win in smartphones, Nokia announced in February plans to form a partnership with Microsoft to combine their respective complementary assets and expertise to build a new global mobile ecosystem. Under the partnership, which was formalized in April , Nokia is adopting and licensing from Microsoft Windows Phone as its primary smartphone platform, and has subsequently begun a transition away from Symbian. In October , Nokia launched the Nokia Lumia and Nokia Lumia , its fi rst products based on the Windows Phone platform. The Lumia range is designed to bring consumers attractive industrial design, a fast social and Internet experience, leading imaging capabilities as well as signature Nokia experiences optimized for Windows Phone, such as Nokia Drive and Mix Radio.
• » Nokia's new strategy for smartphones also included personnel reductions as well as the transfer of approximately employees to Accenture as part of an agreement in which Accenture is providing Symbian software development and support activities to Nokia through . Nokia has continued to bring new Symbian smartphones to market, including seven devices during , of which three are powered by Belle, the latest version of the Symbian software, which brings a major improvement to the user experience.
• » In June , Nokia launched the Nokia N, the outcome of eff orts in Nokia's MeeGo program. The Nokia N is a pure touch smartphone which introduces an innovative new design where the home key – typically located at the bottom of the device – is replaced by a simple gesture: a swipe. Under Nokia's new strategy for smartphones, MeeGo will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences.

MOBILE PHONES

» To support its eff ort to connect the "next billion", Nokia renewed its strategy to focus on capturing volume and value growth by leveraging Nokia's innovation and strength in developing growth markets to provide people with an aff ordable Internet experience on their mobile device – in many cases, their fi rst ever Internet experience with any computing device. In the fourth quarter of , Nokia launched the Nokia Asha range of Nokia mobile phones, which off er access to the Internet, integrated social networking, messaging and access to applications from Nokia Store.

» Nokia's dual SIM technology was among several new innovations during aimed at increasing aff ordability for the consumer not just at the point of sale, but in terms of the total cost of ownership of the device. During , Nokia brought to market its fi rst seven dual SIM mobile phones. Mobile Phones also developed applications and services specifi cally with aff ordability in mind. During , some of Nokia's new mobile phones–including the Nokia Asha range–shipped with a powerful new browser, which compresses data and can thus reduce the cost of browsing the web. Additionally, some new models shipped with Nokia's new maps software which provides an advanced, cost-effi cient maps experience. Nokia Maps for Series is similar to that available on Nokia's smartphones in that people can view maps and plan routes when the phone is in offl ine mode.

Location & Commerce

• » During , Location & Commerce continued to develop integrated location-based products and services for consumers, as well as platform services for the wider ecosystem. For consumers, these included the following applications available either commercially or in beta:
• Nokia Maps, a mobile application that gives people new ways to discover and explore the world around them, as well as enabling them to search for and navigate to addresses and places of interest;
• Nokia Drive, a dedicated in-car navigation application, equivalent to a fully-fl edged personal navigation device, including voice-guided navigation in multiple languages for more than countries, D and D map views and day and night modes;
• Nokia Public Transport, a dedicated public transport application which provides smart public transportation routing for more than cities worldwide on mobile, including timetable routing for bus and train routes for cities;

• Nokia Pulse, an application that enables people to instantly share their location or other information with family, friends or any other pre-defi ned group;

• Nokia Live View, an augmented reality application that enables people to see information about points of interest–such as a restaurant, hotel or shop–in their camera viewfi nder;

• Nokia Maps HTML–a mobile web version of Nokia Maps providing access to Nokia's rich mapping experience to owners of non-Nokia smartphones and tablets; and
• maps.nokia.com, Nokia's mapping off ering on the web, enabling people to discover the world easy and comfortably with City Pages, heat maps, stunning D maps for more than cities, a rich places directory, superior content from leading guides, and local insights from Nokia users.
• » In the fourth quarter, Location & Commerce began powering Yahoo! Maps.
• » Location & Commerce continued to build the "Where" ecosystem with partners from Internet companies as well as the car and mobile industry, including Yahoo! whose maps.yahoo.com off ering is powered by the Nokia Location Platform, benefi ting from the latest maps with up-to-date location data/addresses, new routing options enabling users to avoid tolls and freeway, updated road networks and points of interest.
• » During the third quarter, Location & Commerce announced that it is supplying map data and content to Daimler AG for the Mercedes E Class range plus the CLS-Class model. As a result, almost all Daimler passenger vehicle navigation platforms in Europe will be powered by Location & Commerce.
• » During the fourth quarter, Location & Commerce was selected by Ford Motor Company to be its exclusive map supplier for the SYNC MyFord Touch navigation system. The agreement positions Location & Commerce as the map data provider for the system in North America, Latin America, the Middle East, Russia and Europe.

Nokia Siemens Networks

• » In November , Nokia Siemens Networks announced a new strategy, including changes to its organizational structure and a signifi cant restructuring program aimed at making the company an undisputed leader in mobile broadband and services and improving the company's competitiveness and profi tability.
• » Throughout , Nokia Siemens Networks announced a number of contracts in the key area of mobile broadband, including LTE deals with STC in Saudi Arabia, Latvijas

Mobilais Telefons in Latvia; with TeliaSonera in Finland, Bell in Canada, LG U+ and SK Telecom in Korea, Telecom Italia and Telefonica O in Germany.

» During the third quarter, to further support its focus on mobile broadband, Nokia Siemens Networks also outlined its vision for how broadband must be delivered in the future via Liquid Net; unveiled three new TD-LTE devices to supply communications service providers and enable the market for TD-LTE; agreed to establish a mobile broadband focused SmartLab with the Skolkovo Foundation in Russia; and setup a joint venture to build G LTE equipment with Micran in Tomsk, Russia.

SIGNIFIC ANT ACQUISITIONS AND DIVE STMENTS IN 2011

• » During the second quarter , Nokia Siemens Networks completed the acquisition of certain wireless network infrastructure assets of Motorola Solutions, including products and services in relation to GSM, CDMA, WCDMA, WiMAX and LTE. The acquisition is designed to strengthen the company's position in North America and Japan, adding approximately employees across countries.
• » As part of its new strategy, Nokia Siemens Networks is focusing on mobile broadband and services, and as such has announced during the fourth quarter a number of planned divestments, with the sale of its Microwave Transport business to DragonWave, its fi xed line Broadband Access business to ADTRAN and its WiMAX unit to NewNet Communications Technologies.

PERSONNEL

The average number of employees for was ( for and for ). At December , , Nokia employed a total of people ( people at December , and people at December , ). The total amount of wages and salaries paid in was EUR (EUR million in and EUR million in ).

SUSTAINABILITY AT NOKIA

Nokia strives to be a leader in sustainability. Nokia has a long track record of taking sustainability into account in everything it does, from product design and supplier requirements, to service off ering which enhance people's education, livelihoods and health, and which can be benefi cial in many other ways too. Nokia believes that its approach in considering our environmental and social impact not only refl ects ethical and legal responsibilities, but also makes good business sense and our goals go way beyond compliance. In managing environmental requirements, Nokia focuses on materials used, energy effi ciency, take-back of used products, the environmental performance of Nokia operations and supply chain, and services downloadable from Nokia store to help people to make sustainable choices. In social issues management, the focus is on human rights, labor conditions and origins of raw materials, as well as leveraging the power of mobile technology to make a positive impact in people´s lives.

Some of the sustainability highlights include:

• » eff orts in providing the next billion people with the access to the Internet and information;
• » improving education, health and livelihoods with mobile technology, for example million people having experienced Nokia Life as of the end of ;
• » increasing focus on supplier performance and making progress in tracing the origins of certain raw materials;
• » introducing fi ve new Eco Hero devices, including the Nokia Asha and , the fi rst Eco Hero devices available at a lower price point; and
• » launching the Nokia Public Transport, an application that off ers public transportation route planning in hundreds of cities all over the world.

MANAGEMENT AND BOARD OF DIRECTORS

Board of Directors, Nokia Leadership Team and President

Pursuant to the Articles of Association, Nokia Corporation has a Board of Directors composed of a minimum of seven and a maximum of members. The members of the Board are elected for a one-year term at each Annual General Meeting, i.e. from the close of that Annual General Meeting until the close of the following Annual General Meeting, which convenes each year by June . The Board has the responsibility for appointing and discharging the Chief Executive Offi cer, the Chief Financial Offi cer and the other members of the Nokia Leadership Team. The Chief Executive Offi cer also acts as President and his rights and responsibilities include those allotted to the President under Finnish law.

The Annual General Meeting held on May , elected the following members to the Board of Directors: Stephen Elop, Bengt Holmström, Henning Kagermann, Per Karlsson, Jouko Karvinen, Helge Lund, Isabel Marey-Semper, Jorma Ollila, Dame Marjorie Scardino, Risto Siilasmaa and Kari Stadigh.

For information on shares and stock options held by the members of the Board of Directors, the President and CEO and the other members of the Nokia Leadership Team, please see the section "Compensation of the Board of Directors and the Nokia Leadership Team" available in the Additional information section of this 'Nokia in ' publication.

For more information regarding Corporate Governance, please see the Corporate Governance Statement in the Additional information section of this 'Nokia in ' publication or Nokia's website, www.nokia.com/global/about-nokia.

Changes in the Nokia Leadership Team

During and subsequently, the following appointments to the Nokia Leadership Team were made:

• » Jerri DeVard was appointed Executive Vice President, Chief Marketing Offi cer, and member of the Nokia Leadership Team as from January , .
• » Colin Giles was appointed Executive Vice President of Sales and member of the Nokia Leadership Team as from February , .
• » Jo Harlow was appointed Executive Vice President of Smart Devices and member of the Nokia Leadership Team as from February , .
• » Louise Pentland, Chief Legal Offi cer, was appointed Executive Vice President and member of the Nokia Leadership Team as from February , .
• » Michael Halbherr was appointed Executive Vice President of Location & Commerce and member of the Nokia Leadership Team as from July , .
• » Henry Tirri was appointed Executive Vice President, Chief Technology Offi cer, and member of the Nokia Leadership Team as from September , .
• » Marko Ahtisaari was appointed Executive Vice President of Design and member of the Nokia Leadership Team as from February , .

Further, during , the following Nokia Leadership Team members resigned:

» Alberto Torres, formerly Executive Vice President of MeeGo Computers, resigned from the Nokia Leadership Team effective as from February , and left Nokia on March , .

• » Richard Green, formerly Executive Vice President and Chief Technology Offi cer, resigned from the Nokia Leadership Team and left Nokia eff ective as from September , .
• » Dr. Tero Ojanperä formerly Executive Vice President of Services and Developer Experience resigned from the Nokia Leadership Team and left Nokia eff ective as from October , .

PROVISIONS ON THE AMENDMENT OF ARTICLES OF ASSOCIATION

Amendment of the Articles of Association requires a decision of the general meeting, supported by two-thirds of the votes cast and two-thirds of the shares represented at the meeting. Amendment of the provisions of Article of the Articles of Association, "Obligation to purchase shares", requires a resolution supported by three-quarters of the votes cast and three-quarters of the shares represented at the meeting.

SHARES AND SHARE CAPITAL

Nokia has one class of shares. Each Nokia share entitles the holder to one vote at general meetings of Nokia.

In , Nokia did not cancel or repurchase any shares nor did Nokia issue any new shares.

In , Nokia transferred a total of Nokia shares held by it as settlement under Nokia equity plans to the plan participants, personnel of Nokia Group. The shares were transferred free of charge and the amount of shares transferred represented approximately .% of the total number of shares and the total voting rights. The transfers did not have a signifi cant eff ect on the relative holdings of the other shareholders of the company nor on their voting power.

On December , , Nokia and its subsidiary companies owned Nokia shares. The shares represented approximately .% of the total number of the shares of the company and the total voting rights. The total number of shares at December , , was . On December , , Nokia's share capital was EUR ..

Information on the authorizations held by the Board in to issue shares and special rights entitling to shares, transfer shares and repurchase own shares as well as information on the shareholders, stock options, shareholders' equity per share, dividend yield, price per earnings ratio, share prices, market capitalization, share turnover and average number of shares are available in the Annual Accounts section.

NOKIA OUTLOOK

Year is expected to continue to be a year of transition during which Nokia's Devices & Services business will be

subject to risks and uncertainties as Nokia's Smart Devices business unit continues to transition from Symbian products to Nokia products with Windows Phone and Nokia's Mobile Phones business unit aims to bring more smartphone-like features and design to Nokia's feature phone portfolio. Those risks and uncertainties include, among others, continued deterioration in demand for Nokia's Symbian devices; the timing, ramp-up and demand for Nokia's new products, including Nokia's Lumia devices; and further pressure on margins as competitors endeavor to capitalize on Nokia's platform and product transition. Nokia Siemens Networks announced in November a new strategy which focuses its business on mobile broadband and services, and has launched an extensive global restructuring program. In Nokia Siemens Networks is continuing to implement its new strategy and restructuring program. Additionally, the macroeconomic environment is making it increasingly diffi cult to estimate our outlook and provide reliable targets.

Mainly due to these factors, Nokia believes that it is not appropriate to provide annual targets for .

Longer-term, Nokia targets:

• » Devices & Services net sales to grow faster than the market, and
• » Devices & Services operating margin to be % or more, excluding special items and purchase price accounting related items.

Longer-term, Nokia and Nokia Siemens Networks target:

» Nokia Siemens Networks' operating margin to be between % and %, excluding special items and purchase price accounting related items.

Nokia and Nokia Siemens Networks have announced a number of planned changes to operations during and in connection with the implementation of new strategies for Nokia's Devices & Services and Nokia Siemens Networks businesses as well as in relation to the creation of a new Location & Commerce business. The planned changes include substantial personnel reductions, site and facility closures and reconfi gurations of certain Nokia facilities. Nokia continues to target to reduce its Devices & Services operating expenses by more than EUR billion for the full year , compared to the Devices & Services operating expenses of EUR . billion for the full year , excluding special items and purchase price accounting related items. Nokia and Nokia Siemens Networks continue to target to reduce Nokia Siemens Networks annualized operating expenses and production overheads, excluding special items and purchase price accounting related items, by EUR billion by the end of , compared to the end of .

RISK FACTORS

Set forth below is a description of risk factors that could affect Nokia. There may be, however, additional risks unknown to Nokia and other risks currently believed to be immaterial that could turn out to be material. These risks, either individually or together, could adversely aff ect Nokia's business, sales, profi tability, results of operations, fi nancial condition, market share, brand, reputation and share price from time to time. Unless otherwise indicated or the context otherwise provides, references in these risk factors to "Nokia", "we", "us" and "our" mean Nokia's consolidated operating segments. Additional risks primarily related to Nokia Siemens Networks that could aff ect Nokia are detailed under the heading "Nokia Siemens Networks" below.

• » Our success in the smartphone market depends on our ability to introduce and bring to market quantities of attractive, competitively priced Nokia products with Windows Phone that are positively diff erentiated from our competitors' products, both outside and within the Windows Phone ecosystem, and receive broad market acceptance.
• » We may not be able to make Nokia products with Windows Phone a competitive choice for consumers unless, together with Microsoft, we successfully encourage and support a competitive and profi table global ecosystem for Windows Phone smartphones that achieves suffi cient scale, value and attractiveness to all market participants.
• » We may experience further diffi culties in having a competitive off ering of Symbian devices and maintaining the economic viability of the Symbian smartphone platform during the transition to Windows Phone as our primary smartphone platform.
• » We may not be able to produce attractive and competitive feature phones, including devices with more smartphonelike features, in a timely and cost effi cient manner with diff erentiated hardware, software, localized services and applications.
• » We face intense competition in mobile products and in the digital map data and related location-based content and services markets.
• » We may not be able to retain, motivate, develop and recruit appropriately skilled employees, which may hamper our ability to implement our strategies, particularly our current

mobile products strategy and location-based services and commerce strategy, and we may not be able to eff ectively and smoothly implement the new operational structure for our businesses, achieve targeted effi ciencies and reductions in operating expenses.

• » Our strategy for our Location & Commerce business may not succeed if we are unable to maintain current sources of revenue, provide support for our Devices & Services business and create new sources of revenue from our locationbased services and commerce assets.
• » Our partnership with Microsoft is subject to risks and uncertainties.
• » Our failure to keep momentum and increase our speed of innovation, product development and execution will impair our ability to bring new innovative and competitive mobile products and location-based or other services to the market in a timely manner.
• » Our sales and profi tability are dependent on the development of the mobile and communications industry, including location-based and other services industries, in numerous diverse markets, as well as on general economic conditions globally and regionally.
• » Our products include numerous patented standardized or proprietary technologies on which we depend. Third parties may use without a license and unlawfully infringe our intellectual property or commence actions seeking to establish the invalidity of the intellectual property rights of these technologies. This may have a material adverse eff ect on our business and results of operations.
• » Our ability to maintain and leverage our traditional strengths in the mobile product market may be impaired if we are unable to retain the loyalty of our mobile operator and distributor customers and consumers as a result of the implementation of our strategies or other factors.
• » If any of the companies we partner and collaborate with, including Microsoft and Accenture, were to fail to perform as planned or if we fail to achieve the collaboration or partnering arrangements needed to succeed, we may not be able to bring our mobile products or location-based or other services to market successfully or in a timely way.
• » If the limited number of suppliers we depend on fail to deliver suffi cient quantities of fully functional products, components, sub-assemblies, software and services on favorable terms and in compliance with our supplier requirements, our ability to deliver our mobile products profi tably, in line

with quality requirements and on time could be materially adversely aff ected.

• » We may fail to manage our manufacturing, service creation and delivery as well as our logistics effi ciently and without interruption, or fail to make timely and appropriate adjustments, or fail to ensure that our products meet our and our customers' and consumers' requirements and are delivered on time and in suffi cient volumes.
• » Any actual or even alleged defects or other quality, safety and security issues in our products, including the hardware, software and content used in our products, could have a material adverse eff ect on our sales, results of operations, reputation and the value of the Nokia brand.
• » Any cybersecurity breach or other factors leading to an actual or alleged loss, improper disclosure or leakage of any personal or consumer data collected by us or our partners or subcontractors, made available to us or stored in or through our products could have a material adverse eff ect on our sales, results of operations, reputation and value of the Nokia brand.
• » Our business and results of operations, particularly our profi tability, may be materially adversely aff ected if we are not able to successfully manage the pricing of our products and costs related to our products and our operations.
• » Our net sales, costs and results of operations, as well as the US dollar value of our dividends and market price of our ADSs, are aff ected by exchange rate fl uctuations, particularly between the euro, which is our reporting currency, and the US dollar, the Japanese yen and the Chinese yuan, as well as certain other currencies.
• » Our products include increasingly complex technologies, some of which have been developed by us or licensed to us by certain third parties. As a result, evaluating the rights related to the technologies we use or intend to use is more and more challenging, and we expect increasingly to face claims that we could have allegedly infringed third parties' intellectual property rights. The use of these technologies may also result in increased licensing costs for us, restrictions on our ability to use certain technologies in our products and/or costly and time-consuming litigation, which could have a material adverse eff ect on our business, results of operations and fi nancial condition.
• » Our sales derived from, and manufacturing facilities and assets located in, emerging market countries may be materially adversely aff ected by economic, regulatory, political or

other developments in those countries or by other countries imposing regulations against imports to such countries.

• » Changes in various types of regulation, technical standards and trade policies as well as enforcement of such regulation and policies in countries around the world could have a material adverse eff ect on our business and results of operations.
• » We have operations in a number of countries and, as a result, face complex tax issues and could be obligated to pay additional taxes in various jurisdictions.
• » Our operations rely on the effi cient and uninterrupted operation of complex and centralized information technology systems and networks. If a system or network ineffi ciency, malfunction or disruption occurs, this could have a material adverse eff ect on our business and results of operations.
• » An unfavorable outcome of litigation could have a material adverse eff ect on our business, results of operations, fi nancial condition and reputation.
• » Allegations of possible health risks from the electromagnetic fi elds generated by base stations and mobile devices, and the lawsuits and publicity relating to this matter, regardless of merit, could have a material adverse eff ect on our sales, results of operations, share price, reputation and brand value by leading consumers to reduce their use of mobile devices, by increasing diffi culty in obtaining sites for base stations, by leading regulatory bodies to set arbitrary use restrictions and exposure limits, or by causing us to allocate additional monetary and personnel resources to these issues.

Nokia Siemens Networks

In addition to the risks described above, the following are risks primarily related to Nokia Siemens Networks that could aff ect Nokia.

• » Nokia Siemens Networks' new strategy to focus on mobile broadband and services and its restructuring plan designed to improve fi nancial performance and competitiveness may not succeed in improving its overall competitiveness and profi tability. Nokia Siemens Networks may be unable to execute the strategy eff ectively and in a timely manner, and it may be unable to otherwise continue to reduce operating expenses and other costs.
• » Nokia Siemens Networks' sales and profi tability depend on its success in the mobile broadband infrastructure services market, a key focus area in its new strategy. Nokia Siemens Networks' may fail to eff ectively and profi tably adapt its

business and operations in a timely manner to the increasingly diverse service needs of its customers in that market.

• » Competition in the mobile broadband infrastructure and related services market is intense. Nokia Siemens Networks' may be unable to maintain or improve its market position or respond successfully to changes in the competitive environment.
• » Nokia Siemens Networks' liquidity and its ability to meet its working capital requirements depend on access to available credit under Nokia Siemens Networks' credit facilities and other credit lines as well as cash at hand. If a signifi cant number of those sources of liquidity were to be unavailable, or cannot be refi nanced when they mature, this would have a material adverse eff ect on our business, results of operations and fi nancial condition.
• » Nokia Siemens Networks' may fail to eff ectively and profi tably invest in new competitive products, services, upgrades and technologies and bring them to market in a timely manner.
• » Nokia Siemens Networks may be unable to execute successfully its strategy for the acquired Motorola Solutions wireless network infrastructure assets, including retaining existing customers of those acquired assets, cross-selling its products and services to customers of those acquired assets and otherwise realizing the expected synergies and benefi ts of the acquisition.
• » The networks infrastructure and related services business relies on a limited number of customers and large multi-year contracts. Unfavorable developments under such a contract or in relation to a major customer may have a material adverse eff ect on our business, results of operations and fi nancial condition.
• » Providing customer fi nancing or extending payment terms to customers can be a competitive requirement in the networks infrastructure and related services business and may have a material adverse eff ect on our business, results of operations and fi nancial condition.
• » Some of the Siemens carrier-related operations transferred to Nokia Siemens Networks have been and continue to be the subject of various criminal and other governmental investigations related to whether certain transactions and payments arranged by some current or former employees of Siemens were unlawful. As a result of those investigations, government authorities and others have taken and may take further actions against Siemens and/or its employees that may involve and aff ect the assets and employees transferred

by Siemens to Nokia Siemens Networks, or there may be undetected additional violations that may have occurred prior to the transfer or violations that may have occurred after the transfer of such assets and employees.

DIVIDEND

Nokia's Board of Directors will propose a dividend of EUR . per share for .

Board of Directors, Nokia Corporation March ,

CONSOLIDATED INCOME STATEMENTS, IFRS

		2011	2010	2009
Financial year ended December 31	Notes	EURm	EURm	EURm
Net sales		38 659	42 446	40 984
Cost of sales		– 27 340	– 29 629	– 27 720
Gross profi t		11 319	12 817	13 264
Research and development expenses		– 5 612	– 5 863	– 5 909
Selling and marketing expenses		– 3 791	– 3 877	– 3 933
Administrative and general expenses		– 1 121	– 1 115	– 1 145
Impairment of goodwill	8	– 1 090	—	– 908
Other income	7	221	476	338
Other expenses	7, 8	– 999	– 368	– 510
Operating loss (–)/profi t (+)	2–10, 24	– 1 073	2 070	1 197
Share of results of associated companies	15, 31	– 23	1	30
Financial income and expenses	8, 11	– 102	– 285	– 265
Loss (–)/profi t (+) before tax		– 1 198	1 786	962
Tax	12	– 290	– 443	– 702
Loss (–)/profi t (+)		– 1 488	1 343	260
Loss (–)/profi t (+) attributable to equity holders of the parent		– 1 164	1 850	891
Loss attributable to non-controlling interests		– 324	– 507	– 631
		– 1 488	1 343	260
Earnings per share
(for loss (–)/profi t (+) attributable		2011	2010	2009
to the equity holders of the parent)	28	EUR	EUR	EUR
Basic		– 0.31	0.50	0.24
Diluted		– 0.31	0.50	0.24
Average number of shares (1 000's shares)	28	2011	2010	2009

Basic 3 709 947 3 708 816 3 705 116 Diluted 3 709 947 3 713 250 3 721 072

See Notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME, IFRS

		2011	2010	2009
Financial year ended December 31	Notes	EURm	EURm	EURm
Loss (–)/profi t (+)		– 1 488	1 343	260
Other comprehensive income
Translation diff erences	22	9	1 302	– 563
Net investment hedge gains (+)/losses (–)	22	– 37	– 389	114
Cash fl ow hedges	21	116	– 141	25
Available-for-sale investments	21	70	9	48
Other increase (+)/decrease (–), net		-16	45	-7
Income tax related to components
of other comprehensive income Other comprehensive income (+)/expense (–), net of tax	21, 22	– 16 126	126 952	– 44 – 427
Total comprehensive income (+)/expense (–)		– 1 362	2 295	– 167
Total comprehensive income (+)/expense (–) attributable to
equity holders of the parent		– 1 083	2 776	429
non-controlling interests		– 279	– 481	– 596
		– 1 362	2 295	– 167

See Notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION, IFRS

	2011	2010
December 31 Notes	EURm	EURm
ASSETS
Non-current assets
Capitalized development costs 13	6	40
Goodwill 13	4 838	5 723
Other intangible assets 13	1 406	1 928
Property, plant and equipment 14	1 842	1 954
Investments in associated companies 15	67	136
Available-for-sale investments 16	641	533
Deferred tax assets 25	1 848	1 596
Long-term loans receivable 16, 34	99	64
Other non-current assets	3	4
	10 750	11 978
Current assets
Inventories 18, 20	2 330	2 523
Accounts receivable, net of allowances for doubtful accounts (2011: EUR 284 million, 2010: EUR 363 million) 16, 20, 34	7 181	7 570
Prepaid expenses and accrued income 19	4 488	4 360
Current portion of long-term loans receivable 16, 34	54	39
Other fi nancial assets 16, 17, 34	500	378
Investments at fair value through profi t and loss, liquid assets 16, 34	433	911
Available-for-sale investments, liquid assets 16, 34	1 233	3 772
Available-for-sale investments, cash equivalents 16, 34	7 279	5 641
Bank and cash 34	1 957	1 951
	25 455	27 145
Total assets	36 205	39 123
SHAREHOLDERS' EQUITY AND LIABILITIES
Capital and reserves attributable to equity holders of the parent
Share capital 23	246	246
Share issue premium	362	312
Treasury shares, at cost	-644	-663
Translation diff erences 22	771	825
Fair value and other reserves 21	154	3
Reserve for invested non-restricted equity	3 148	3 161
Retained earnings	7 836	10 500
	11 873	14 384
Non-controlling interests	2 043	1 847
Total equity	13 916	16 231
Non-current liabilities
Long-term interest-bearing liabilities 16, 34	3 969	4 242
Deferred tax liabilities 25	800	1 022
Other long-term liabilities	76	88
	4 845	5 352
Current liabilities
Current portion of long-term loans 16, 34	357	116
Short-term borrowings 16, 34	995	921
Other fi nancial liabilities 16, 17, 34	483	447
Accounts payable 16, 34	5 532	6 101
Accrued expenses and other liabilities 26	7 450	7 365
Provisions 27	2 627	2 590
	17 444	17 540

CONSOLIDATED STATEMENTS OF CASH FLOWS, IFRS

Financial year ended December 31 Notes	2011 EURm	2010 EURm	2009 EURm
Cash fl ow from operating activities
Loss (–)/profi t (+) attributable to equity holders of the parent	– 1 164	1 850	891
Adjustments, total 32	3 486	2 112	3 390
Change in net working capital 32	– 638	2 349	140
Cash generated from operations	1 684	6 311	4 421
Interest received	190	110	125
Interest paid	– 283	– 235	– 256
Other fi nancial income and expenses, net	264	– 507	– 128
Income taxes paid, net	– 718	– 905	– 915
Net cash from operating activities	1 137	4 774	3 247
Cash fl ow from investing activities
Acquisition of Group companies, net of acquired cash	– 817	– 110	– 29
Purchase of current available-for-sale investments, liquid assets	– 3 676	– 8 573	– 2 800
Purchase of investments at fair value through profi t and loss, liquid assets	– 607	– 646	– 695
Purchase of non-current available-for-sale investments	– 111	– 124	– 95
Purchase of shares in associated companies	– 2	– 33	– 30
Additions to capitalized development costs	—	—	– 27
Proceeds from (+) /payment of (–) other long-term receivables	– 14	2	2
Proceeds from (+) /payment of (–) short-term loans receivable	– 31	– 2	2
Capital expenditures	– 597	– 679	– 531
Proceeds from disposal of shares in Group companies, net of disposed cash	– 5	– 21	—
Proceeds from disposal of shares in associated companies	4	5	40
Proceeds from disposal of businesses	3	141	61
Proceeds from maturities and sale of current available-for-sale investments, liquid assets	6 090	7 181	1 730
Proceeds from maturities and sale of investments at fair value through profi t and loss, liquid assets	1 156	333	108
Proceeds from sale of non-current available-for-sale investments	57	83	14
Proceeds from sale of fi xed assets	48	21	100
Dividends received	1	1	2
Net cash from/used in investing activities	1 499	– 2 421	– 2 148
Cash fl ow from fi nancing activities
Other contributions from shareholders	546	—	—
Purchase of treasury shares	—	1	—
Proceeds from long-term borrowings	1	482	3 901
Repayment of long-term borrowings	– 51	– 6	– 209
Proceeds from (+) /repayment of (–) short-term borrowings	– 59	131	– 2 842
Dividends paid	– 1 536	– 1 519	– 1 546
Net cash used in fi nancing activities	– 1 099	– 911	– 696
Foreign exchange adjustment	107	224	– 25
Net increase (+) /decrease (–) in cash and cash equivalents	1 644	1 666	378
Cash and cash equivalents at beginning of period	7 592	5 926	5 548
Cash and cash equivalents at end of period	9 236	7 592	5 926
Cash and cash equivalents comprise of:
Bank and cash	1 957	1 951	1 142
Current available-for-sale investments, cash equivalents 16, 34	7 279	5 641	4 784
	9 236	7 592	5 926

The figures in the consolidated cash flow statement cannot be directly traced from the balance sheet without additional

information as a result of acquisitions and disposals of subsidiaries and net foreign exchange differences arising on consolidation.

See Notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY, IFRS

EURm	Number of shares	Share	Share (1 000's) capital premium	issue Treasury diff er- shares	lation	Trans - Fair value and other ences reserves	Reserve for invested non-	equity earnings	Before non- restrict. Retained controlling controlling interests	Non- interests	Total
Balance at December 31, 2008	3 697 872	246	442	– 1 881	341	62	3 306	11 692	14 208		2 302 16 510
Translation diff erences					– 552				– 552	– 9	– 561
Net investment hedge gains, net of tax					84				84		84
Cash fl ow hedges, net of tax						– 35			– 35	49	14
Available-for-sale investments, net of tax						42			42	2	44
Other decrease, net								– 1	– 1	– 7	– 8
Profi t								891	891	– 631	260
Total comprehensive income		—	—	—	– 468	7	—	890	429	– 596	– 167
Stock options exercised	7						—		—		—
Stock options exercised related to acquisitions			– 1						– 1		– 1
Share-based compensation			16						16		16
Excess tax benefi t on share-based compensation			– 12						– 12	– 1	– 13
Settlement of performance and restricted shares	10 352		– 166	230			– 136		– 72		– 72
Reissuance of treasury shares	31			1					1		1
Cancellation of treasury shares				969				– 969	—		—
Dividend								– 1 481	– 1 481		– 44 – 1 525
Total of other equity movements	10 390	—	– 163	1 200	—	—	– 136	– 2 450	– 1 549		– 45 – 1 594
Balance at December 31, 2009	3 708 262	246	279	– 681	– 127	69	3 170	10 132	13 088		1 661 14 749
Translation diff erences					1 240				1 240	64	1 304
Net investment hedge losses, net of tax					– 288				– 288		– 288
Cash fl ow hedges, net of tax						– 73			– 73	– 43	– 116
Available-for-sale investments, net of tax						7			7		7
Other increase, net								40	40	5	45
Profi t								1 850	1 850	– 507	1 343
Total comprehensive income		—	—	—	952	– 66	—	1 890	2 776	– 481	2 295
Stock options exercised related to acquisitions			– 1						– 1		– 1
Share-based compensation			47						47		47
Excess tax benefi t on share-based compensation			– 1						– 1		– 1
Settlement of performance and restricted shares	868		– 12	17			– 9		– 4		– 4
Reissuance of treasury shares				1					1		1
Conversion of debt to equity										766	766
Dividend								– 1 483	– 1 483		– 56 – 1 539
Acquisitions and other change in non-controlling interests								– 39	– 39	– 43	– 82
Total of other equity movements	868	—	33	18	—	—	– 9	– 1 522	– 1 480	667	– 813
Balance at December 31, 2010	3 709 130	246	312	– 663	825	3	3 161	10 500	14 384		1 847 16 231

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY, IFRS (continued)

EURm	Number of shares	Share	Share (1 000's) capital premium	issue Treasury diff er- shares	lation	Trans- Fair value and other ences reserves	Reserve for invested non-	equity earnings	Before non- restrict. Retained controlling controlling interests	Non- interests	Total
Balance at December 31, 2010	3 709 130	246	312	– 663	825	3	3 161	10 500	14 384		1 847 16 231
Translation diff erences					– 26				– 26	35	9
Net investment hedge losses, net of tax					– 28				– 28		– 28
Cash fl ow hedges, net of tax						84			84	10	94
Available-for-sale investments, net of tax						67			67		67
Other decrease, net								– 16	– 16		– 16
Loss								– 1 164	– 1 164		– 324 – 1 488
Total comprehensive income		—	—	—	– 54	151	—	– 1 180	– 1 083		– 279 – 1 362
Share-based compensation			18						18		18
Excess tax benefi t on share-based compensation			– 3						– 3	– 1	– 4
Settlement of performance and restricted shares	1 059		– 11	19			– 13		– 5		– 5
Contributions from shareholders			46						46	500	546
Dividend								– 1 484	– 1 484		– 39 – 1 523
Acquisitions and other change in non-controlling interests									—	15	15
Total of other equity movements	1 059	—	50	19	—	—	– 13	– 1 484	– 1 428	475	– 953
Balance at December 31, 2011	3 710 189	246	362	– 644	771	154	3 148	7 836	11 873		2 043 13 916

Dividends declared per share were EUR . for (EUR . for , EUR . for ), subject to shareholders' approval.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ACCOUNTING PRINCIPLE S

Basis of presentation

The consolidated fi nancial statements of Nokia Corporation ("Nokia" or "the Group"), a Finnish public limited liability company with domicile in Helsinki, in the Republic of Finland, are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IASB") and in conformity with IFRS as adopted by the European Union ("IFRS"). The consolidated fi nancial statements are presented in millions of euros ("EURm"), except as noted, and are prepared under the historical cost convention, except as disclosed in the accounting policies below. The notes to the consolidated fi nancial statements also conform to Finnish accounting legislation. Nokia's Board of Directors authorized the fi nancial statements for for issuance and fi ling on March , .

As of April , , the Group's operational structure featured two new operating and reportable segments: Smart Devices and Mobile Phones, which combined with Devices & Services Other and unallocated items form Devices & Services business.

As of October , , the Group formed a Location & Commerce business which combines NAVTEQ and Nokia's social location services operations from Devices & Services. Location & Commerce business is an operating and reportable segment. From the third quarter until the end of the third quarter , NAVTEQ was a separate reportable segment of Nokia. As a consequence, Nokia currently has four operating and reportable segments: Smart Devices and Mobile Phones within Devices & Services, Location & Commerce and Nokia Siemens Networks.

Prior year segment specifi c results for and have been regrouped and recasted for comparability purposes according to the new operational structure. See Note .

ADOPTION OF PRONOUNCEMENTS UNDER IFRS

In the current year, the Group has adopted all of the new and revised standards, amendments and interpretations to existing standards issued by the IASB that are relevant to its operations and eff ective for accounting periods commencing on or after January , .

» Amendment to IAS Financial Instruments: Presentation requires that if an entity's rights issues off ered are issued pro-rata to all existing shareholders in the same class for a fi xed amount of currency, they should be classifi ed as equity regardless of the currency in which the exercise price is denominated.

• » Amendment to IFRS Financial Instruments: Disclosures enhances disclosures about transfer transactions of fi nancial assets in order to help users of fi nancial statements evaluate related risk exposures and their eff ect on an entity's fi nancial position.
• » IFRIC Extinguishing Financial Liabilities with Equity Instruments clarifi es accounting requirements for an entity that renegotiates terms of a fi nancial liability with its creditor and the creditor agrees to accept the entity's equity instruments to settle the fi nancial liability fully or partially. The entity's equity instruments issued to the creditor are part of the consideration paid to extinguish the fi nancial liability and the issued instruments should be measured at their fair value.

In addition, a number of other amendments that form part of the IASB's annual improvement project were adopted by the Group.

The adoption of each of the above mentioned standards did not have a material impact to the consolidated fi nancial statements.

Principles of consolidation

The consolidated fi nancial statements include the accounts of Nokia's parent company ("Parent Company"), and each of those companies over which the Group exercises control. Control over an entity is presumed to exist when the Group owns, directly or indirectly through subsidiaries, over % of the voting rights of the entity, the Group has the power to govern the operating and fi nancial policies of the entity through agreement or the Group has the power to appoint or remove the majority of the members of the board of the entity.

The Group's share of profi ts and losses of associates is included in the consolidated income statement in accordance with the equity method of accounting. An associate is an entity over which the Group exercises signifi cant infl uence. Signifi cant infl uence is generally presumed to exist when the Group owns, directly or indirectly through subsidiaries, over % of the voting rights of the company.

All inter-company transactions are eliminated as part of the consolidation process. Profi t or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. In the consolidated statement of fi nancial position, non-controlling interests are presented within equity, separately from the equity of the owners of the parent.

The entities or businesses acquired during the fi nancial periods presented have been consolidated from the date on which

control of the net assets and operations was transferred to the Group. Similarly, the result of a Group entity or business divested during an accounting period is included in the Group accounts only to the date of disposal.

Business Combinations

The acquisition method of accounting is used to account for acquisitions of separate entities or businesses by the Group. The consideration transferred in a business combination is measured as the aggregate of the fair values of the assets transferred, liabilities incurred towards the former owners of the acquired business and equity instruments issued. Acquisition-related costs are recognized as expense in profi t and loss in the periods when the costs are incurred and the related services are received. Identifi able assets acquired and liabilities assumed by the Group are measured separately at their fair value as of the acquisition date. Non-controlling interests in the acquired business are measured separately based on their proportionate share of the identifi able net assets of the acquired business. The excess of the cost of the acquisition over the interest in the fair value of the identifi able net assets acquired and attributable to the owners of the parent, is recorded as goodwill.

Assessment of the recoverability of long-lived assets, intangible assets and goodwill

For the purposes of impairment testing, goodwill is allocated to cash-generating units that are expected to benefi t from the synergies of the acquisition in which the goodwill arose.

The Group assesses the carrying amount of goodwill annually or more frequently if events or changes in circumstances indicate that such carrying amount may not be recoverable. The Group assesses the carrying amount of identifi able intangible assets and long-lived assets if events or changes in circumstances indicate that such carrying amount may not be recoverable. Factors that could trigger an impairment review include signifi cant underperformance relative to historical or projected future results, signifi cant changes in the manner of the use of the acquired assets or the strategy for the overall business and signifi cant negative industry or economic trends.

The Group conducts its impairment testing by determining the recoverable amount for the asset or cash-generating unit. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. If there is no reason to believe that cash-generating unit's value in use materially exceeds its fair value less costs to sell, the Group may use fair value less costs to sell as its recoverable amount.

Cash-generating unit, as determined for the purposes of Group's goodwill impairment testing, is the smallest group of assets (including goodwill) generating cash infl ows that are largely independent of the cash infl ows from other assets or groups of assets. In testing a cash-generating unit for impairment, the Group identifi es all corporate assets that relate to the cash-generating unit under review and those assets are allocated, on a reasonable and consistent basis, to the relevant units. The aggregate total carrying amount of the unit, including the portion of the carrying amount of the corporate assets allocated to the unit, is compared with its recoverable amount. An impairment loss is recognized if the recoverable amount is less than the carrying amount. Impairment losses are recognized immediately in the income statement.

Disposals of separate entities or businesses

When a disposal transaction causes the Group to relinquish control over a separate entity or business, the Group records a gain or loss on disposal at the disposal date. The gain or loss on disposal is calculated as the diff erence between the fair value of the consideration received and the derecognized net assets of the disposed entity or business, adjusted by amounts recognized in other comprehensive income in relation to that entity or business.

Foreign currency translation

FUNCTIONAL AND PRESENTATION CURRENCY

The fi nancial statements of all Group entities are measured using the currency of the primary economic environment in which the entity operates (functional currency). The consolidated fi nancial statements are presented in Euro, which is the functional and presentation currency of the Parent Company.

TRANSACTIONS IN FOREIGN CURRENCIES

Transactions in foreign currencies are recorded at the rates of exchange prevailing at the dates of the individual transactions. For practical reasons, a rate that approximates the actual rate at the date of the transaction is often used. At the end of the accounting period, the unsettled balances on foreign currency assets and liabilities are valued at the rates of exchange prevailing at the end of the accounting period. Foreign exchange gains and losses arising from statement of fi nancial position items, as well as changes in fair value in the related hedging instruments, are reported in fi nancial income and expenses. For non-monetary items, such as shares, the unrealized foreign exchange gains and losses are recognized in other comprehensive income.

FOREIGN GROUP COMPANIES

In the consolidated accounts, all income and expenses of foreign subsidiaries are translated into Euro at the average foreign exchange rates for the accounting period. All assets and liabilities of Group companies, where the functional currency is other than euro, are translated into euro at the yearend foreign exchange rates. Diff erences resulting from the translation of income and expenses at the average rate and assets and liabilities at the closing rate are recognized in other comprehensive income as translation diff erences within consolidated shareholder's equity. On the disposal of all or part of a foreign Group company by sale, liquidation, repayment of share capital or abandonment, the cumulative amount or proportionate share of the translation diff erence is recognized as income or as expense in the same period in which the gain or loss on disposal is recognized.

Revenue recognition

Majority of the Group's sales are recognized as revenue when the signifi cant risks and rewards of ownership have transferred to the buyer, continuing managerial involvement usually associated with ownership and eff ective control have ceased, the amount of revenue can be measured reliably, it is probable that economic benefi ts associated with the transaction will fl ow to the Group and the costs incurred or to be incurred in respect of the transaction can be measured reliably. The Group records reductions to revenue for special pricing agreements, price protection and other volume based discounts. Service revenue is generally recognized on a straight line basis over the service period unless there is evidence that some other method better represents the stage of completion. License fees from usage are recognized in the period when they are reliably measurable, which is normally when the customer reports them to the Group.

The Group enters into transactions involving multiple components consisting of any combination of hardware, services and software. The commercial eff ect of each separately identifi able component of the transaction is evaluated in order to refl ect the substance of the transaction. The consideration received from these transactions is allocated to each separately identifi able component based on the relative fair value of each component. The Group determines the fair value of each component by taking into consideration factors such as the price when the component or a similar component is sold separately by the Group or a third party. The consideration allocated to each component is recognized as revenue when the revenue recognition criteria for that component have been met.

In addition, sales and cost of sales from contracts involving solutions achieved through modifi cation of complex telecom-

munications equipment are recognized using the percentage of completion method when the outcome of the contract can be estimated reliably. A contract's outcome can be estimated reliably when total contract revenue and the costs to complete the contract can be estimated reliably, it is probable that the economic benefi ts associated with the contract will fl ow to the Group and the stage of contract completion can be measured reliably. When the Group is not able to meet one or more of the conditions, the policy is to recognize revenues only equal to costs incurred to date, to the extent that such costs are expected to be recovered.

Progress towards completion is measured by reference to cost incurred to date as a percentage of estimated total project costs, the cost-to-cost method.

The percentage of completion method relies on estimates of total expected contract revenue and costs, as well as dependable measurement of the progress made towards completing a particular project. Recognized revenues and profi ts are subject to revisions during the project in the event that the assumptions regarding the overall project outcome are revised. The cumulative impact of a revision in estimates is recorded in the period where such revisions become probable and can be estimated reliably. Losses on projects in progress are recognized in the period they become probable and can be estimated reliably.

Shipping and handling costs

The costs of shipping and distributing products are included in cost of sales.

Research and development

Research and development costs are expensed as they are incurred, except for certain development costs, which are capitalized when it is probable that a development project will generate future economic benefi ts, and certain criteria, including commercial and technological feasibility, have been met. Capitalized development costs, comprising direct labor and related overhead, are amortized on a systematic basis over their expected useful lives between two and fi ve years.

Capitalized development costs are subject to regular assessments of recoverability based on anticipated future revenues, including the impact of changes in technology. Unamortized capitalized development costs determined to be in excess of their recoverable amounts are expensed immediately.

Other intangible assets

Acquired patents, trademarks, licenses, software licenses for internal use, customer relationships and developed technology are capitalized and amortized using the straight-line method over their useful lives, generally to years. Where

an indication of impairment exists, the carrying amount of the related intangible asset is assessed for recoverability. Any resulting impairment losses are recognized immediately in the income statement.

Pensions

The Group companies have various pension schemes in accordance with the local conditions and practices in the countries in which they operate. The schemes are generally funded through payments to insurance companies or contributions to trustee-administered funds as determined by periodic actuarial calculations.

In a defi ned contribution plan, the Group has no legal or constructive obligation to make any additional contributions even if the party receiving the contributions is unable to pay the pension obligations in question. The Group's contributions to defi ned contribution plans, multi-employer and insured plans are recognized in the income statement in a period which the contributions relate to.

If a pension plan is funded through an insurance contract where the Group does not retain any legal or constructive obligations, the plan is treated as a defi ned contribution plan. All arrangements that do not fulfi ll these conditions are considered defi ned benefi t plans.

For defi ned benefi t plans, pension costs are assessed using the projected unit credit method: Pension cost is recognized in the income statement so as to spread the service cost over the service lives of employees. Pension obligation is measured as the present value of the estimated future cash outfl ows using interest rates on high quality corporate bonds with appropriate maturities. Actuarial gains and losses outside corridor are recognized over the average remaining service lives of employees. The corridor is defi ned as ten percent of the greater of the value of plan assets or defi ned benefi t obligation at the beginning of the respective year. Actuarial gains and losses within the corridor limits are not recognized.

Past service costs are recognized immediately in income, unless the changes to the pension plan are conditional on the employees remaining in service for a specifi ed period of time (the vesting period). In this case, the past service costs are amortized on a straight-line basis over the vesting period.

The liability (or asset) recognized in the statement of fi nancial position is pension obligation at the closing date less the fair value of plan assets, the share of unrecognized actuarial gains and losses, and past service costs. Any net pension asset is limited to unrecognized actuarial losses, past service cost, the present value of available refunds from the plan and expected reductions in future contributions to the plan.

Actuarial valuations for the Group's defi ned benefi t pension plans are performed annually. In addition, actuarial valuations are performed when a curtailment or settlement of a defi ned benefi t plan occurs in the Group.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the expected useful lives of the assets as follows:

Buildings and constructions	 –  years
Production machinery,
measuring and test equipment	 –  years
Other machinery and equipment	 –  years

Land and water areas are not depreciated.

Maintenance, repairs and renewals are generally charged to expense during the fi nancial period in which they are incurred. However, major renovations are capitalized and included in the carrying amount of the asset when it is probable that future economic benefi ts in excess of the originally assessed standard of performance of the existing asset will fl ow to the Group. Major renovations are depreciated over the remaining useful life of the related asset. Leasehold improvements are depreciated over the shorter of the lease term or useful life.

Gains and losses on the disposal of fi xed assets are included in operating profi t/loss.

Leases

The Group has entered into various operating lease contracts. The related payments are treated as rentals and recognized in the income statement on a straight-line basis over the lease terms unless another systematic approach is more representative of the pattern of the user's benefi t.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined using standard cost, which approximates actual cost on a FIFO (First-in First-out) basis. Net realizable value is the amount that can be realized from the sale of the inventory in the normal course of business after allowing for the costs of realization.

In addition to the cost of materials and direct labor, an appropriate proportion of production overhead is included in the inventory values.

An allowance is recorded for excess inventory and obsolescence based on the lower of cost or net realizable value.

Financial assets

The Group has classifi ed its fi nancial assets as one of the following categories: available-for-sale investments, loans and receivables, fi nancial assets at fair value through profi t or loss and bank and cash.

AVAILABLE-FOR-SALE INVESTMENTS

The Group invests a portion of cash needed to cover projected cash needs of its on-going operations in highly liquid, interest-bearing investments and certain equity instruments. The following investments are classifi ed as available-forsale based on the purpose for acquiring the investments as well as ongoing intentions: () Highly liquid, interest-bearing investments that are readily convertible to known amounts of cash with maturities at acquisition of less than months, which are classifi ed in the balance sheet as current availablefor-sale investments, cash equivalents. Due to the high credit quality and short-term nature of these investments, there is an insignifi cant risk of changes in value. () Similar types of investments as in category (), but with maturities at acquisition of longer than months, are classifi ed in the balance sheet as current available-for-sale investments, liquid assets. () Investments in technology related publicly quoted equity shares, or unlisted private equity shares and unlisted funds, are classifi ed in the balance sheet as non-current availablefor-sale investments.

Current fi xed income and money-market investments are fair valued by using quoted market rates, discounted cash fl ow analyses and other appropriate valuation models at the balance sheet 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 by using various factors, including, but not limited to: () the current market value of similar instruments, () prices established from a recent arm's length fi nancing transaction of the target companies, () analysis of market prospects and operating performance of the target companies taking into consideration the public market of comparable companies in similar industry sectors. The remaining available-for-sale investments are carried at cost less impairment, which are technology related investments in private equity shares and unlisted funds for which the fair value cannot be measured reliably due to non-existence of public markets or reliable valuation methods against which to value these assets. The investment and disposal decisions on these investments are business driven.

All purchases and sales of investments are recorded on the trade date, which is the date that the Group commits to purchase or sell the asset.

The changes in fair value of available-for-sale investments are recognized in fair value and other reserves as part of shareholders' equity, with the exception of interest calculated using the eff ective interest method and foreign exchange gains and losses on monetary assets, which are recognized directly in profi t and loss. Dividends on available-for-sale equity instruments are recognized in profi t and loss when the Group's right to receive payment is established. When the investment is disposed of, the related accumulated changes in fair value are released from shareholders' equity and recognized in the income statement. The weighted average method is used when determining the cost-basis of publicly listed equities being disposed of by the Group. FIFO (First-in First-out) method is used to determine the cost basis of fi xed income securities being disposed of by the Group. An impairment is recorded when the carrying amount of an available-for-sale investment is greater than the estimated fair value and there is objective evidence that the asset is impaired including, but not limited to, counterparty default and other factors causing a reduction in value that can be considered other than temporary. The cumulative net loss relating to that investment is removed from equity and recognized in the income statement for the period. If, in a subsequent period, the fair value of the investment in a non-equity instrument increases and the increase can be objectively related to an event occurring after the loss was recognized, the loss is reversed, with the amount of the reversal included in the income statement.

INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS, LIQUID ASSETS

The investments at fair value through profi t and loss, liquid assets include highly liquid fi nancial assets designated at fair value through profi t or loss at inception. For investments designated at fair value through profi t or loss, the following criteria must be met: () the designation eliminates or signifi cantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or recognizing gains or losses on a diff erent basis; or () the assets are part of a group of fi nancial assets, which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

These investments are initially recorded at fair value. Subsequent to initial recognition, these investments are remeasured at fair value. Fair value adjustments and realized gain and loss are recognized in the income statement.

LOANS RECEIVABLE

Loans receivable include loans to customers and suppliers and are initially measured at fair value and subsequently at amortized cost using the eff ective interest method less impairment. Loans are subject to regular and thorough review as to their collectability and as to available collateral; in the event that any loan is deemed not fully recoverable, a provision is made to refl ect the shortfall between the carrying amount and the present value of the expected cash fl ows. Interest income on loans receivable is recognized by applying the eff ective interest rate. The long-term portion of loans receivable is included on the statement of fi nancial position under long-term loans receivable and the current portion under current portion of long-term loans receivable.

BANK AND CASH

Bank and cash consist of cash at bank and in hand.

ACCOUNTS RECEIVABLE

Accounts receivable are carried at the original amount due from customers, which is considered to be fair value, less allowances for doubtful accounts. Allowance for doubtful accounts is based on a periodic review of all outstanding amounts, where signifi cant doubt about collectability exists, including an analysis of historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in our customer payment terms. Bad debts are written off when identifi ed as uncollectible, and are included within other operating expenses.

Financial liabilities

LOANS PAYABLE

Loans payable are recognized initially at fair value, net of transaction costs incurred. Any diff erence between the fair value and the proceeds received is recognized in profi t and loss at initial recognition. In subsequent periods, they are stated at amortized cost using the eff ective interest method. The long-term portion of loans payable is included on the statement of fi nancial position under long-term interestbearing liabilities and the current portion under current portion of long-term loans.

ACCOUNTS PAYABLE

Accounts payable are carried at the original invoiced amount, which is considered to be fair value due to the short-term nature of the Group's accounts payable.

Derivative fi nancial instruments

All derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognizing the

resulting gain or loss varies according to whether the derivatives are designated and qualify under hedge accounting or not. Generally, the cash fl ows of a hedge are classifi ed as cash fl ows from operating activities in the consolidated statement of cash fl ows as the underlying hedged items relate to the company's operating activities. When a derivative contract is accounted for as a hedge of an identifi able position relating to fi nancing or investing activities, the cash fl ows of the contract are classifi ed in the same manner as the cash fl ows of the position being hedged.

DERIVATIVES NOT DESIGNATED IN HEDGE ACCOUNTING RELATIONSHIPS CARRIED AT FAIR VALUE THROUGH PROFIT AND LOSS

Fair values of forward rate agreements, interest rate options, futures contracts and exchange traded options are calculated based on quoted market rates at each balance sheet date. Discounted cash fl ow analyses are used to value interest rate and currency swaps. Changes in the fair value of these contracts are recognized in the income statement.

Fair values of cash settled equity derivatives are calculated based on quoted market rates at each balance sheet date. Changes in fair value are recognized in the income statement.

Forward foreign exchange contracts are valued at the market forward exchange rates. Changes in fair value are measured by comparing these rates with the original contract forward rate. Currency options are valued at each balance sheet date by using the Garman & Kohlhagen option valuation model. Changes in the fair value on these instruments are recognized in the income statement.

For the derivatives not designated under hedge accounting but hedging identifi able exposures such as anticipated foreign currency denominated sales and purchases, the gains and losses are recognized within other operating income or expenses. The gains and losses on all other hedges not designated under hedge accounting are recognized under fi nancial income and expenses.

Embedded derivatives are identifi ed and monitored by the Group and fair valued at each balance sheet date. In assessing the fair value of embedded derivatives, the Group employs a variety of methods including option pricing models and discounted cash fl ow analysis using assumptions that are based on market conditions existing at each balance sheet date. Changes in fair value are recognized in the income statement.

Hedge accounting

CASH FLOW HEDGES: HEDGING OF ANTICIPATED FOREIGN CURRENCY DENOMINATED SALES AND PURCHASES

The Group applies hedge accounting for "Qualifying hedges". Qualifying hedges are those properly documented cash fl ow hedges of the foreign exchange rate risk of future anticipated foreign currency denominated sales and purchases that meet the requirements set out in IAS . The cash fl ow being hedged must be "highly probable" and must present an exposure to variations in cash fl ows that could ultimately aff ect profi t or loss. The hedge must be highly eff ective both prospectively and retrospectively.

The Group claims hedge accounting in respect of certain forward foreign exchange contracts and options, or option strategies, which have zero net premium or a net premium paid, and where the critical terms of the bought and sold options within a collar or zero premium structure are the same and where the nominal amount of the sold option component is no greater than that of the bought option.

For qualifying foreign exchange forwards, the change in fair value that refl ects the change in spot exchange rates is deferred in shareholders' equity to the extent that the hedge is eff ective. For qualifying foreign exchange options, or option strategies, the change in intrinsic value is deferred in shareholders' equity to the extent that the hedge is eff ective. In all cases, the ineff ective portion is recognized immediately in the income statement as fi nancial income and expenses. Hedging costs, expressed either as the change in fair value that refl ects the change in forward exchange rates less the change in spot exchange rates for forward foreign exchange contracts, or changes in the time value for options, or options strategies, are recognized within other operating income or expenses.

Accumulated changes in fair value from qualifying hedges are released from shareholders' equity into the income statement as adjustments to sales and cost of sales, in the period when the hedged cash fl ow aff ects the income statement. If the hedged cash fl ow is no longer expected to take place, all deferred gains or losses are released immediately into the income statement as adjustments to sales and cost of sales. If the hedged cash fl ow ceases to be highly probable, but is still expected to take place, accumulated gains and losses remain in equity until the hedged cash fl ow aff ects the income statement.

Changes in the fair value of any derivative instruments that do not qualify for hedge accounting under IAS are recognized immediately in the income statement. The changes in fair value of derivative instruments that directly relate to normal business operations are recognized within other operating income and expenses. The changes in fair value from all other

derivative instruments are recognized in fi nancial income and expenses.

CASH FLOW HEDGES: HEDGING OF FOREIGN CURRENCY RISK OF HIGHLY PROBABLE BUSINESS ACQUISITIONS AND OTHER TRANSACTIONS

The Group hedges the cash fl ow variability due to foreign currency risk inherent in highly probable business acquisitions and other future transactions that result in the recognition of non-fi nancial assets. When those non-fi nancial assets are recognized in the statement of fi nancial position, the gains and losses previously deferred in equity are transferred from equity and included in the initial acquisition cost of the asset. The deferred amounts are ultimately recognized in the profi t and loss as a result of goodwill assessments in case of business acquisitions and through depreciation in the case of other assets. In order to apply for hedge accounting, the forecasted transactions must be highly probable and the hedges must be highly eff ective prospectively and retrospectively.

The Group claims hedge accounting in respect of forward foreign exchange contracts, foreign currency denominated loans, and options, or option strategies, which have zero net premium or a net premium paid, and where the terms of the bought and sold options within a collar or zero premium structure are the same.

For qualifying foreign exchange forwards, the change in fair value that refl ects the change in spot exchange rates is deferred in shareholders' equity. The change in fair value that refl ects the change in forward exchange rates less the change in spot exchange rates is recognized in the income statement within fi nancial income and expenses. For qualifying foreign exchange options, the change in intrinsic value is deferred in shareholders' equity. Changes in the time value are at all times recognized directly in the income statement as fi nancial income and expenses. In all cases the ineff ective portion is recognized immediately in the income statement as fi nancial income and expenses.

CASH FLOW HEDGES: HEDGING OF CASH FLOW VARIABILITY ON VARIABLE RATE LIABILITIES

The Group applies cash fl ow hedge accounting for hedging cash fl ow variability on variable rate liabilities. The eff ective portion of the gain or loss relating to interest rate swaps hedging variable rate borrowings is deferred in shareholders' equity. The gain or loss relating to the ineff ective portion is recognized immediately in the income statement as fi nancial income and expenses. For hedging instruments closed before the maturity date of the related liability, hedge accounting will immediately discontinue from that date onwards, with all the cumulative

gains and losses on the hedging instruments recycled gradually to income statement in the periods when the hedged variable interest cash fl ows aff ect the income statement.

FAIR VALUE HEDGES

The Group applies fair value hedge accounting with the objective to reduce the exposure to fl uctuations in the fair value of interest-bearing liabilities due to changes in interest rates and foreign exchange rates. Changes in the fair value of derivatives designated and qualifying as fair value hedges, together with any changes in the fair value of the hedged liabilities attributable to the hedged risk, are recorded in the income statement within fi nancial income and expenses.

If a hedge no longer meets the criteria for hedge accounting, hedge accounting ceases and any fair value adjustments made to the carrying amount of the hedged item during the periods the hedge was eff ective are amortized to profi t or loss based on the eff ective interest method.

HEDGES OF NET INVESTMENTS IN FOREIGN OPERATIONS

The Group also applies hedge accounting for its foreign currency hedging on net investments. Qualifying hedges are those properly documented hedges of the foreign exchange rate risk of foreign currency denominated net investments that meet the requirements set out in IAS . The hedge must be eff ective both prospectively and retrospectively.

The Group claims hedge accounting with respect to forward foreign exchange contracts, foreign currency denominated loans, and options, or option strategies, which have zero net premium or a net premium paid, and where the terms of the bought and sold options within a collar or zero premium structure are the same.

For qualifying foreign exchange forwards, the change in fair value that refl ects the change in spot exchange rates is deferred in shareholders' equity. The change in fair value that refl ects the change in forward exchange rates less the change in spot exchange rates is recognized in the income statement within fi nancial income and expenses. For qualifying foreign exchange options, the change in intrinsic value is deferred in shareholders' equity. Changes in the time value are at all times recognized directly in the income statement as fi nancial income and expenses. If a foreign currency denominated loan is used as a hedge, all foreign exchange gains and losses arising from the transaction are recognized in shareholders' equity. In all cases, the ineff ective portion is recognized immediately in the income statement as fi nancial income and expenses.

Accumulated changes in fair value from qualifying hedges are released from shareholders' equity into the income statement only if the legal entity in the given country is sold, liquidated, repays its share capital or is abandoned.

Income taxes

The tax expense comprises current tax and deferred tax. Current taxes are based on the results of the Group companies and are calculated according to local tax rules. Taxes are recognized in the income statement, except to the extent that it relates to items recognized in the other comprehensive income or directly in equity, in which case, the tax is recognized in other comprehensive income or equity, respectively.

Deferred tax assets and liabilities are determined, for all temporary diff erences arising between tax bases of assets and liabilities and their carrying amounts in the consolidated fi nancial statements using liability method. Deferred tax assets are recognized to the extent that it is probable that future taxable profi t will be available against which the unused tax losses or deductible temporary diff erences can be utilized. Each reporting period they are assessed for realizability and when circumstances indicate it is no longer probable that deferred tax assets will be utilized, they are adjusted as necessary. Deferred tax liabilities are recognized for temporary differences that arise between the amounts initially recognized and the tax base of identifi able net assets acquired in business combinations. Deferred tax assets and deferred tax liabilities are off set for presentation purposes when there is a legally enforceable right to set off current tax assets against current tax liabilities, and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or diff erent taxable entities, which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which signifi cant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

The enacted or substantively enacted tax rates as of each balance sheet date that are expected to apply in the period when the asset is realized or the liability is settled are used in the measurement of deferred tax assets and liabilities.

Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outfl ow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. When the Group expects a provision to be reimbursed, the reimbursement is recognized as an asset only when the reimbursement is virtually certain. The Group assesses the adequacy of its pre-existing provisions and adjusts the amounts as necessary based on actual experience and changes in future estimates at each balance sheet date.

WARRANTY PROVISIONS

The Group provides for the estimated liability to repair or replace products under warranty at the time revenue is recognized. The provision is an estimate calculated based on historical experience of the level of volumes, product mix and repair and replacement cost.

INTELLECTUAL PROPERTY RIGHTS (IPR) PROVISIONS

The Group provides for the estimated future settlements related to asserted and unasserted past alleged IPR infringements based on the probable outcome of potential infringement.

TAX PROVISIONS

The Group recognizes a provision for tax contingencies based upon the estimated future settlement amount at each balance sheet date.

RESTRUCTURING PROVISIONS

The Group provides for the estimated cost to restructure when a detailed formal plan of restructuring has been completed, the restructuring plan has been announced by the Group and a reliable estimate of the amount can be made.

OTHER PROVISIONS

The Group recognizes the estimated liability for non-cancellable purchase commitments for inventory in excess of forecasted requirements at each balance sheet date.

The Group provides for onerous contracts based on the lower of the expected cost of fulfi lling the contract and the expected cost of terminating the contract.

Share-based compensation

The Group off ers three types of global equity settled share-based compensation schemes for employees: stock options, performance shares and restricted shares. Employee services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments as of the date of grant, excluding the impact of any non-market vesting conditions. Non-market vesting conditions attached to the performance shares are included in assumptions about the number of shares that the employee will ultimately receive. On a regular basis, the Group reviews the assumptions made and, where necessary, revises its estimates of the number of performance shares that are expected to be settled. Share-based compensation is recognized as an expense in the income statement over the service period. A separate vesting period is defi ned for each quarterly lot of the stock options plans. When stock options are exercised, the proceeds received, net of any transaction

costs, are credited to share issue premium and the reserve for invested non-restricted equity.

Treasury shares

The Group recognizes acquired treasury shares as a deduction from equity at their acquisition cost. When cancelled, the acquisition cost of treasury shares is recognized in retained earnings.

Dividends

Dividends proposed by the Board of Directors are not recorded in the fi nancial statements until they have been approved by the shareholders at the Annual General Meeting.

Earnings per share

The Group calculates both basic and diluted earnings per share. Basic earnings per share is computed using the weighted average number of shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of shares outstanding during the period plus the dilutive eff ect of stock options, restricted shares and performance shares outstanding during the period.

Use of estimates and critical accounting judgments

The preparation of fi nancial statements in conformity with IFRS requires the application of judgment by management in selecting appropriate assumptions for calculating fi nancial estimates, which inherently contain some degree of uncertainty. Management bases its estimates on historical experience, expected outcomes and various other assumptions that are believed to be reasonable under the circumstances. The related results form a basis for making judgments about the reported carrying values of assets and liabilities and the reported amounts of revenues and expenses that may not be readily apparent from other sources. The Group will revise material estimates if changes occur in the circumstances on which an estimate was based or as a result of new information or more experience. Actual results may diff er from these estimates under diff erent assumptions or conditions.

Set forth below are areas requiring signifi cant judgment and estimation that may have an impact on reported results and the fi nancial position.

REVENUE RECOGNITION

Majority of the Group's sales are recognized as revenue when the signifi cant risks and rewards of ownership have transferred to the buyer, continuing managerial involvement usually associated with ownership and eff ective control have ceased, the amount of revenue can be measured reliably, it is probable

that economic benefi ts associated with the transaction will fl ow to the Group and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Sales could materially change if management's assessment of such criteria was determined to be inaccurate. The Group enters into transactions involving multiple components consisting of any combination of hardware, services and software. The consideration received from these transactions is allocated to each separately identifi able component based on the relative fair value of each component. The consideration allocated to each component is recognized as revenue when the revenue recognition criteria for that component have been met. Determination of the fair value for each component requires the use of estimates and judgment taking into consideration factors which may have a signifi cant impact on the timing and amount of revenue recognition. Examples of such factors include price when the component is sold separately by the Group or the price when a similar component is sold separately by the Group or a third party.

The Group makes price protection adjustments based on estimates of future price reductions and certain agreed customer inventories at the date of the price adjustment. Potential changes in these estimates could result in revisions to the sales in future periods.

Revenue from contracts involving solutions achieved through modifi cation of complex telecommunications equipment is recognized on the percentage of completion basis when the outcome of the contract can be estimated reliably. Recognized revenues and profi ts are subject to revisions during the project in the event that the assumptions regarding the overall project outcome are revised. Current sales and profi t estimates for projects may materially change due to the early stage of a long-term project, new technology, changes in the project scope, changes in costs, changes in timing, changes in customers' plans, realization of penalties, and other corresponding factors, which may have a signifi cant impact on the timing and amount of revenue recognition.

CUSTOMER FINANCING

The Group has provided a limited number of customer fi nancing arrangements and agreed extended payment terms with selected customers. Should actual fi nancial position of the customers or general economic conditions diff er from assumptions, the ultimate collectability of such fi nancings and trade credits may be required to be re-assessed, which could result in a write-off of these balances and thus negatively impact profi ts in future periods. From time to time the Group endeavors to mitigate this risk through transfer of its rights to the cash collected from these arrangements to third party

fi nancial institutions on a non-recourse basis in exchange for an upfront cash payment.

ALLOWANCES FOR DOUBTFUL ACCOUNTS

The Group maintains allowances for doubtful accounts for estimated losses resulting from subsequent inability of customers to make required payments. If the fi nancial conditions of customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required in future periods.

INVENTORY-RELATED ALLOWANCES

The Group periodically reviews inventory for excess amounts, obsolescence and declines in net realizable value below cost and records an allowance against the inventory balance for any such declines. These reviews require management to estimate future demand for products. Possible changes in these estimates could result in revisions to the valuation of inventory in future periods.

WARRANTY PROVISIONS

The Group provides for the estimated cost of product warranties at the time revenue is recognized. The Group's warranty provision is established based upon best estimates of the amounts necessary to settle future and existing claims on products sold as of each balance sheet date. As new products incorporating complex technologies are continuously introduced, and as local laws, regulations and practices may change, changes in these estimates could result in additional allowances or changes to recorded allowances being required in future periods.

PROVISION FOR INTELLECTUAL PROPERTY RIGHTS, OR IPR, INFRINGEMENTS

The Group provides for the estimated future settlements related to asserted and unasserted past alleged IPR infringements based on the probable outcome of potential infringement. IPR infringement claims can last for varying periods of time, resulting in irregular movements in the IPR infringement provision. The ultimate outcome or actual cost of settling an individual infringement may materially vary from estimates.

LEGAL CONTINGENCIES

Legal proceedings covering a wide range of matters are pending or threatened in various jurisdictions against the Group. Provisions are recorded for pending litigation when it is determined that an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertain nature of litigation, the ultimate outcome or actual cost of settlement may materially vary from estimates.

CAPITALIZED DEVELOPMENT COSTS

The Group capitalizes certain development costs when it is probable that a development project will generate future economic benefi ts and certain criteria, including commercial and technological feasibility, have been met. Should a product fail to substantiate its estimated feasibility or life cycle, material development costs may be required to be written-off in future periods.

BUSINESS COMBINATIONS

The Group applies the acquisition method of accounting to account for acquisitions of businesses. The consideration transferred in a business combination is measured as the aggregate of the fair values of the assets transferred, liabilities incurred towards the former owners of the acquired business and equity instruments issued. Identifi able assets acquired, and liabilities assumed by the Group are measured separately at their fair value as of the acquisition date. Non-controlling interests in the acquired business are measured separately based on their proportionate share of the identifi able net assets of the acquired business. The excess of the cost of the acquisition over Nokia's interest in the fair value of the identifi able net assets acquired is recorded as goodwill.

The allocation of fair values to the identifi able assets acquired and liabilities assumed is based on various valuation assumptions requiring management judgment. Actual results may diff er from the forecasted amounts and the diff erence could be material. See also Note .

ASSESSMENT OF THE RECOVERABILITY OF LONG-LIVED ASSETS, INTANGIBLE ASSETS AND GOODWILL

The recoverable amounts for long-lived assets, intangible assets and goodwill have been determined based on the expected future cash fl ows attributable to the asset or cash-generating unit discounted to present value. The key assumptions applied in the determination of recoverable amount include discount rate, length of an explicit forecast period, estimated growth rates, profi t margins and level of operational and capital investment. Amounts estimated could diff er materially from what will actually occur in the future. See also Note .

FAIR VALUE OF DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS

The fair value of fi nancial instruments that are not traded in an active market (for example, unlisted equities, currency options and embedded derivatives) are determined using various valuation techniques. The Group uses judgment to select an appropriate valuation methodology as well as underlying

assumptions based on existing market practice and conditions. Changes in these assumptions may cause the Group to recognize impairments or losses in future periods.

INCOME TAXES

Management judgment is required in determining current tax expense, tax provisions, deferred tax assets and liabilities and the extent to which deferred tax assets can be recognized. Each reporting period they are assessed for realizability and when circumstances indicate it is no longer probable that deferred tax assets will be utilized, they are adjusted as necessary. If the fi nal outcome of these matters diff ers from the amounts initially recorded, diff erences may impact the income tax expense in the period in which such determination is made.

Primarily in Finland and Germany but also in certain other jurisdictions the utilization of deferred tax assets is dependent on future taxable profi t in excess of the profi ts arising from reversal of existing taxable temporary diff erences. The recognition of deferred tax assets is based upon whether it is more likely than not that suffi cient taxable profi ts will be available in the future from which the reversal of temporary diff erences and tax losses can be deducted. Recognition therefore involves judgment with regard to future fi nancial performance of a particular legal entity or tax group in which the deferred tax asset has been recognized.

PENSIONS

The determination of pension benefi t obligation and expense for defi ned benefi t pension plans is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions include, among others, the discount rate, expected long-term rate of return on plan assets and annual rate of increase in future compensation levels. A portion of plan assets is invested in equity securities, which are subject to equity market volatility. Changes in assumptions and actuarial conditions may materially aff ect the pension benefi t obligation and future expense. See also Note .

SHARE-BASED COMPENSATION

The Group operates various types of equity settled sharebased compensation schemes for employees. Fair value of stock options is based on certain assumptions, including, among others, expected volatility and expected life of the options. Non-market related vesting conditions attached to performance shares are included in assumptions about the number of shares that the employee will ultimately receive relating to projections of net sales and earnings per share. Signifi cant diff erences in equity market performance, employee option activity and the Group's projected and actual net sales and earnings per share performance, may aff ect future expense. See also Note .

New accounting pronouncements under IFRS

The Group will adopt the following new and revised standards, amendments and interpretations to existing standards issued by the IASB that are expected to be relevant to its operations and fi nancial position:

IFRS Financial Instruments will change the classifi cation, measurement and impairment of fi nancial instruments based on the Group's objectives for the related contractual cash fl ows.

IFRS Consolidated Financial Statements establishes principles for the presentation and preparation of consolidated fi nancial statements when an entity controls one or more other entities.

IFRS Joint Arrangements establishes that the legal form of an arrangement should not be the primary factor in the determination of the appropriate accounting for the arrangement. Party to a joint arrangement determines the type of joint arrangement in which it is involved by assessing its rights and obligations and then accounting for those rights and obligations in accordance with that type of joint arrangement.

IFRS Disclosure of Interests in Other Entities requires disclosure of information that enables users of fi nancial statements to evaluate nature of, and risks associated with, its interests in other entities and the eff ects of those interests on its fi nancial position, fi nancial performance and cash fl ows.

IFRS Fair Value Measurement replaces fair value measurement guidance contained within individual IFRSs with a single, unifi ed defi nition of fair value in a single new IFRS standard. The new standard provides a framework for measuring fair value, related disclosure requirements about fair value measurements and further authoritative guidance on the application of fair value measurement in inactive markets.

Amendments to IAS Presentation of Financial Statements retains the 'one or two statement' approach at the option of the entity and only revises the way other comprehensive income is presented: Requiring separate subtotals for those elements which may be 'recycled' and those elements that will not.

Amendment to IAS Income Taxes provides clarifi cation for measurement of deferred taxes in situations where an asset is measured using the fair value model in IAS Investment Property by introducing a presumption that the carrying amount of the underlying asset will be recovered through sale.

Amended IAS Employee Benefi ts discontinues the use of the 'corridor' approach and re-measurement impacts will be recognized in other comprehensive income (with the remainder in profi t or loss). Other long-term benefi ts are required to

be measured in the same way even though changes in the recognized amount are fully refl ected in profi t or loss. Treatment for termination benefi ts, specifi cally the point in time when an entity would recognize a liability for termination benefi ts is also revised.

Amendments to IAS and IAS will be adopted on January , . The Group expects to adopt the new standards IFRS , IFRS , IFRS and IFRS as well as the amended IAS on their eff ective date, January , .

On December , the IASB amended the eff ective date of IFRS to annual periods beginning on or after January , and modifi ed the relief from restating comparative periods and the associated disclosures in IFRS . The Group will adopt the standard on the revised eff ective date.

The Group is currently evaluating potential impact of the new standards on its accounts.

2. SEGMENT INFORMATION

Nokia has three businesses: Devices & Services, Location & Commerce and Nokia Siemens Networks, and four operating and reportable segments for fi nancial reporting purposes: Smart Devices and Mobile Phones within our Devices & Services business, Location & Commerce and Nokia Siemens Networks.

Nokia's reportable segments represent the strategic business units that off er diff erent products and services. The chief operating decision maker receives monthly fi nancial information for these business units. Key fi nancial performance measures of the reportable segments include primarily net sales and contribution/operating profi t. Segment contribution for Smart Devices and Mobile Phones consists of net sales as well as its own, directly assigned costs and allocated costs but exclude major restructuring projects/programs and certain other items that are not directly related to the segments. Operating Profi t is presented for Location & Commerce and Nokia Siemens Networks. Nokia evaluates the performance of its segments and allocates resources to them based on operating profi t/contribution.

Smart Devices focuses on smartphones and smart devices and has profi t-and-loss responsibility and end-to-end accountability for the full consumer experience, including product development, product management and product marketing.

Mobile Phones focuses on mass market feature phones and related services and applications and has profi t-and-loss responsibility and end-to-end accountability for the full consumer experience, including development, management and marketing of feature phone products, services and applications.

Devices & Services Other includes net sales of Vertu, spare parts and related cost of sales and operating expenses, as well as intellectual property related royalty income. Operating expenses of Devices & Services Other also include common research and development. Other income and expenses include major restructuring projects/programs related to the Devices & Services business as well as other unallocated items.

Location & Commerce develops a range of location-based products and services for consumers, as well as platform services and local commerce services for the Group's feature phones and smartphones as well as for other device manufacturers, application developers, Internet service providers, merchants, and advertisers. Location & Commerce also continues to serve NAVTEQ's existing customers both in terms of provision of content and as a business-to-business provider of map data. Location & Commerce has profi t and loss responsibility and end-to-end accountability for the full consumer experience.

Nokia Siemens Networks provides a portfolio of mobile, fi xed and converged network technology, as well as professional services including managed services, consultancy and systems integration, deployment and maintenance to operators and service providers.

Corporate Common Functions consists of company-wide functions.

In February , Nokia announced a partnership with Microsoft to bring together the respective complementary assets and expertise of both parties to build a new global mobile ecosystem for smartphones. The partnership, under which Nokia is adopting and licensing Windows Phone from Microsoft as its primary smartphone platform, was formalized in April .

The Group is paying Microsoft a software royalty fee to license the Windows Phone smartphone platform, which the Group records as royalty expense in its Smart Devices cost of goods sold. Nokia has a competitive software royalty structure, which includes annual minimum software royalty commitments and refl ects the large volumes that the Group expects to ship, as well as a variety of other considerations related to engineering work to which both companies are committed. The Group expects that the adoption of Windows Phone will enable it to reduce signifi cantly its operating expenses.

In recognition of the contributions that the Group is providing, the Group will receive quarterly platform support payments from Microsoft. The received platform support payments are recognized over time as a benefi t to our Smart Devices costs of goods sold. The total amount of the platform payments is expected to slightly exceed the total amount of the minimum software royalty commitments.

The Microsoft partnership also recognizes the value of intellectual property and puts in place mechanisms for exchanging intellectual property rights.

Nokia adopted its current operational structure during . As of April , Devices & Services business, previously a reportable segment itself, has two operating and reportable segments; Smart Devices and Mobile Phones as well as Devices & Services Other. As of October , , Location & Commerce, was formed by combining the NAVTEQ business, previously a reportable segment itself, with Devices & Services social location services operations. Prior period results have been regrouped and recast for comparability purposes according to the new organizational structure. Majority of impacted amounts relate to operating expenses which were previously recorded in Devices & Services and subsequently transferred to Location & Commerce, and which specifi cally related to social location services operations.

In order to consistently refl ect where the economic value of location services is created, the recast also impacted cost of sales by reportable segment. Amounts that were previously reported within Devices & Services Other cost of sales and Smart Devices cost of sales were transferred to Location & Commerce cost of sales. As a consequence of the higher value add performed in Location & Commerce, the recasted numbers also refl ect a higher internal transfer price, which impacted Location & Commerce net sales positively and Smart Devices cost of sales negatively. The internal transfer price represents revenue to Location & Commerce and cost of sales to Smart Devices.

Location & Commerce will be responsible for developing the services going forward and these services will continue to be delivered to customers and consumers by Devices & Services in combination with our devices. In order to consistently refl ect deferral of services revenue over the service period, the recast also had an impact on Location & Commerce revenue and corporate eliminations.

The accounting policies of the segments are the same as those described in Note . Nokia accounts for intersegment revenues and transfers as if the revenues were to third parties, that is, at current market prices.

No single customer represents % or more of Group revenues.

	Smart	Mobile	Devices & Services	Devices &	Location &	Nokia Siemens	Corporate Common Functions and Corporate un-	Elimina
2011, EURm	Devices	Phones	Other	Services	Commerce	Networks	allocated.4, 6	tions	Group
Profi t and loss information
Net sales to external customers	10 818	11 930	1 178	23 926	698	14 035	—		38 659
Net sales to other segments	2	—	15	17	393	6	—	– 416	—
Depreciation and amortization	18	20	315	353	491	711	7		1 562
Impairment 1	—	2	168	170	1 091	19	58		1 338
Contribution	– 411	1 481	– 186
Operating profi t (+)/loss (–) 1				884	– 1 526	– 300	– 131		– 1 073
Share of results of associated companies	—	—	—	—	1	– 17	– 7		– 23
Balance sheet information
Capital expenditures 2	21	18	213	252	43	302	—		597
Segment assets 3	2 367	1 999	4 299	8 665	5 257	11 310	13 505	– 2 532	36 205
of which:
Investments in associated companies	—	—	—	—	4	29	34		67
Segment liabilities 5	2 528	1 270	5 696	9 494	2 812	7 520	4 995	– 2 532	22 289
2010, EURm
Profi t and loss information
Net sales to external customers	14 870	13 696	552	29 118	668	12 660	—		42 446
Net sales to other segments	3	—	13	16	201	1	—	– 218	—
Depreciation and amortization	38	17	350	405	519	843	4		1 771
Impairment	—	—	—	—	—	2	13		15
Contribution	1 376	2 327	– 163
Operating profi t (+)/loss (–)				3 540	– 663	– 686	– 113	– 8	2 070
Share of results of associated companies	—	—	—	—	2	11	– 12		1
Balance sheet information
Capital expenditures 2	31	13	256	300	73	306	—		679
Segment assets 3	2 924	1 905	4 725	9 554	6 742	10 621	14 754	– 2 548	39 123
of which:
Investments in associated companies				—	7	42	87		136
Segment liabilities 5	3 064	1 417	5 627	10 108	3 009	7 190	5 133	– 2 548	22 892
2009, EURm
Profi t and loss information
Net sales to external customers	12 640	14 644	557	27 841	579	12 564	—		40 984
Net sales to other segments	9	—	3	12	177	10	—	– 199	—
Depreciation and amortization	35	17	380	432	488	860	4		1 784
Impairment 1	—	—	56	56	—	919	34		1 009
Contribution	1 438	2 240	– 114
Operating profi t (+)/loss (–) 1				3 564	– 594	– 1 639	– 134		1 197
Share of results of associated companies	—	—	—	—	—	32	– 2		30

Location & Commerce operating loss in includes a goodwill impairment loss of EUR million. Nokia Siemens Networks operating loss in includes a goodwill impairment loss of EUR million.

Including goodwill, capital expenditures in amount to EUR million (EUR million in ). The goodwill consists of EUR million in (EUR million in ) for Devices & Services, EUR million in (EUR million in ) for Location & Commerce, EUR million in (EUR million in ) for Nokia Siemens Networks, and EUR million in (EUR million in ) for Corporate Common Functions.

Comprises intangible assets, property, plant and equipment, investments, inventories and accounts receivable as well as prepaid expenses and accrued income except those related to interest and taxes for Devices & Services and Corporate Common Functions. In addition, Location & Commerce and Nokia Siemens Networks' assets include cash and other liquid assets, available-for-sale investments, long-term loans receivable and other financial assets as well as interest and tax related prepaid expenses and accrued income. These are directly attributable to Location & Commerce and Nokia Siemens Networks.

Unallocated assets include cash and other liquid assets, available-for-sale investments, long-term loans receivable and other financial assets as well as interest and tax related prepaid expenses and accrued income for Devices & Services and Corporate Common Functions.

Comprises accounts payable, accrued expenses and provisions except those related to interest and taxes for Devices & Services and Corporate Common Functions. In addition, Location & Commerce's and Nokia Siemens Networks' liabilities include non-current liabilities and short-term borrowings as well as interest and tax related prepaid income and accrued expenses and provisions. These are directly attributable to Location & Commerce and Nokia Siemens Networks.

Unallocated liabilities include non-current liabilities and short-term borrowings as well as interest and tax related prepaid income, accrued expenses and provisions related to Devices & Services and Corporate Common Functions.

		2009
		390
		5 990
		2 809
		1 333
		1 528
		1 733
		312
		1 731
		1 916
		1 252
		21 990
38 659	42 446	40 984
	2011 317 6 130 2 923 1 901 1 843 1 606 1 539 1 405 996 982 19 017	2010 371 7 149 2 952 1 506 1 744 2 019 730 1 630 1 470 1 266 21 609

Segment non-current assets by geographic area 7, EURm	2011	2010
Finland	894	1 501
China	472	402
India	185	210
Germany	192	209
UK	120	236
USA	4 732	6 079
Other	1 497	1 008
Total	8 092	9 645

Comprises intangible and tangible assets and property, plant and equipment.

3. PERCENTAGE OF COMPLETION

Contract sales recognized under percentage of completion accounting are EUR million in (EUR million in and EUR million in ). Services revenue for managed services and network maintenance contracts are EUR million in (EUR million in and EUR million in ).

Advances received related to construction contracts, included in accrued expenses and other liabilities, are EUR million at December , (EUR million in ). Included in accounts receivable are contract revenues recorded prior to billings EUR million at December , (EUR million in ) and billings in excess of costs incurred are EUR million at December , (EUR million in ).

The aggregate amount of costs incurred and recognized profi ts (net of recognized losses) under construction contracts in progress since inception is EUR million at December , (EUR million in ).

Retentions related to construction contracts, included in accounts receivable, are EUR million at December , (EUR million at December , ).

4. PERSONNEL E XPENSE S

EURm	2011	2010	2009
Wages and salaries	6 284	5 808	5 658
Share-based compensation expense, total	18	48	13
Pension expenses, net	445	431	427
Other social expenses	787	708	649
Personnel expenses as per income statement	7 534	6 995	6 747

Share-based compensation expense includes pension and other social costs of EUR million in (EUR million in and EUR – million in ) based on the related employee benefi t charge recognized during the year.

Pension expenses, comprised of multi-employer, insured and defi ned contribution plans were EUR million in (EUR million in and EUR million in ). The remainder consists of expenses related to defi ned benefi t plans.

Average personnel	2011	2010	2009
Devices & Services	54 850	56 896	54 987
Location & Commerce	7 187	6 766	5 757
Nokia Siemens Networks	71 825	65 379	62 129
Group Common Functions	309	314	298
Nokia Group	134 171	129 355 123 171

5. PENSIONS

The Group operates a number of post retirement plans in various countries. These plans include both defi ned contribution and defi ned benefi t schemes.

The Group's most signifi cant defi ned benefi t pension plans are in Germany and in the UK. The majority of active employees in Germany participate in the pension scheme BAP (Beitragsorientierter Alterversorgungs Plan), formerly known as Beitragsorientierte Siemens Alterversorgung ("BSAV"). The funding vehicle for the BAP is the NSN Pension Trust e.V. In Germany, individual benefi ts are generally dependent on eligible compensation levels, ranking within the Group and years of service.

The majority of active employees in Nokia UK participate in a pension scheme which is designed according to the Scheme Trust Deeds and Rules and is compliant with the Guidelines of the UK Pension Regulator. The funding vehicle for the pension scheme is Nokia Group (UK) Pension Scheme Ltd which is run on a Trust basis. In the UK, individual benefi ts are generally dependent on eligible compensation levels and years of service for the defi ned benefi t section of the scheme and on individual investment choices for the defi ned contribution section of the scheme.

The following table sets forth the changes in the benefi t obligation and fair value of plan assets during the year and the funded status of the signifi cant defi ned benefi t pension plans showing the amounts that are recognized in the Group's consolidated statement of fi nancial position at December :

EURm	2011	2010
Present value of defi ned benefi t
obligations at beginning of year	– 1 544	– 1 411
Foreign exchange	– 3	– 49
Current service cost	– 59	– 61
Interest cost	– 83	– 78
Plan participants' contributions	– 9	– 8
Past service cost	– 1	– 1
Actuarial gain (+)/loss (–)	– 26	1
Business combinations	—	– 1
Curtailment	8	1
Settlements	17	17
Benefi ts paid	46	46
Other movements 1	– 83	—
Present value of defi ned benefi t
obligations at end of year	– 1 737	– 1 544
Plan assets at fair value at
beginning of year	1 494	1 330
Foreign exchange	4	44
Expected return on plan assets	77	76
Actuarial gain (+)/loss (–) on plan assets	– 14	9
Employer contribution	54	62
Plan participants' contributions	9	8
Benefi ts paid	– 37	– 32
Settlements	– 11	– 6
Business combinations	– 2	3
Other movements 1	83	—
Plan assets at fair value at end of year	1 657	1 494
Defi cit	– 80	– 50
Unrecognized net actuarial
gains (+)/losses (–)	10	– 26
Unrecognized past service cost	1	1
Amount not recognized as an asset
in the balance sheet because
of limit in IAS 19 paragraph 58(b)	– 1	– 9
Prepaid (+)/accrued (–) pension cost in the statement of fi nancial position	– 70	– 84

The Group has reclassified an existing plan as a defined benefit plan due to requirement to cover for shortfall in return on plan assets. This reclassification did not have a material impact on the Group's financial statements.

Present value of obligations include EUR million (EUR million in ) of wholly funded obligations, EUR million of partly funded obligations (EUR million in ) and EUR million (EUR million in ) of unfunded obligations.

The amounts recognized in the income statement are as follows:

EURm	2011	2010	2009
Current service cost	59	61	55
Interest cost	83	78	69
Expected return on plan assets	– 77	– 76	– 70
Net actuarial gains (–)/losses (+) recognized in year	7	– 1	– 9
Impact of paragraph 58 (b) limitation	– 7	3	5
Past service cost gain (–)/loss (+)	1	1	—
Curtailment	– 11	– 1	—
Settlement	– 6	– 11	—
Total, included in personnel expenses	49	54	50

Movements in prepaid/accrued pension costs recognized in the statement of financial position are as follows:

EURm	2011	2010
Prepaid (+)/accrued (–) pension costs at beginning of year	– 84	– 106
Net income (+)/expense (–) recognized in the profi t and loss account	– 49	– 54
Contributions paid	54	62
Benefi ts paid	9	14
Business combinations	– 2	2
Foreign exchange	2	– 2
Prepaid (+)/accrued (–) pension costs at end of year 1	– 70	– 84

Included within prepaid expenses and accrued income/accrued expense .

The accrued pension cost above is made up of a prepayment of EUR million (EUR million in ) and an accrual of EUR million (EUR million in ).

EURm	2011	2010	2009	2008	2007
Present value of defi ned benefi t obligations				– 1 737 – 1 544 – 1 411 – 1 205 – 2 266
Plan assets at fair value	1 657	1 494	1 330	1 197	2 174
Surplus (+)/ defi cit (–)	– 80	– 50	– 81	– 8	– 92

Experience adjustments arising on plan obligations amount to a gain of EUR million in (gain of EUR million in , a loss of EUR million in , a gain of EUR million in , a loss of EUR million in ).

Experience adjustments arising on plan assets amount to a loss of EUR million in (a gain of EUR million in , EUR million in , a loss of EUR million in , EUR million in ).

The principal actuarial weighted average assumptions used were as follows:

%	2011	2010
Discount rate for determining present values	4.9	5.1
Expected long-term rate of return on plan assets	4.5	5.1
Annual rate of increase in future compensation levels	2.4	2.6
Pension increases	2.0	2.0

The expected long-term rate of return on plan assets is based on the expected return multiplied with the respective percentage weight of the market-related value of plan assets. The expected return is defi ned on a uniform basis, refl ecting long-term historical returns, current market conditions and strategic asset allocation.

The Group's pension plan weighted average asset allocation as a percentage of Plan Assets at December , , and , by asset category are as follows:

%	2011	2010
Asset category:
Equity securities	20	23
Debt securities	62	57
Insurance contracts	8	8
Short-term investments	3	4
Other	7	8
Total	100	100

The objective of the investment activities is to maximize the excess of plan assets over projected benefi t obligations, within an accepted risk level, taking into account the interest rate and infl ation sensitivity of the assets as well as the obligations. Derivative instruments can be used to change the portfolio asset allocation and risk characteristics.

The foreign pension plan assets include a self investment through a loan provided to Nokia by the Group's German pension fund of EUR million (EUR million in ). See Note .

The actual return on plan assets was EUR million in (EUR million in ).

In , the Group expects to make contributions of EUR million to its defi ned benefi t pension plans.

6. EXPENSES BY NATURE

EURm	2011	2010	2009
Cost of material	18 331	20 917	19 502
Personnel expenses	7 534	6 995	6 747
Depreciation and amortization	1 562	1 771	1 784
Advertising and promotional expenses	1 212	1 291	1 335
Warranty costs	671	894	696
Other costs and expenses	8 554	8 616	8 643
Total of Cost of sales, Research and development, Selling and marketing and Administrative
and general expenses	37 864	40 484	38 707

7. OTHER INCOME AND E XPENSE S

Other income totaled EUR million in (EUR million in and EUR million in ). Other expenses totaled EUR million in (EUR million in and EUR million in ).

In , other operating income includes a benefi t from a cartel claim settlement of EUR million. Other expenses included restructuring charges of EUR million and associated impairments of EUR million. Restructuring charges included EUR million related to Devices & Services, recorded within Devices & Services other, EUR million related to Location & Commerce and EUR million to Nokia Siemens Networks, respectively. Other expenses also included an impairment of shares in an associated company of EUR million. In addition other expenses included a consideration paid related to the Accenture transaction of EUR million. Nokia agreed to outsource its Symbian software development and support

activities to Accenture, which resulted in the transfer of approximately employees to Accenture.

In , other income includes a refund of customs duties of EUR million, a gain on sale of assets and a business of EUR million and a gain on sale of the wireless modem business of EUR million impacting Devices & Services operating profi t. The wireless modem business was responsible for development of Nokia's wireless modem technologies for LTE, HSPA and GSM standards. The wireless modem business included Nokia's wireless modem technologies for LTE, HSPA and GSM standards, certain related patens and approximately Nokia R&D professionals, the vast majority of whom were located in Finland, India, the UK and Denmark. The sale was closed on November , . Other expenses included restructuring charges of EUR million, of which EUR million is related to Devices & Services and EUR million to Nokia Siemens Networks. The restructuring charges in Devices & Services mainly related to changes in Symbian Smartphones and Services organizations as well as certain corporate functions.

Other income for includes a gain on sale of security appliance business of EUR million impacting Devices & Services operating profi t and a gain on sale of real estate in Oulu, Finland, of EUR million impacting Nokia Siemens Networks operating loss. In , other operating expenses includes EUR million charges related to restructuring activities in Devices & Services due to measures taken to adjust the business operations and cost base according to market conditions. In conjunction with the decision to refocus its activities around specifi ed core assets, Devices & Services recorded impairment charges totaling EUR million for intangible assets arising from the acquisitions of Enpocket and Intellisync and the asset acquisition of Twango.

In all three years presented "Other income and expenses" include the costs of hedging forecasted sales and purchases (forward points of cash fl ow hedges) and fair value changes of derivatives hedging identifi able and probable forecasted cash fl ows.

8. IMPAIRMENT

EURm	2011	2010	2009
Goodwill	1 090	—	908
Other intangible assets	2	—	56
Property, plant and equipment	104	—	1
Inventories	7	—	—
Investments in associated companies	41	—	19
Available-for-sale investments	94	107	25
Other assets	—	3	—
Total, net	1 338	110	1 009

Goodwill

Goodwill is allocated to the Group's cash-generating units (CGU) for the purpose of impairment testing. The allocation is made to those cash-generating units that are expected to benefi t from the synergies of the business combination in which the goodwill arose. In , the Group has allocated goodwill to four cash-generating units, which correspond to the Group's reportable segments: Smart Devices CGU, Mobile Phones CGU, Location & Commerce CGU and Nokia Siemens Networks CGU. For the purposes of the Group's annual impairment testing, the amount of goodwill previously allocated in to the Devices & Services CGU has been reallocated to the Smart Devices CGU and the Mobile Phones CGU based on their relative fair values. Based on the Group's assessment, no goodwill was allocated from Devices & Services to Location & Commerce pursuant to the formation of Location & Commerce business unit and segment on October , . The organizational changes were not a driver of, and did not result in an impairment in the Location & Commerce CGU.

The recoverable amounts for the Smart Devices CGU and the Mobile Phones CGU are based on value in use calculations. A discounted cash fl ow calculation was used to estimate the value in use for both CGUs. Cash fl ow projections determined by management are based on information available, to refl ect the present value of the future cash fl ows expected to be derived through the continuing use of the Smart Devices CGU and the Mobile Phones CGU.

The recoverable amounts for the Location & Commerce CGU and the Nokia Siemens Networks CGU are based on fair value less costs to sell. A discounted cash fl ow calculation was used to estimate the fair value less costs to sell for both CGUs. The cash fl ow projections employed in the discounted cash fl ow calculation have been determined by management based on the information available, to refl ect the amount that an entity could obtain from separate disposal of each of the Location & Commerce CGU and the Nokia Siemens Networks CGU, in an arm's length transaction between knowledgeable, willing parties, after deducting the estimated costs of disposal.

The cash fl ow projections employed in the value in use and the fair value less costs to sell calculations are based on detailed fi nancial plans approved by management, covering a three-year planning horizon. Cash fl ows in subsequent periods refl ect a realistic pattern of slowing growth that declines towards an estimated terminal growth rate utilized in the terminal period. The terminal growth rate utilized does not exceed long-term average growth rates for the industry and economies in which the CGU operates. All cash fl ow projections are consistent with external sources of information, wherever available.

Goodwill amounting to EUR million, EUR million and EUR million was allocated to the Smart Devices CGU, Mobile Phones CGU and Nokia Siemens Networks CGU, respectively, at the date of the impairment testing. The goodwill impairment testing conducted for the aforementioned CGUs did not result in any impairment charges for the year ended December , .

In the fourth quarter of , the Group conducted annual impairment testing for the Location & Commerce CGU to assess if events or changes in circumstances indicated that the carrying amount of the Location & Commerce CGU was not recoverable. As a result, the Group recorded an impairment loss of EUR million to reduce the carrying amount of the Location & Commerce CGU to its recoverable amount. The impairment loss was allocated in its entirety to the carrying amount of goodwill in the balance sheet of the Location & Commerce CGU. This impairment loss is presented as impairment of goodwill in the consolidated income statement. As a result of the impairment loss, the amount of goodwill allocated to the Location & Commerce CGU has been reduced to EUR million at December , .

The impairment charge is the result of an evaluation of the projected fi nancial performance and net cash fl ows of the Location & Commerce CGU. The main drivers for management's net cash fl ow projections include license fees related to digital map data, fair value of the services sold within the Group and estimated average revenue per user with regard to mobile media advertising. The average revenue per user is estimated based on peer market data for mobile advertising revenue. Projected device sales volumes impact the overall forecasted intercompany and advertising revenues. This takes into consideration the market dynamics in digital map data and related location-based content markets, including the Group's long-term view that the market will move from feebased models towards advertising-based models especially in some more mature markets. It also refl ects recently announced results and related competitive factors in local search and advertising markets resulting in lower estimated growth prospects from location-based assets integrated with diff erent advertising platforms. After consideration of all relevant factors, the Group reduced the net sales projections for the Location & Commerce CGU which, in turn, reduced projected profi tability and cash fl ows.

The Group has concluded that the recoverable amount for the Location & Commerce CGU is most sensitive to the valuation assumptions for discount rate and long-term growth rate. A reasonably possible increase in the discount rate or decrease in long-term growth rate would give rise to an additional material impairment loss.

The key assumptions applied in the impairment testing analysis for each CGU are presented in the table below:

	Cash-generating unit
	Smart Devices %	Mobile Phones %	Location & Commerce %	Nokia Siemens Networks %
Terminal growth rate	1.9	1.5	3.1	1.0
Post-tax discount rate	9.0	9.0	9.7	10.4
Pre-tax discount rate	12.2	13.1	13.1	13.8

Both value in use of Smart Devices CGU and Mobile Phones CGU and fair value less costs to sell for Location & Commerce CGU and Nokia Siemens Networks CGU are determined on a pre-tax value basis using pre-tax valuation assumptions including pre-tax cash fl ows and pre-tax discount rate. As market-based rates of return for the Group's CGUs are available only on a post-tax basis, the pre-tax discount rates are derived by adjusting the post-tax discount rates to refl ect the specifi c amount and timing of future tax cash fl ows.

The discount rates applied in the impairment testing for each CGU have been determined independently of capital structure refl ecting current assessments of the time value of money and relevant market risk premiums. Risk premiums included in the determination of the discount rate refl ect risks and uncertainties for which the future cash fl ow estimates have not been adjusted.

In , the Group recorded an impairment loss of EUR million to reduce the carrying amount of the Nokia Siemens Networks CGU to its recoverable amount. The impairment loss was allocated in its entirety to the carrying amount of goodwill arising from the formation of Nokia Siemens Networks and from subsequent acquisitions completed by Nokia Siemens Networks. As a result of the impairment loss, the amount of goodwill allocated to the Nokia Siemens Networks CGU in the year ended December , , was reduced to zero. Goodwill allocated to the Nokia Siemens Networks CGU has subsequently increased during , primarily as a result of the acquisition of Motorola Solutions' Networks business (see Note ).

The goodwill impairment testing conducted for each of the Group's CGUs for the year ended December , did not result in any impairment charges.

Other intangible assets

In conjunction with the Group's decision to refocus its activities around specifi ed core assets, the Group recorded impairment charges in totaling EUR million for intangible assets arising from the acquisitions of Enpocket and Intellisync and the asset acquisition of Twango. The impairment charge was recognized in other operating expense and is included in Devices & Services Other.

Property, plant and equipment and inventories

The majority of impairment losses recognized with respect to property, plant and equipment resulted from EUR million charges related to the Group's restructuring programs, including the closure of manufacturing operations in Cluj, Romania, and consolidation of other offi ce sites. The charges were recorded in other operating expense and are included in Devices & Services Other.

Investments in associated companies

After application of the equity method, including recognition of the Group's share of results of associated companies, the Group determined that recognition of impairment losses of EUR million in (EUR million in , EUR million in ) was necessary to adjust the Group's investment in associated companies to its recoverable amount.

Available-for-sale investments

The Group's investment in certain equity and interest bearing securities held as available-for-sale suff ered a permanent decline in fair value resulting in an impairment charge of EUR million (EUR million in , EUR million in ). These impairment amounts are included within fi nancial expenses and other operating expenses in the consolidated income statement. See also Note .

9. ACQUISITIONS

Acquisitions in 2011

MOTOROLA

On April , Nokia Siemens Networks completed its acquisition of assets related to Motorola Solutions' networks business in exchange for a total consideration of EUR

million. The acquired business consists of Motorola's wireless networks infrastructure equipment manufacturing and sales operations, including the GSM, CDMA, WCDMA, WiMAX and LTE product portfolios and services off erings. The acquisition is expected to strengthen the Group's position in certain regions, particularly North America and Japan. The goodwill of EUR million arising from the acquisition is attributable to the increased presence in these key markets and the assembled workforce. The majority of the goodwill acquired is expected to be deductible for income tax purposes.

The following table summarizes the consideration paid, the fair value of assets acquired, liabilities assumed and the non-controlling interest at December , . The fair values of certain intangible and tangible assets acquired remain provisional as at December , pending fi nalization of the valuation of those assets. Consequently, the goodwill is also provisional.

	EURm
Cash	706
Fair value of installment payments receivable	-64
Total consideration	642
Non-current assets
Goodwill	155
Developed technology	156
Customer relationships	195
Other intangible assets	3
	509
Property, plant & equipment	105
Investments in associated companies	6
Deferred tax assets	1
	621
Current assets
Inventories	103
Accounts receivable	228
Prepaid expenses and accrued income	20
Deferred tax assets	35
Bank and cash	31
	417
Total assets acquired	1 038
Non-current liabilities
Other long-term liabilities	15
	15
Current liabilities
Accounts payable	154
Accrued expenses	166
Deferred tax liabilities	15
Provisions	30
	365
Total liabilities assumed	380
Non-controlling interests	16
Net assets acquired	642

Nokia Siemens Networks has concluded on a working capital adjustment settlement with respect to the acquisition whereby Motorola Solutions has agreed to make additional installment payments to Nokia Siemens Networks. The installment payments are subject to certain conditions that Nokia Siemens Networks must fulfi ll over a given time period. The maximum amount of installment payments totals EUR million and Nokia Siemens Networks has determined that the fair value of the installment payments amounts to EUR million of which EUR million has been received at December , .

The fair value of accounts receivables of EUR million includes trade receivables with a fair value of EUR million. The gross contractual amount for trade receivables due is EUR million, of which EUR million is expected to be uncollectible.

Acquisition-related costs of EUR million and EUR million have been charged to administrative and general expenses in the consolidated income statement for the years ended December , and December , , respectively.

From April , , the consolidated statement of comprehensive income includes revenue and net loss contributed by the Motorola networks business of EUR million and EUR million, respectively.

Had Motorola Networks business been consolidated from January , , the Group consolidated statement of income would show revenue of EUR million and loss of EUR million. This pro forma information is not necessarily indicative of the results of the combined operations, had the acquisition actually occurred on January , , nor is it indicative of the future results of the combined operations.

During , the Group completed additional acquisitions that in aggregate did not have a material impact on the consolidated fi nancial statements.

Acquisitions in 2010

During , the Group completed several minor acquisitions that did not have a material impact on the consolidated fi nancial statements. The purchase consideration paid and the total goodwill arising from these acquisitions amounted to EUR million and EUR million, respectively. The goodwill arising from these acquisitions is attributable to assembled workforce and post acquisition synergies.

• MetaCarta Inc, based in Cambridge, USA, provides unique geographic intelligence technology and expertise in geographic intelligence solutions. The Group acquired a % ownership in MetaCarta on April , .
• Novarra Inc, based in Chicago, USA, is a provider of a mobile browser and service platform with more than employees. The Group acquired a % ownership interest in Novarra on April , .
• Motally Inc, a US-based company, provides mobile analytics services off ering in-application tracking and reporting. The Group acquired a % ownership interest in Motally on August .
• PixelActive Inc, based in California, USA, specialises in tools and techniques for D modeling of detailed road networks, buildings and terrain. The Group acquired a % ownership interest in PixelActive on November , .

Acquisitions in 2009

During , the Group completed fi ve acquisitions that did not have a material impact on the consolidated fi nancial statements. The purchase consideration paid and the total goodwill arising from these acquisitions amounted to EUR million and EUR million, respectively. The goodwill arising from these acquisitions is attributable to assembled workforce and post acquisition synergies.

• Plum Ventures, Inc, based in Boston, USA, develops and operates a cloud-based social media sharing and messaging service for private groups. The Group acquired certain assets of Plum on September , .
• Dopplr Oy, based in Helsinki, Finland, provides a Social Atlas that enables members to share travel plans and preferences privately with their networks. The Group acquired a % ownership interest in Dopplr on September , .
• Huano Technology Co., Ltd, based in Changsha, China, is an infrastructure service provider with Nokia Siemens Networks as its primary customer. Nokia Siemens Networks increased its ownership interest in Huano from % to % on July , .
• T-Systems Traffi c GmbH is a leading German provider of dynamic mobility services delivering near real-time data about traffi c fl ow and road conditions. The Group acquired a % ownership interest in T-Systems Traffi c on January , .
• Acuity Mobile, based in Greenbelt, USA, is a leading provider of mobile marketing content delivery solutions. The Group acquired a % ownership interest in Acuity Mobile on September , .

10. DEPRECIATION AND AMORTIZ ATION

EURm	2011	2010	2009
Depreciation and amortization by function
Cost of sales	227	248	266
Research and development 1	674	906	909
Selling and marketing 2	442	426	424
Administrative and general	219	191	185
Total	1 562	1 771	1 784

In , depreciation and amortization allocated to research and development included amortization of acquired intangible assets of EUR million (EUR million in and EUR million in ).

In , depreciation and amortization allocated to selling and marketing included amortization of acquired intangible assets of EUR million (EUR million in and EUR million in ).

11. FINANCIAL INCOME AND EXPENSES

EURm	2011	2010	2009
Dividend income on available-for-sale fi nancial investments	2	2	3
Interest income on available-for-sale fi nancial investments	169	110	101
Interest income on loans receivables carried at amortized cost	1	—	—
Interest income on investments at fair value through profi t and loss	18	28	11
Net interest income / (expense) on derivatives not under hedge accounting	– 12	– 20	– 8
Interest expense on fi nancial liabilities carried at amortized cost	– 255	– 254	– 243
Net realised gains (or losses) on disposal of fi xed income available-for– sale fi nancial investments	– 4	1	2
Net fair value gains (or losses) on investments at fair value through profi t and loss	102	– 3	19
Net gains (net losses) on other derivatives designated at fair value through profi t and loss	– 121	19	– 7
Net fair value gains (or losses) on hedged items under fair value hedge accounting	– 82	– 63	– 4
Net fair value gains (or losses) on hedging instruments under fair value hedge accounting	72	58	—
Net foreign exchange gains (or losses)
From foreign exchange derivatives designated at fair value through
profi t and loss	74	58	– 358
From balance sheet items revaluation	– 34	– 165	230
Other fi nancial income	49	73	18
Other fi nancial expenses	– 81	– 129	– 29
Total	– 102	– 285	– 265

During , the Group received distributions of million (EUR million in ) included in other fi nancial income from a private fund held as non-current available-for-sale. Due to these distributions resulting in a reduction in estimated future cash fl ows, the Group also recognized an impairment loss of million (EUR million in ) for the fund included in other fi nancial expenses. Due to deterioration of the Asset Backed Security market the Group recognized an impairment loss of million in (EUR million in ) included in other fi nancial expenses. Additional information can be found in Note and Note .

During , interest income increased mainly as a result of higher cash levels than in and higher interest rates in certain currencies where the Group has investments. Lower

interest rates in EUR and USD had a positive impact on Net fair value gains (or losses) on investments at fair value through profi t and loss but these gains were off set by the negative impact on Net gains (or losses) on other derivatives designated at fair value through profi t and loss that was aff ected by similar factors. Foreign exchange gains (or losses) were positively impacted by low and in some cases negative hedging costs (i.e. income) in as well as increased volatility on the foreign exchange market.

During , interest income decreased signifi cantly due to lower interest rates and interest expense has increased given higher long-term funding with a higher cost.

12. INCOME TA XES

EURm	2011	2010	2009
Income tax
Current tax	– 752	– 798	– 736
Deferred tax	462	355	34
Total	– 290	– 443	– 702
Finland	– 97	– 126	76
Other countries	– 193	– 317	– 778
Total	– 290	– 443	– 702

The diff erences between income tax expense computed at statutory rate (in Finland %) and income taxes recognized in the consolidated income statement is reconciled as follows at December , :

EURm	2011	2010	2009
Income tax
expense (+)/benefi t (–)
at statutory rate	– 311	464	250
Permanent diff erences	– 22	4	– 96
Non tax deductible impairment of goodwill 1	283	—	236
Taxes for prior years	– 7	– 48	– 17
Taxes on foreign subsidiaries' profi ts in excess of (lower than) income taxes at statutory rates	– 73	– 195	– 145
Change in losses and temporary diff erences with no tax eff ect 2	280	221	577
Net increase (+)/decrease (–) in tax contingencies	7	24	– 186
Change in income tax rates	39	2	4
Deferred tax liability on undistributed earnings 3	62	– 31	111
Other	32	2	– 32
Income tax expense	290	443	702

See Note .

This item primarily relates to Nokia Siemens Networks' losses and temporary differences for which no deferred tax was recognized. In it also includes benefit of EUR million from reassessment of recoverability of deferred tax assets in Nokia Siemens Networks.

In the change in deferred tax liability on undistributed earnings mainly relates to changes to tax rates applicable to profit distributions.

Certain of the Group companies' income tax returns for periods ranging from through are under examination by tax authorities. The Group does not believe that any signifi cant additional taxes in excess of those already provided for will arise as a result of the examinations.

13. INTANGIBLE A SSETS

EURm	2011	2010
Capitalized development costs
Acquisition cost January 1	1 035	1 830
Impairments	—	– 11
Retirements	—	– 784
Accumulated acquisition cost December 31	1 035	1 035
Accumulated amortization January 1	– 995	– 1 687
Retirements	—	784
Impairments	—	11
Amortization	– 34	– 103
Accumulated amortization December 31	– 1 029	– 995
Net book value January 1	40	143
Net book value December 31	6	40
Goodwill
Acquisition cost January 1	6 631	6 079
Translation diff erences	17	470
Acquisitions	189	82
Disposals	– 1	—
Accumulated acquisition cost December 31	6 836	6 631
Accumulated impairments January 1	– 908	– 908
Impairments	– 1 090	—
Accumulated impairments December 31	– 1 998	– 908
Net book value January 1	5 723	5 171
Net book value December 31	4 838	5 723
Other intangible assets
Acquisition cost January 1	5 437	5 287
Translation diff erences	83	216
Additions	53	58
Acquisitions	366	21
Retirements	– 23	– 142
Impairments	– 2	—
Disposals	– 37	– 3
Accumulated acquisition cost December 31	5 877	5 437
Accumulated amortization January 1	– 3 509	– 2 525
Translation diff erences	– 84	– 42
Retirements	21	125
Disposals	25	2
Amortization	– 924	– 1 069
Accumulated amortization December 31	– 4 471	– 3 509
Net book value January 1	1 928	2 762
Net book value December 31	1 406	1 928

14. PROPERTY, PLANT AND EQUIPMENT

EURm	2011	2010
Land and water areas
Acquisition cost January 1	57	59
Acquisitions	9	—
Impairments	– 4	—
Disposals	—	– 2
Accumulated acquisition cost December 31	62	57
Net book value January 1	57	59
Net book value December 31	62	57
Buildings and constructions
Acquisition cost January 1	1 414	1 312
Translation diff erences	3	69
Additions	86	86
Acquisitions	32	—
Impairments	– 124	—
Disposals	– 31	– 53
Accumulated acquisition cost December 31	1 380	1 414
Accumulated depreciation January 1	– 453	– 385
Translation diff erences	—	– 19
Impairments	40	—
Disposals	13	41
Depreciation	– 119	– 90
Accumulated depreciation December 31	– 519	– 453
Net book value January 1	961	927
Net book value December 31	861	961
Machinery and equipment
Acquisition cost January 1	4 004	3 984
Translation diff erences	– 4	213
Additions	464	472
Acquisitions	66	4
Impairments	– 25	—
Disposals	– 427	– 669
Accumulated acquisition cost December 31	4 078	4 004
Accumulated depreciation January 1	– 3 185	– 3 168
Translation diff erences	– 13	– 164
Impairments	9	—
Disposals	410	639
Depreciation	– 478	– 492
Accumulated depreciation December 31	– 3 257	– 3 185
Net book value January 1	819	816
Net book value December 31	821	819

EURm	2011	2010
Other tangible assets
Acquisition cost January 1	56	47
Translation diff erences	– 3	6
Additions	11	15
Disposals	– 7	– 12
Accumulated acquisition cost December 31	57	56
Accumulated depreciation January 1	– 37	– 27
Translation diff erences	3	– 2
Disposals	7	9
Depreciation	– 7	– 17
Accumulated depreciation December 31	– 34	– 37
Net book value January 1	19	20
Net book value December 31	23	19
Advance payments and fi xed assets under construction
Net carrying amount January 1	98	45
Translation diff erences	—	3
Additions	57	92
Acquisitions	1	—
Disposals	—	– 1
Transfers to:
Other intangible assets	2	—
Buildings and constructions	– 42	– 20
Machinery and equipment	– 38	– 10
Other tangible assets	– 3	– 11
Net carrying amount December 31	75	98
Total property, plant and equipment	1 842	1 954

15. INVESTMENTS IN ASSOCIATED COMPANIES

EURm	2011	2010
Net carrying amount January 1	136	69
Translation diff erences	– 5	3
Additions	8	63
Deductions	– 7	– 6
Impairments (Note 8)	– 41	—
Share of results	– 23	1
Dividend	—	– 1
Other movements	– 1	7
Net carrying amount December 31	67	136

Shareholdings in associated companies are comprised of investments in unlisted companies in all periods presented.

16. FAIR VALUE OF FINANCIAL INSTRUMENTS

			Carrying amounts
	Current available- for-sale fi nancial assets	Non-current available- for-sale fi nancial assets	Financial instruments at fair value profi t or loss	Loans and receivables through measured at measured at amortized cost	Financial liabilties amortized cost	Total carrying amounts	Fair value
At December 31, 2011, EURm
Available-for-sale investments
in publicly quoted equity shares	—	7	—	—	—	7	7
Other available-for-sale investments carried at fair value	—	359	—	—	—	359	359
Other available-for-sale investments carried at cost less impairment	—	215	—	—	—	215	215
Long-term loans receivable	—	—	—	99	—	99	97
Accounts receivable	—	—	—	7 181	—	7 181	7 181
Current portion of long-term loans receivable	—	—	—	54	—	54	54
Derivative assets	—	—	475	—	—	475	475
Other current fi nancial assets	—	—	—	25	—	25	25
Fixed income and money-market investments carried at fair value	8 512	60	—	—	—	8 572	8 572
Investments designated at fair value through profi t and loss	—	—	433	—	—	433	433
Total fi nancial assets	8 512	641	908	7 359	—	17 420 17 418
Long-term interest-bearing liabilities	—	—	—	—	3 969	3 969	3 929
Other long-term non-interest bearing fi nancial liabilities	—	—	—	—	3	3	3
Current portion of long-term loans payable	—	—	—	—	357	357	357
Short-term borrowings	—	—	—	—	995	995	995
Other fi nancial liabilities	—	—	483	—	—	483	483
Accounts payable	—	—	—	—	5 532	5 532	5 532
Total fi nancial liabilities	—	—	483	—	10 856	11 339 11 299
At December 31, 2010, EURm
Available-for-sale investments in publicly quoted equity shares	—	8	—	—	—	8	8
Other available-for-sale investments carried at fair value	—	293	—	—	—	293	293
Other available-for-sale investments carried at cost less impairment	—	232	—	—	—	232	232
Long-term loans receivable	—	—	—	64	—	64	60
Other non-current assets	—	—	—	4	—	4	4
Accounts receivable	—	—	—	7 570	—	7 570	7 570
Current portion of long-term loans receivable	—	—	—	39	—	39	39
Derivative assets	—	—	366	—	—	366	366
Other current fi nancial assets	—	—	—	12	—	12	12
Fixed income and money-market investments carried at fair value	9 413	—	—	—	—	9 413	9 413
Investments designated at fair value through profi t and loss	—	—	911	—	—	911	911
Total fi nancial assets	9 413	533	1 277	7 689	—	18 912 18 908
Long-term interest-bearing liabilities	—	—	—	—	4 242	4 242	4 467
Other long-term non-interest bearing fi nancial liabilities	—	—	—	—	13	13	13
Current portion of long-term loans payable	—	—	—	—	116	116	116
Short-term borrowings	—	—	—	—	921	921	921
Other fi nancial liabilities	—	—	359	—	88	447	447
Accounts payable	—	—	—	—	6 101	6 101	6 101
Total fi nancial liabilities	—	—	359	—	11 481	11 840 12 065

The current fi xed income and money market investments included available for sale liquid assets of EUR million (EUR million in ) and cash equivalents of EUR million (EUR million in ). See Note , section Financial Credit Risk, for details on fi xed income and money-market investments.

For information about the valuation of items measured at fair value see Note .

In the tables above fair value is set to carrying amount for other available-for-sale investments carried at cost less impairment for which no reliable fair value has been possible to estimate.

The fair value of loan receivables and payables is estimated based on the current market values of similar instruments.

Fair value is estimated to be equal to the carrying amount for short-term fi nancial assets and fi nancial liabilities due to limited credit risk and short time to maturity.

The Group had a non-controlling interest that includes a put arrangement measured at its redemption value of EUR million at December , presented in Other fi nancial liabilities. The put arrangement has been exercised in the fi rst quarter of . The remaining portion of the line Other fi nancial liabilities is comprised of derivative liabilities.

Note includes the split of hedge accounted and nonhedge accounted derivatives.

The following table presents the valuation methods used to determine fair values of fi nancial instruments carried at fair value:

	Instruments with quoted prices in active markets (Level 1)	Valuation technique using observable data (Level 2)	Valuation technique using non observable data (Level 3)	Total
At December 31, 2011, EURm
Fixed income and money-market investments carried at fair value	8 540	32	—	8 572
Investments at fair value through profi t and loss	433	—	—	433
Available-for-sale investments in publicly quoted equity shares	7	—	—	7
Other available-for-sale investments carried at fair value	—	13	346	359
Derivative assets	—	475	—	475
Total assets	8 980	520	346	9 846
Derivative liabilities	—	483	—	483
Total liabilities	—	483	—	483
At December 31, 2010, EURm
Fixed income and money-market investments carried at fair value	9 215	198	—	9 413
Investments at fair value through profi t and loss	911	—	—	911
Available-for-sale investments in publicly quoted equity shares	8	—	—	8
Other available-for-sale investments carried at fair value	—	14	279	293
Derivative assets	—	366	—	366
Total assets	10 134	578	279	10 991
Derivative liabilities	—	359	—	359
Total liabilities	—	359	—	359

Level category includes fi nancial assets and liabilities that are measured in whole or in signifi cant part by reference to published quotes in an active market. A fi nancial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm's length basis. This category includes listed bonds and other securities, listed shares and exchange traded derivatives.

Level category includes fi nancial assets and liabilities measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions. These include assets and liabilities for which pricing is obtained via pricing services, but where prices have not been determined in an active market, fi nancial assets with fair values based on broker quotes and assets that are valued using the Group's own valuation models whereby the material assumptions are market observable. The majority of Group's over-the-counter derivatives and several other instruments not traded in active markets fall within this category.

Level category includes fi nancial assets and liabilities measured using valuation techniques based on non market observable inputs. This means that fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. However, the fair value measurement objective remains the same, that is, to estimate an exit price from the perspective of the Group. The main asset classes in this category are unlisted equity investments as well as unlisted funds.

The following table shows a reconciliation of the opening and closing recorded amount of Level fi nancial assets which are measured at fair value:

EURm	Other available- for-sale investments carried at fair value
Balance at December 31, 2009	242
Total gains/losses in income statement	3
Total gains/losses recorded in other comprehensive income	– 11
Purchases	78
Sales	– 34
Other transfers	1
Balance at December 31, 2010	279
Total gains/losses in income statement	– 22
Total gains/losses recorded in other comprehensive income	51
Purchases	81
Sales	– 47
Other transfers	4
Balance at December 31, 2011	346

The gains and losses from Level fi nancial instruments are included in other operating expenses for the respective period. A net loss of EUR million (net loss of EUR million in ) related to level fi nancial instruments held at December , , was included in the profi t and loss during .

17. DERIVATIVE FINANCIAL INSTRUMENTS

		Assets		Liabilities
2011, EURm	Fair	value 1 Notional 2 value 1 Notional 2	Fair
Hedges of net investment in foreign subsidiaries:
Forward foreign exchange contracts	56	1 584	– 179	2 810
Cash fl ow hedges:
Forward foreign exchange contracts	107	7 464	– 117	7 540
Fair value hedges
Interest rate swaps	167	1 627	—	—
Cash fl ow and Fair value hedges: 3
Cross currency interest rate swaps	26	378	—	—
Derivatives not designated in hedge accounting relationships carried at fair value through profi t and loss:
Forward foreign exchange contracts	112	5 435	– 139	6 282
Currency options bought 7		994	—	—
Currency options sold	—	—	– 6	721
Interest rate swaps	—	—	– 41	552
Other derivatives	—	3	– 1	38
	475	17 485	– 483	17 943

	Assets Liabilities
2010, EURm	Fair	value 1 Notional 2 value 1 Notional 2	Fair
Hedges of net investment in foreign subsidiaries:
Forward foreign exchange contracts	66	2 254	– 154	4 433
Cash fl ow hedges:
Forward foreign exchange contracts	41	8 025	– 57	8 572
Fair value hedges
Interest rate swaps	128	1 550	– 8	76
Cash fl ow and Fair value hedges: 3
Cross currency interest rate swaps	—	—	– 6	378
Derivatives not designated in hedge accounting relationships carried at fair value through profi t and loss:
Forward foreign
exchange contracts	73	5 349	– 69	7 956
Currency options bought 13		1 959	—	—
Currency options sold	—	—	– 15	749
Interest rate swaps	45	1 028	– 50	1 199
	366	20 165	– 359	23 363

The fair value of derivative financial instruments is included on the asset side under heading Other financial assets and on the liability side under Other financial liabilities.

Includes the gross amount of all notional values for contracts that have not yet been settled or cancelled. The amount of notional value outstanding is not necessarily a measure or indication of market risk, as the exposure of certain contracts may be offset by that of other contracts.

These cross-currency interest rate swaps have been designated partly as fair value hedges and partly as cash flow hedges.

In addition to derivative liabilities the Group had a noncontrolling interest that included a put arrangement measured at its redemption value of EUR million at December , presented in Other fi nancial liabilities. The put arrangement has been exercised in the fi rst quarter of .

18. INVENTORIES

EURm	2011	2010
Raw materials, supplies and other	789	762
Work in progress	516	642
Finished goods	1 025	1 119
Total	2 330	2 523

19. PREPAID E XPENSE S AND ACCRUED INCOME

EURm	2011	2010
Social security, VAT and other taxes	1 906	1 690
Deferred cost of sales	114	175
Other prepaid expenses and accrued income	2 468	2 495
Total	4 488	4 360

In , other prepaid expenses and accrued income included advance payments to Qualcomm of EUR million (EUR million in ). In , Nokia and Qualcomm entered into a new year agreement, under the terms of which Nokia was granted a license to all Qualcomm's patents for the use in Nokia mobile devices and Nokia Siemens Networks infrastructure equipment. The fi nancial structure of the agreement included an upfront payment of EUR . billion, which is amortized over the contract period and ongoing royalties payable to Qualcomm. As part of the licence agreement, Nokia also assigned ownership of a number of patents to Qualcomm. These patents were valued using the income approach based on projected cash fl ows, on a discounted basis, over the assigned patents' estimated useful life. Based on the valuation and underlying assumptions Nokia determined that the fair value of these patents were not material.

Prepaid expenses and accrued income also include, accrued interest income and various other prepaid expenses and accrued income, but no amounts which are individually signifi cant.

20. VALUATION AND QUALIF YING ACCOUNTS

EURm Allowances on assets to which they apply:	Balance at beginning of year	Charged to cost and expenses	Deductions 1	Balance at end of year
2011
Allowance for doubtful accounts	363	131	– 210	284
Excess and obsolete inventory	301	345	– 189	457
2010
Allowance for doubtful accounts	391	117	– 145	363
Excess and obsolete inventory	361	124	– 184	301
2009
Allowance for doubtful accounts	415	155	– 179	391
Excess and obsolete inventory	348	192	– 179	361

Deductions include utilization and releases of the allowances.

21. FAIR VALUE AND OTHER RESERVES

		Hedging reserve			Available-for-sale investments		Fair value and other reserves total
EURm	Gross	Tax	Net	Gross	Tax	Net	Gross	Tax	Net
Balance at December 31, 2008	101	– 20	81	– 29	10	– 19	72	– 10	62
Cash fl ow hedges:
Net fair value gains (+)/losses (–)	– 19	6	– 13	—	—	—	– 19	6	– 13
Transfer of gains (–)/losses (+) to profi t and loss account as adjustment to net sales	873	– 222	651	—	—	—	873	– 222	651
Transfer of gains (–)/losses (+) to profi t and loss account as adjustment to cost of sales	– 829	205	– 624	—	—	—	– 829		205 – 624
Available-for-sale investments:
Net fair value gains (+)/losses (–)	—	—	—	36	– 4	32	36	– 4	32
Transfer to profi t and loss account on impairment	—	—	—	14	—	14	14	—	14
Transfer of net fair value gains (–)/losses (+) to profi t and loss account on disposal	—	—	—	– 2	—	– 2	– 2	—	– 2
Movements attributable to non-controlling interests	– 65	16	– 49	– 2	—	– 2	– 67	16	– 51
Balance at December 31, 2009	61	– 15	46	17	6	23	78	– 9	69
Cash fl ow hedges:
Net fair value gains (+)/losses (–)	– 119	12	– 107	—	—	—	– 119		12 – 107
Transfer of gains (–)/losses (+) to profi t and loss account as adjustment to net sales	357	– 57	300	—	—	—	357	– 57	300
Transfer of gains (–)/losses (+) to profi t and loss account as adjustment to cost of sales	– 379	70	– 309	—	—	—	– 379		70 – 309
Available-for-sale investments:
Net fair value gains (+)/losses(–)	—	—	—	– 3	– 2	– 5	– 3	– 2	– 5
Transfer to profi t and loss account on impairment	—	—	—	13	—	13	13	—	13
Transfer of net fair value gains (–)/losses (+) to profi t and loss account on disposal	—	—	—	– 1	—	– 1	– 1	—	– 1
Movements attributable to non-controlling interests	50	– 7	43	—	—	—	50	– 7	43
Balance at December 31, 2010	– 30	3	– 27	26	4	30	– 4	7	3
Cash fl ow hedges:
Net fair value gains (+)/losses (–)	106	– 25	81	—	—	—	106	– 25	81
Transfer of gains (–)/losses (+) to profi t and loss account as adjustment to net sales	– 166	42	– 124	—	—	—	– 166		42 – 124
Transfer of gains (–)/losses (+) to profi t and loss account as adjustment to cost of sales	162	– 36	126	—	—	—	162	– 36	126
Transfer of gains (–)/losses (+) as a basis adjustment to assets and liabilities 1	14	– 3	11	—	—	—	14	– 3	11
Available-for-sale investments:
Net fair value gains (+)/losses (–)	—	—	—	67	—	67	67	—	67
Transfer to profi t and loss account on impairment	—	—	—	22	– 2	20	22	– 2	20
Transfer of net fair value gains (–)/losses (+) to profi t and loss account on disposal	—	—	—	– 19	– 1	– 20	– 19	– 1	– 20
Movements attributable to non-controlling interests	– 8	– 2	– 10	—	—	—	– 8	– 2	– 10
Balance at December 31, 2011	78	– 21	57	96	1	97	174	– 20	154

The adjustments relate to acquisitions completed in . For more details see Note .

In order to ensure that amounts deferred in the cash fl ow hedging reserve represent only the eff ective portion of gains and losses on properly designated hedges of future transactions that remain highly probable at the balance sheet date, Nokia has adopted a process under which all derivative gains and losses are initially recognized in the income statement.

The appropriate reserve balance is calculated at the end of each period and posted to the fair value and other reserves.

The Group continuously reviews the underlying cash fl ows and the hedges allocated thereto, to ensure that the amounts transferred to the fair value reserves during the years ended December , and do not include gains/losses

on forward exchange contracts that have been designated to hedge forecasted sales or purchases that are no longer expected to occur.

All of the net fair value gains or losses recorded in the fair value and other reserves at December , on open forward foreign exchange contracts which hedge anticipated future foreign currency sales or purchases are transferred from the hedging reserve to the income statement when the hedged items aff ect the income statement, at various dates up to approximately year from the balance sheet date.

22. TR ANSL ATION DIFFERENCE S

	Translation diff erences			Net investment hedging			Translation diff erences total
EURm	Gross	Tax	Net	Gross	Tax	Net	Gross	Tax	Net
Balance at December 31, 2008 1	260	0	260	100	– 19	81	360	– 19	341
Translation diff erences:
Currency translation diff erences	– 556		2 – 554	—	—	—	– 556		2 – 554
Transfer to profi t and loss (fi nancial income and expense)	– 7	—	– 7	—	—	—	– 7	—	– 7
Net investment hedging:
Net investment hedging gains (+)/losses (–)	—	—	—	114	– 31	83	114	– 31	83
Transfer to profi t and loss (fi nancial income and expense)	—	—	—	1	—	1	1	—	1
Movements attributable to non-controlling interests	8	1	9	—	—	—	8	1	9
Balance at December 31, 2009	– 295		3 – 292	215	– 50	165	– 80		– 47 – 127
Translation diff erences:
Currency translation diff erences	1 302		3 1 305	—	—	—	1 302		3 1 305
Transfer to profi t and loss (fi nancial income and expense)	—	—	—	—	—	—	—	—	—
Net investment hedging:
Net investment hedging gains (+)/losses (–)	—	—	—	– 389	101	– 288	– 389		101 – 288
Transfer to profi t and loss (fi nancial income and expense)	—	—	—	—	—	—	—	—	—
Movements attributable to non-controlling interests	– 63	– 2	– 65	—	—	—	– 63	– 2	– 65
Balance at December 31, 2010	944	4	948	– 174	51	– 123	770	55	825
Translation diff erences:
Currency translation diff erences	9	—	9	—	—	—	9	—	9
Transfer to profi t and loss (fi nancial income and expense)	—	—	—	—	—	—	—	—	—
Net investment hedging:
Net investment hedging gains (+)/losses (–)	—	—	—	– 37	9	– 28	– 37	9	– 28
Transfer to profi t and loss (fi nancial income and expense)	—	—	—	—	—	—	—	—	—
Movements attributable to non-controlling interests	– 35	—	– 35	—	—	—	– 35	—	– 35
Balance at December 31, 2011	918	4	922	– 211	60	– 151	707	64	771

Reclassification of an item recognized prior to with no impact to total translation differences in the consolidated statement of financial position.

23. THE SHARE S OF THE PARENT COMPANY

Nokia shares and shareholders

SHARES AND SHARE CAPITAL

Nokia has one class of shares. Each Nokia share entitles the holder to one vote at General Meetings of Nokia.

On December , , the share capital of Nokia Corporation was EUR . and the total number of shares issued was .

On December , , the total number of shares included shares owned by Group companies representing approximately .% of the share capital and the total voting rights.

Under the Articles of Association of Nokia, Nokia Corporation does not have minimum or maximum share capital or a par value of a share.

Authorizations

AUTHORIZATION TO INCREASE THE SHARE CAPITAL

At the Annual General Meeting held on May , , Nokia share holders authorized the Board of Directors to issue a maximum of million shares through one or more issues of shares or special rights entitling to shares, including stock options. The Board of Directors may issue either new shares or shares held by the Company. The authorization includes the right for the Board to resolve on all the terms and conditions of such issuances of shares and special rights, including to whom the shares and the special rights may be issued. The authorization may be used to develop the Company's capital structure, diversify the shareholder base, fi nance or carry out acquisitions or other arrangements, settle the Company's equitybased incentive plans, or for other purposes resolved by the Board. The authorization is eff ective until June , .

At the end of , the Board of Directors had no other authorizations to issue shares, convertible bonds, warrants or stock options.

OTHER AUTHORIZATIONS

At the Annual General Meeting held on May , , Nokia shareholders authorized the Board of Directors to repurchase a maximum of million Nokia shares by using funds in the unrestricted equity. Nokia did not repurchase any shares on the basis of this authorization. This authorization was eff ective until June , as per the resolution of the Annual General Meeting on May , , but it was terminated by the resolution of the Annual General Meeting on May , .

At the Annual General Meeting held on May , , Nokia shareholders authorized the Board of Directors to repurchase a maximum of million Nokia shares by using funds in the unrestricted equity. The amount of shares corresponds to less than % of all the shares of the Company. The shares may be repurchased under the buyback authorization in order to develop the capital structure of the Company. In addition, shares may be repurchased in order to fi nance or carry out acquisitions or other arrangements, to settle the Company's equity-based incentive plans, to be transferred for other purposes, or to be cancelled. The authorization is eff ective until June , .

AUTHORIZATIONS PROPOSED TO THE ANNUAL GENERAL MEETING

On January , , Nokia announced that the Board of Directors will propose that the Annual General Meeting convening on May , authorize the Board to resolve to repurchase a maximum of million Nokia shares. The proposed maximum number of shares that may be repurchased is the same as the Board's current share repurchase authorization and it corresponds to less than % of all the shares of the company. The shares may be repurchased in order to develop the capital structure of the Company, fi nance or carry out acquisitions or other arrangements, settle the company's equity-based incentive plans, be transferred for other purposes, or be cancelled. The shares may be repurchased either through a tender off er made to all shareholders on equal terms, or through public trading from the stock market. The authorization would be eff ective until June , and terminate the current authorization for repurchasing of the Company's shares resolved at the Annual General Meeting on May , .

24. SHARE-BA SED PAYMENT

The Group has several equity-based incentive programs for employees. The programs include performance share plans, stock option plans and restricted share plans. Both executives and employees participate in these programs.

The equity-based incentive grants are generally conditional upon continued employment as well as fulfi llment of such performance, service and other conditions, as determined in the relevant plan rules.

The share-based compensation expense for all equitybased incentive awards amounted to EUR million in (EUR million in and EUR million in ).

Stock options

During Nokia administered three global stock option plans, the Stock Option Plan , and , each of which, including its terms and conditions, has been approved by the Annual General Meeting in the year when the plan was launched.

Each stock option entitles the holder to subscribe for one new Nokia share. The stock options are non-transferable and may be exercised for shares only. All of the stock options granted under the Stock Option Plans and have a vesting schedule with % of the options vesting one year after grant and .% each quarter thereafter. The stock options granted under the and plans have a term of approximately fi ve years. The stock options granted under the Stock Option Plan have a vesting schedule with % of stock options vesting three years after grant date and the remaining % vesting four years from grant. The stock options granted under the plan have a term of approximately six years.

The exercise price of the stock options is determined at the time of grant, on a quarterly basis, in accordance with a pre-agreed schedule after the release of Nokia's periodic fi nancial results. The exercise prices are based on the trade volume weighted average price of a Nokia share on NASDAQ OMX Helsinki during the trading days of the fi rst whole week of the second month of the respective calendar quarter (i.e., February, May, August or November). With respect to the Stock Option Plan, should an ex-dividend date take place during that week, the exercise price shall be determined based on the following week's trade volume weighted average price of the Nokia share on NASDAQ OMX Helsinki. Exercise prices are determined on a one-week weighted average to mitigate any day-specifi c fl uctuations in Nokia's share price. The determination of exercise price is defi ned in the terms and conditions of the stock option plan, which are approved by the shareholders at the respective Annual General Meeting. The Board of Directors does not have the right to change how the exercise price is determined.

Shares will be eligible for dividend for the fi nancial year in which the subscription takes place. Other shareholder rights commence on the date on which the subscribed shares are entered in the Trade Register. The stock option grants are generally forfeited if the employment relationship terminates with Nokia.

Pursuant to the stock options issued under the global stock option plans, an aggregate maximum number of new Nokia shares may be subscribed for, representing .% of the total number of votes at December , . All share subscription prices based on the exercises of stock options are recorded in the fund for invested non-restricted equity as per a resolution by the Annual General Meeting.

The table below sets forth certain information relating to the stock options outstanding at December , .

Plan (year of	Stock options outstanding	Number of participants	Option (sub)	Vesting status (as percentage of total number of stock options		Exercise period		Exercise price/ share
launch)	2011	(approx.)	category	outstanding)	First vest date	Last vest date	Expiry date	EUR
2005 1	—	—	2006 1Q	Expired	April 1, 2007	April 1, 2010	December 31, 2011	14.99
			2006 2Q	Expired	July 1, 2007	July 1, 2010	December 31, 2011	18.02
			2006 3Q	Expired	October 1, 2007	October 1, 2010	December 31, 2011	15.37
			2006 4Q	Expired	January 1, 2008	January 1, 2011	December 31, 2011	15.38
			2007 1Q	Expired	April 1, 2008	April 1, 2011	December 31, 2011	17.00
2007 1	12 352 526	4 600	2007 2Q	100.00	July 1, 2008	July 1, 2011	December 31, 2012	18.39
			2007 3Q	100.00	October 1, 2008	October 1, 2011	December 31, 2012	21.86
			2007 4Q	93.75	January 1, 2009	January 1, 2012	December 31, 2012	27.53
			2008 1Q	87.50	April 1, 2009	April 1, 2012	December 31, 2013	24.15
			2008 2Q	81.25	July 1, 2009	July 1, 2012	December 31, 2013	19.16
			2008 3Q	75.00	October 1, 2009	October 1, 2012	December 31, 2013	17.80
			2008 4Q	68.75	January 1, 2010	January 1, 2013	December 31, 2013	12.43
			2009 1Q	62.50	April 1, 2010	April 1, 2013	December 31, 2014	9.82
			2009 2Q	56.25	July 1, 2010	July 1, 2013	December 31, 2014	11.18
			2009 3Q	50.00	October 1, 2010	October 1, 2013	December 31, 2014	9.28
			2009 4Q	43.75	January 1, 2011	January 1, 2014	December 31, 2014	8.76
			2010 1Q	37.50	April 1, 2011	April 1, 2014	December 31, 2015	10.11
			2010 2Q	31.25	July 1, 2011	July 1, 2014	December 31, 2015	8.86
			2010 3Q	25.00	October 1, 2011	October 1, 2014	December 31, 2015	7.29
			2010 4Q	—	January 1, 2012	January 1, 2015	December 31, 2015	7.59
2011 2	10 850 802	3 000	2011 2Q	—	July 1, 2014	July 1, 2015	December 27, 2017	6.02
			2011 3Q	—	October 1, 2014	October 1, 2015	December 27, 2017	3.76
			2011 4Q	—	January 1, 2015	January 1, 2016	December 27, 2017	4.84

The Group's global Stock Option Plans and have a vesting schedule with % vesting one year after grant, and quarterly vesting thereafter, each of the quarterly lots representing .% of the total grant. The grants vest fully in four years.

The Group's global Stock Option Plan has a vesting schedule with

% of stock options vesting three years after grant date and the remaining % vesting four years from grant.

Total stock options outstanding at December ,

	Number of shares	Weighted average exercise price EUR	Weighted average share price EUR
Shares under option at January 1, 2009	23 813 865	15.89
Granted	4 791 232	11.15
Exercised	104 172	6.18	9.52
Forfeited	893 943	17.01
Expired	4 567 020	13.55
Shares under option at December 31, 2009	23 039 962	15.39
Granted	6 708 582	8.73
Exercised	39 772	2.20	9.44
Forfeited	1 698 435	12.07
Expired	6 065 041	13.97
Shares under option at December 31, 2010	21 945 296	14.04
Granted	11 751 907	5.50
Exercised	6 208	5.07	7.69
Forfeited	2 441 876	9.05
Expired	7 909 089	17.53
Shares under option at December 31, 2011	23 340 030	9.08
Options exercisable at December 31, 2008 (shares)	12 895 057	14.77
Options exercisable at December 31, 2009 (shares)	13 124 925	16.09
Options exercisable at December 31, 2010 (shares)	11 376 937	17.07
Options exercisable at December 31, 2011 (shares)	6 904 331	14.01

Includes also stock options granted under other than global equity plans. For further information see "Other equity plans for employees" below.

The weighted average grant date fair value of stock options granted was EUR . in , EUR . in and EUR . in .

The options outstanding by range of exercise price at December , are as follows:

Options outstanding
Exercise prices, EUR	Number of shares	Weighted average remaining contractual life in years	Weighted average exercise price EUR
0.90–4.84	2 825 362	5.99	3.85
5.14–6.02	8 098 681	5.98	6.01
6.20–8.86	5 112 043	4.00	8.69
8.88–14.75	3 994 625	2.84	11.40
17.80–27.53	3 309 319	1.50	18.83
	23 340 030

Nokia calculates the fair value of stock options using the Black-Scholes model. The fair value of the stock options is estimated at the grant date using the following assumptions:

	2011	2010	2009
Weighted average expected dividend yield	7.37%	4.73%	3.63%
Weighted average expected volatility	36.95%	52.09%	43.46%
Risk-free interest rate		1.71–2.86% 1.52–2.49% 1.97–2.94%
Weighted average risk-free
interest rate	2.68%	1.78%	2.23%
Expected life (years)	4.70	3.59	3.60
Weighted average share price, EUR	5.46	8.27	10.82

Expected term of stock options is estimated by observing general option holder behavior and actual historical terms of Nokia stock option plans.

Expected volatility has been set by reference to the implied volatility of options available on Nokia shares in the open market and in light of historical patterns of volatility.

Performance shares

During , Nokia administered four global performance share plans, the Performance Share Plans of , , and , each of which, including its terms and conditions, has been approved by the Board of Directors.

The performance shares represent a commitment by Nokia Corporation to deliver Nokia shares to employees at a future point in time, subject to Nokia's fulfi llment of pre-defi ned performance criteria. No performance shares will vest unless the Group's performance reaches at least one of the threshold levels measured by two independent, pre-defi ned performance criteria: the Group's average annual net sales growth for the performance period of the plan and, in the Performance Share Plans of , and earnings per share ("EPS") at the end of the performance period and in the Performance Share Plan average annual EPS during the performance period.

The , , and plans have a three-year performance period with no interim payout. The shares vest after the respective performance period. The shares will be delivered to the participants as soon as practicable after they vest. Until the Nokia shares are delivered, the participants will not have any shareholder rights, such as voting or dividend rights associated with the performance shares. The performance share grants are generally forfeited if the employment relationship terminates with Nokia prior to vesting.

The following table summarizes our global performance share plans.

Plan	Performance shares outstanding at threshold 1,2	Number of participants (approx.)	Performance Settle period	ment
2008	0	5000	2008–2010	2011
2009	0	4000	2009–2011	2012
2010	2 660 445	3000	2010–2012	2013
2011	4 669 530	4000	2011–2013	2014

Shares under performance share plan vested on December , and are therefore not included in the outstanding numbers.

Does not include outstanding performance shares with deferred delivery due to leave of absence.

The following table sets forth the performance criteria of each global performance share plan.

		Threshold performance		Maximum performance
Plan	EPS 1,2 EUR	Average annual net sales growth 1	EUR	Average annual EPS 1,2 net sales growth 1
2008	1.72	4%	2.76	16%
2009	1.01	– 5%	1.53	10%
2010	0.82	0%	1.44	13.5%
2011	0.50	2.5%	1.10	10%

Both the EPS and Average Annual Net Sales Growth criteria have an equal weight of %.

Performance Share Plans of , and : EPS at the end of the performance period. Performance Share Plan : average annual EPS. The EPS for plan: diluted excluding special items. The EPS for , and plans: diluted non-IFRS.

Performance shares outstanding at December ,

	Number of performance shares at threshold	Weighted average grant date fair value EUR 2
Performance shares at January 1, 2009	8 035 219
Granted	2 960 110	9.57
Forfeited	691 325
Vested 3, 4	5 210 044
Performance shares at December 31, 2009	5 093 960
Granted	3 576 403	5.94
Forfeited	1 039 908
Vested 5	1 910 332
Performance shares at December 31, 2010	5 720 123
Granted	5 410 211	3.66
Forfeited	1 538 377
Vested 6	2 009 423
Performance shares at December 31, 2011	7 582 534

Includes also performance shares granted under other than global equity plans. For further information see "Other equity plans for employees" below.

The fair value of performance shares is estimated based on the grant date market price of the Company's share less the present value of dividends, if any, expected to be paid during the vesting period.

• Based on the performance of the Group during the Interim Measurement Period –, under the Performance Share Plan, both performance criteria were met. Hence, Nokia shares equaling the threshold number were delivered in . The final payout, in , was adjusted by the shares delivered based on the Interim Measurement Period.
• Includes performance shares under Performance Share plan that vested on December , .
• Includes performance shares under Performance Share plan that vested on December , .
• Includes performance shares under Performance Share plan that vested on December , .

There will be no settlement under the Performance Share Plan as neither of the threshold performance criteria of EPS and Average Annual Net Sales Growth of this plan was met.

Restricted shares

During , Nokia administered four global restricted share plans, the Restricted Share Plans , , and , each of which, including its terms and conditions, has been approved by the Board of Directors.

Restricted shares are used to recruit, retain and motivate selected high potential and critical talent who are vital to the future success of Nokia. Restricted shares are used only for key management positions and other critical talent.

All of the Group's restricted share plans have a restriction period of three years after grant. Until the Nokia shares are delivered, the participants will not have any shareholder rights, such as voting or dividend rights, associated with the restricted shares. The restricted share grants are generally forfeited if the employment relationship terminates with Nokia prior to vesting.

Restricted shares outstanding at December ,

	Number of restricted shares	Weighted average grant date fair value EUR 2
Restricted shares at January 1, 2009	8 049 397
Granted	4 288 600	7.59
Forfeited	446 695
Vested	2 510 300
Restricted shares at December 31, 2009	9 381 002
Granted	5 801 800	6.85
Forfeited	1 492 357
Vested	1 330 549
Restricted shares at December 31, 2010	12 359 896
Granted	8 024 880	3.15
Forfeited	2 063 518
Vested	1 735 167
Restricted shares at December 31, 2011 3	16 586 091

Includes also restricted shares granted under other than global equity plans. For further information see "Other equity plans for employees" below.

The fair value of restricted shares is estimated based on the grant date market price of the Company's share less the present value of dividends, if any, expected to be paid during the vesting period.

Includes restricted shares granted in Q under Restricted Share Plan that vested on January , .

Other equity plans for employees

In addition to the global equity incentive plans described above, Nokia has equity plans for Nokia-acquired businesses or employees in the United States and Canada under which participants can receive Nokia ADSs or ordinary shares. These equity plans do not result in an increase in the share capital of Nokia. On the basis of these plans, the Group had . million stock options outstanding on December , . The weighted average exercise price is USD ..

In connection with the July , acquisition of NAVTEQ, the Group assumed NAVTEQ's Stock Incentive Plan ("NAVTEQ Plan"). All unvested NAVTEQ restricted stock units under the NAVTEQ Plan were converted to an equivalent number of restricted stock units entitling their holders to Nokia shares. The maximum number of Nokia shares to be delivered to NAVTEQ employees during the years – is approximately million, of which approximately . million shares have already been delivered by December , . The Group does not intend to make further awards under the NAVTEQ Plan.

The Group also has an Employee Share Purchase Plan in the United States, which permits all full-time Nokia employees located in the United States to acquire Nokia ADSs at a % discount. The purchase of the ADSs is funded through monthly payroll deductions from the salary of the participants, and the ADSs are purchased on a monthly basis. As of December , , approximately ADSs had been purchased under this plan during , and there were a total of approximately participants in the plan.

Nokia also has a one-time special CEO incentive program designed to align the CEO's compensation to increased shareholder value and links a meaningful portion of CEO's compensation directly to the performance of Nokia's share price over the period of -. Mr. Elop has the opportunity to earn – Nokia shares at the end of based on two independent criteria: Total Shareholder Return (TSR) relative to a peer group of companies over the two-year period and Nokia's absolute share price at the end of . If the minimum performance for neither of the two performance criterion is reached, no share delivery will take place. Shares earned under this plan are subject to an additional one-year vesting period.

25. DEFERRED TA XE S

EURm	2011	2010
Deferred tax assets:
Intercompany profi t in inventory	66	76
Tax losses carried forward
and unused tax credits	715	488
Warranty provision	63	82
Other provisions	363	268
Depreciation diff erences and untaxed reserves	711	782
Share-based compensation	11	21
Other temporary diff erences	362	347
Reclassifi cation due to netting of deferred taxes	– 443	– 468
Total deferred tax assets	1 848	1 596
Deferred tax liabilities:
Depreciation diff erences
and untaxed reserves	– 500	– 406
Fair value gains/losses	– 65	– 13
Undistributed earnings	– 268	– 353
Other temporary diff erences 1	– 410	– 718
Reclassifi cation due to netting
of deferred taxes	443	468
Total deferred tax liabilities	– 800	– 1 022
Net deferred tax asset	1 048	574
Tax charged to equity	– 4	– 1

In other temporary differences include a deferred tax liability of EUR million (EUR million in ) arising from purchase price allocation related to Nokia Siemens Networks and NAVTEQ.

At December , the Group had loss carry forwards of EUR million (EUR million in ) of which EUR million will expire within years (EUR million in ).

At December , the Group had loss carry forwards, temporary diff erences and tax credits of EUR million (EUR million in ) for which no deferred tax asset was recognized due to uncertainty of utilization of these items. Most of these items do not have an expiry date.

The recognition of the remaining deferred tax assets is supported by profi t projections in the relevant jurisdictions.

At December , the Group had undistributed earnings of EUR million (EUR million in ) on which no deferred tax liability has been formed as these will not reverse in the foreseeable future.

26. ACCRUED E XPENSE S AND OTHER LIABILITIES

EURm	2011	2010
Social security, VAT and other taxes	1 655	1 585
Wages and salaries	636	619
Deferred revenue	751	786
Advance payments	1 524	1 172
Other	2 884	3 203
Total	7 450	7 365

Other operating expense accruals include accrued discounts, royalties and marketing expenses as well as various amounts which are individually insignifi cant. Majority of the deferred revenue will be recognized as revenue within the next months.

27. PROVISIONS

EURm	Warranty	Restructuring	IPR infringements	Project losses	Tax	Other	Total
At January 1, 2011	928	195	449	207	296	515	2 590
Translation diff erences	– 5	—	—	—	– 4	—	– 9
Acquisitions	30	—	—	—	—	5	35
Additional provisions	671	584	70	237	124	374	2 060
Changes in estimates	– 33	– 95	– 74	– 70	– 103	– 135	– 510
Charged to profi t and loss account	638	489	– 4	167	21	239	1 550
Utilized during year	– 903	– 225	– 14	– 169	– 14	– 214	– 1 539
At December 31, 2011	688	459	431	205	299	545	2 627
At January 1, 2010	971	184	390	197	274	702	2 718
Translation diff erences	40	—	—	—	—	—	40
Additional provisions	888	228	106	239	40	238	1 739
Changes in estimates	– 43	– 44	– 15	– 52	– 13	– 87	– 254
Charged to profi t and loss account	845	184	91	187	27	151	1 485
Utilized during year	– 928	– 173	– 32	– 177	– 5	– 338	– 1 653
At December 31, 2010	928	195	449	207	296	515	2 590

EURm	2011	2010
Analysis of total provisions at December 31:
Non-current	1 175	837
Current	1 452	1 753

Outfl ows for the warranty provision are generally expected to occur within the next months. Timing of outfl ows related to tax provisions is inherently uncertain.

The restructuring provision is mainly related to restructuring activities in Devices & Services and Nokia Siemens Networks businesses. The majority of outfl ows related to the restructuring is expected to occur during .

In April , Nokia announced plans to reduce its global workforce by about employees by the end of , as well as plans to consolidate the company's research and product development sites so that each site has a clear role and mission. In September , Nokia announced plans to take

further actions to align its workforce and operations, which includes reductions in Sales and Marketing and Corporate functions in line with Nokia's earlier announcement in April . The measures also include the closure of Nokia's manufacturing facility in Cluj, Romania, which–together with adjustments to supply chain operations–has aff ected approximately employees. As a result, Devices & Services recognized a restructuring provision of EUR million in total.

In , Devices & Services recognized restructuring provisions of EUR million mainly related to changes in Symbian Smartphones and Services organizations as well as certain corporate functions that were expected to result in a reduction of up to employees globally.

In September , Nokia announced a plan to concentrate the development eff orts of the Location & Commerce business in Berlin, Germany and Boston and Chicago in the USA, and other supporting sites and plans to close its operations in Bonn, Germany and Malvern, USA. As a result, Location & Commerce recognized a restructuring provision of EUR million.

Restructuring and other associated expenses incurred in Nokia Siemens Networks in totaled EUR million (EUR million in ) including mainly personnel related expenses as well as expenses arising from the elimination of overlapping functions, and the realignment of product portfolio and related replacement of discontinued products in customer sites. These expenses included EUR million (EUR million in ) impacting gross profi t, EUR million (EUR million in ) research and development expenses, EUR million reversal of provision (EUR million in ) in selling and marketing expenses, EUR million (EUR million in ) administrative expenses and EUR million (EUR million in ) other operating expenses.

Provisions for losses on projects in progress are related to Nokia Siemens Networks' onerous contracts. Utilization of provisions for project losses is generally expected to occur in the next months.

The IPR provision is based on estimated future settlements for asserted and unasserted past IPR infringements. Final resolution of IPR claims generally occurs over several periods.

Other provisions include provisions for non-cancellable purchase commitments, product portfolio provisions for the alignment of the product portfolio and related replacement of discontinued products in customer sites and provision for pension and other social security costs on share-based awards.

28. EARNINGS PER SHARE

	2011	2010	2009
Numerator/EURm
Basic/Diluted:
Profi t attributable to equity holders of the parent	– 1 164	1 850	891
Denominator/1000 shares
Basic:
Weighted average shares		3 709 947 3 708 816 3 705 116
Eff ect of dilutive securities:
Performance shares	—	324	9 614
Restricted shares	—	4 110	6 341
Stock options	—	—	1
	—	4 434	15 956
Diluted:
Adjusted weighted average shares and
assumed conversions		3 709 947 3 713 250 3 721 072

Under IAS , basic earnings per share is computed using the weighted average number of shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of shares outstanding during the period plus the dilutive eff ect of stock options, restricted shares and performance shares outstanding during the period.

In , stock options equivalent to million shares ( million in and million in ) were excluded from the calculation of diluted earnings per share because they were determined to be anti-dilutive.

In addition, million of performance shares were excluded from the calculation of dilutive shares because contingency conditions have not been met.

As at December , there were million of restricted shares outstanding that could potentially have a dilutive impact in the future but were excluded from the calculation.

29. COMMITMENTS AND CONTINGENCIES

EURm	2011	2010
Collateral for our own commitments
Property under mortgages	18	18
Assets pledged	2	5
Contingent liabilities on behalf of Group companies
Other guarantees	1 292	1 262
Contingent liabilities on behalf of other companies
Other guarantees	16	17
Financing commitments
Customer fi nance commitments 1	86	85
Venture fund commitments 2	133	238

See also Note b).

See also Note a).

The amounts above represent the maximum principal amount of commitments and contingencies.

Property under mortgages given as collateral for our own commitments comprise of mortgages given to the Finnish National Board of Customs as a general indemnity of EUR million in (EUR million in ).

Assets pledged for the Group's own commitments include available-for-sale investments of EUR million in (EUR million of available-for-sale investments in ).

Other guarantees include guarantees of EUR million in (EUR million in ) provided to certain Nokia Siemens Networks' customers in the form of bank guarantees or corporate guarantees issued by Nokia Siemens Networks' Group entity. These instruments entitle the customer to claim payment as compensation for non-performance by Nokia Siemens Networks of its obligations under network infrastructure supply agreements. Depending on the nature of the guarantee, compensation is payable on demand or subject to verifi cation of non-performance. Volume of Other guarantees has slightly increased due to release of certain commercial guarantees and due to transferred business related commercial guarantees from Motorola Solutions, Inc.

Contingent liabilities on behalf of other companies were EUR million in (EUR million in ).

Financing commitments of EUR million in (EUR million in ) are available under loan facilities negotiated mainly with Nokia Siemens Networks' customers. Availability of the amounts is dependent upon the borrower's continuing compliance with stated fi nancial and operational covenants and compliance with other administrative terms of the facility. The loan facilities are primarily available to fund capital expenditure relating to purchases of network infrastructure equipment and services.

Venture fund commitments of EUR million in (EUR million in ) are fi nancing commitments to a number of funds making technology related investments. As a limited partner in these funds Nokia is committed to capital contributions and also entitled to cash distributions according to respective partnership agreements.

The Group is party to routine litigation incidental to the normal conduct of business, including, but not limited to, several claims, suits and actions both initiated by third parties and initiated by Nokia relating to infringements of patents, violations of licensing arrangements and other intellectual property related matters, as well as actions with respect to products, contracts and securities. Based on the information currently available, and in the opinion of the management, outcome of and liabilities in excess of what has been provided for related to these or other proceedings, in the aggregate, are not likely to be material to the fi nancial condition or result of operations.

As of December , , the Group had purchase commitments of EUR million (EUR million in ) relating to inventory purchase obligations, service agreements and outsourcing arrangements, primarily for purchases in . The Group has also entered into a partnership with Microsoft whereas the Group is committed to a software royalty structure which includes annual minimum software royalty commitments. In consideration for Nokia's contribution under the arrangement, the Group will also receive quarterly platform support payments from Microsoft. The total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitments.

30. LE A SING CONTR AC TS

The Group leases offi ce, manufacturing and warehouse space under various non-cancellable operating leases. Certain contracts contain renewal options for various periods of time.

The future costs for non-cancellable leasing contracts are as follows:

Leasing payments, EURm	Operating leases
2012	292
2013	206
2014	154
2015	108
2016	71
Thereafter	196
Total	1 027

Rental expense amounted to EUR million in (EUR million in and EUR million in ).

31. REL ATED PART Y TR ANSAC TIONS

At December , , the Group had borrowings amounting to EUR million (EUR million in and EUR million in ) from Nokia Unterstützungskasse GmbH, the Group's German pension fund, which is a separate legal entity. The loan bears interest at % annum and its duration is pending until further notice by the loan counterparts who have the right to terminate the loan with a day notice period.

There were no loans made to the members of the Nokia Leadership Team and the Board of Directors at December , , or , respectively.

Transactions with associated companies

EURm	2011	2010	2009
Share of results of associated companies	– 23	1	30
Dividend income	—	1	—
Share of shareholders' equity of associated companies	47	61	35
Sales to associated companies	37	15	8
Purchases from associated companies	91	186	211
Receivables from associated companies	—	3	2
Liabilities to associated companies	14	22	31

Management compensation

The following table sets forth the salary and cash incentive information awarded and paid or payable by the company to the Chief Executive Offi cer and President of Nokia Corporation for fi scal years – as well as the share-based compensation expense relating to equity-based awards, expensed by the company.

		2011			2010			2009
EUR	Base salary	Cash incentive payments	Share-based compensation expense	Base salary	Cash incentive payments	Share-based compensation expense	Base salary	Cash payments	Share-based incentive compensation expense
Stephen Elop President and CEO	1 020 000	473 070	2 086 351	280 303	440 137	67 018	—	—	—

Total remuneration of the Nokia Leadership Team awarded for the fi scal years – was EUR in (EUR in and EUR in ), which consisted of base salaries and cash incentive payments. Total share-based compensation expense relating to equity-based awards expensed by the company was EUR in (EUR in and EUR in ).

Board of Directors

The following table depicts the annual remuneration structure paid to the members of our Board of Directors, as resolved by the Annual General Meetings in the respective years.

	2011		2010		2009
Board of Directors	Gross annual fee 1 EUR	Shares received	Gross annual fee 1 EUR	Shares received	Gross annual fee 1 EUR	Shares received
Jorma Ollila, Chairman	440 000	29 604	440 000	20 710	440 000	16 575
Dame Marjorie Scardino, Vice Chairman	150 000	10 092	150 000	7 058	150 000	5 649
Georg Ehrnrooth 2	—	—	—	—	155 000	5 838
Stephen Elop 3	—	—	—	—	—	—
Lalita D. Gupte 4	—	—	140 000	6 588	140 000	5 273
Bengt Holmström	130 000	8 746	130 000	6 117	130 000	4 896
Henning Kagermann 5	155 000	10 428	130 000	6 117	130 000	4 896
Olli-Pekka Kallasvuo 6	—	—	130 000	6 117	130 000	4 896
Per Karlsson 7	130 000	8 746	155 000	7 294	155 000	5 838
Jouko Karvinen 8	140 000	9 419	—	—	—	—
Helge Lund	130 000	8 746	—	—	—	—
Isabel Marey-Semper 9	140 000	9 419	140 000	6 588	140 000	5 273
Risto Siilasmaa 10	155 000	10 428	155 000	7 294	140 000	5 273
Kari Stadigh	130 000	8 746	—	—	—	—
Keijo Suila	—	—	130 000	6 117	130 000	4 896

• Approximately % of each Board member's gross annual fee is paid in Nokia shares purchased from the market (included in the table under "Shares Received") and the remaining approximately % of the gross annual fee is paid in cash. Further, it is Nokia policy that the directors retain all company stock received as director compensation until the end of their board membership, subject to the need to finance any costs relating to the acquisition of the shares, including taxes.
• The fee of Georg Ehrnrooth amounted to an annual total of EUR , consisting of a fee of EUR for services as a member of the Board and EUR for services as Chairman of the Audit Committee.
• Stephen Elop did not receive remuneration for his services as a member of the Board. This table does not include remuneration paid to Mr. Elop for services as the President and CEO.
• The and fees of Lalita D. Gupte amounted to an annual total of EUR each year indicated, consisting of a fee of EUR for services as a member of the Board and EUR for services as a member of the Audit Committee.
• The fee of Henning Kagermann amounted to an annual total of EUR , consisting of a fee of EUR for services as a member of the Board and EUR for services as Chairman of the Personnel Committee.
• Olli-Pekka Kallasvuo left his position on the Nokia Board of Directors in . This table includes fees paid to Olli-Pekka Kallasvuo for his services as a member of the Board, only.
• The and fees of Per Karlsson amounted to an annual total of EUR each year indicated, consisting of a fee of EUR for services as a member of the Board and EUR for services as Chairman of the Personnel Committee.
• The fee of Jouko Karvinen amounted to an annual total of EUR , consisting of a fee of EUR for services as a member of the Board and EUR for services as a member of the Audit Committee.

The , and fees paid to Isabel Marey-Semper amounted to an annual total of EUR each year indicated, consisting of a fee of EUR for services as a member of the Board and EUR for services as a member of the Audit Committee.

The and fees paid to Risto Siilasmaa amounted to an annual total of EUR each year indicated, consisting of a fee of EUR for service as a member of the Board and EUR for service as Chairman of the Audit Committee. The fee of Risto Siilasmaa amounted to an annual total of EUR , consisting of a fee of EUR for services as a member of the Board and EUR for services as a member of the Audit Committee.

Pension arrangements of certain Nokia Leadership Team Members

Stephen Elop, President and CEO, participates in the Finnish TyEL pension system, which provides for a retirement benefi t based on years of service and earnings according to prescribed statutory rules. Under the Finnish TyEL pension system, base pay, incentives and other taxable fringe benefi ts are included in the defi nition of earnings, although gains realized from equity are not. The Finnish TyEL pension scheme provides for early retirement benefi ts at age with a reduction in the amount of retirement benefi ts. Standard retirement benefi ts are available from age to , according to an increasing scale.

32. NOTES TO CASH FLOW STATEMENT

EURm		2011 2010	2009
Adjustments for:
Depreciation and amortization (Note 10)	1 562	1 771	1 784
Profi t (–)/loss (+) on sale of property, plant and equipment and available- for-sale investments	– 49	– 193	– 111
Income taxes (Note 12)	290	443	702
Share of results of associated companies (Note 15)	23	– 1	– 30
Non-controlling interest	– 324	– 507	– 631
Financial income and expenses (Note 11)	49	191	265
Transfer from hedging reserve to sales and cost of sales (Note 21)	– 4	– 22	44
Impairment charges (Note 8)	1 338	110	1 009
Asset retirements (Note 13)	13	37	35
Share-based compensation (Note 24)	18	47	16
Restructuring related charges (Note 7, 27)	565	245	307
Other income and expenses	5	– 9	—
Adjustments, total	3 486	2 112	3 390
Change in net working capital
Decrease (+)/increase (–) in short-term receivables	137	1 281	1 145
Decrease (+)/increase (–) in inventories	289	– 512	640
Decrease (–)/increase (+) in interest-free short-term borrowings	– 1 145	1 563	– 1 698
Loans made to customers	81	17	53
Change in net working capital	– 638	2 349	140

In , Nokia Siemens Networks' EUR million loans and capitalized interest of EUR million from Siemens were converted into equity impacting the non-controlling interests in the Consolidated Statements of Financial Position. The Group did not engage in any material non-cash investing activities in and .

33. PRINCIPAL NOKIA GROUP COMPANIE S AT DECEMBER 31, 2011

%		Parent holding	Group majority
	US Nokia Inc.	—	100.0
	DE Nokia GmbH	100.0	100.0
	GB Nokia UK Limited	—	100.0
KR	Nokia TMC Limited	100.0	100.0
	CN Nokia Telecommunications Ltd	4.5	83.9
NL	Nokia Finance International B.V.	100.0	100.0
	HU Nokia Komárom Kft	100.0	100.0
IN	Nokia India Pvt Ltd	99.9	100.0
IT	Nokia Italia S.p.A	100.0	100.0
ES	Nokia Spain S.A.U	100.0	100.0
BR	Nokia do Brazil Technologia Ltda	99.9	100.0
	RU OOO Nokia	100.0	100.0
	US NAVTEQ Corp	—	100.0
NL	Nokia Siemens Networks B.V.	—	50.0 1
FI	Nokia Siemens Networks Oy	—	50.0
	DE Nokia Siemens Networks GmbH & Co KG	—	50.0
IN	Nokia Siemens Networks Pvt. Ltd.	—	50.0

Nokia Siemens Networks B.V., the ultimate parent of the Nokia Siemens Network group, is owned approximately % by each of Nokia and Siemens and consolidated by Nokia. Nokia effectively controls Nokia Siemens Networks as it has the ability to appoint key officers and the majority of the members of its Board of Directors, and accordingly, Nokia consolidated Nokia Siemens Networks.

A complete list of subsidiaries and associated companies is included in Nokia's Statutory Accounts.

34. RISK MANAGEMENT

General risk management principles

Nokia has a common and systematic approach to risk management across business operations and processes. Material risks and opportunities are identifi ed, analyzed, managed and monitored as part of business performance management. Relevant key risks are identifi ed against business targets either in business operations or as an integral part of long and short-term planning. Nokia's overall risk management concept is based on visibility of the key risks preventing Nokia from reaching its business objectives rather than solely focusing on eliminating risks.

The principles documented in Nokia's Risk Policy and accepted by the Audit Committee of the Board of Directors require risk management and its elements to be integrated into business processes. One of the main principles is that the business, function or category owner is also the risk owner, but it is everyone's responsibility at Nokia to identify risks, which prevent Nokia to reach its objectives. Risk management covers strategic, operational, fi nancial and hazard risks.

Key risks are reported to the Group level management to create assurance on business risks as well as to enable prioritization of risk management activities at Nokia. In addition to general principles there are specifi c risk management policies covering, for example treasury and customer related credit risks.

Financial risks

The objective for Treasury activities in Nokia is to guarantee cost-effi cient funding for the Group at all times, and to identify, evaluate and hedge fi nancial risks. There is a strong focus in Nokia on creating shareholder value. Treasury activities support this aim by: i) mitigating the adverse eff ects caused by fl uctuations in the fi nancial markets on the profi tability of the underlying businesses; and ii) managing the capital structure of the Group by prudently balancing the levels of liquid assets and fi nancial borrowings.

Treasury activities are governed by policies approved by the CEO. Treasury Policy provides principles for overall fi nancial risk management and determines the allocation of responsibilities for fi nancial risk management in Nokia. Operating Procedures cover specifi c areas such as foreign exchange risk, interest rate risk, use of derivative fi nancial instruments, as well as liquidity and credit risk. Nokia is risk averse in its Treasury activities.

A) MARKET RISK

Foreign exchange risk

Nokia operates globally and is thus exposed to foreign exchange risk arising from various currencies. Foreign currency denominated assets and liabilities together with foreign currency denominated cash fl ows from highly probable or probable purchases and sales contribute to foreign exchange exposure. These transaction exposures are managed against various local currencies because of Nokia's substantial production and sales outside the Euro zone.

According to the foreign exchange policy guidelines of the Group, which remains the same as in the previous year, material transaction foreign exchange exposures are hedged unless hedging would be uneconomical due to market liquidity and/or hedging cost. Exposures are defi ned using nominal values of the transactions. Exposures are mainly hedged with derivative fi nancial instruments such as forward foreign exchange contracts and foreign exchange options. The majority of fi nancial instruments hedging foreign exchange risk have duration of less than a year. The Group does not hedge forecasted foreign currency cash fl ows beyond two years.

Since Nokia has subsidiaries outside the Euro zone, the euro-denominated value of the shareholders' equity of Nokia is also exposed to fl uctuations in exchange rates. Equity changes resulting from movements in foreign exchange rates are shown as a translation diff erence in the Group consolidation.

Nokia uses, from time to time, forward foreign exchange contracts, foreign exchange options and foreign currency denominated loans to hedge its equity exposure arising from foreign net investments.

At the end of years and , the following currencies represent a signifi cant portion of the currency mix in the outstanding fi nancial instruments:

2011, EURm	USD	JPY	CNY	INR
FX derivatives used as cash fl ow hedges (net amount) 1	1 282	110	—	– 20
FX derivatives used as net investment hedges (net amount) 2	– 1 045	– 17	– 2 023	– 818
FX exposure from balance sheet items (net amount) 3	– 962	– 19	880	– 109
FX derivatives not designated in a hedge relationship and carried at fair value through the profi t and loss statement (net amount) 3	875	255	– 825	– 264
Cross currency / interest rate hedges	420	—	—	—
2010, EURm	USD	JPY	CNY	INR
FX derivatives used as cashfl ow hedges (net amount) 1	– 140	521	—	– 23
FX derivatives used as net investment hedges (net amount) 2	– 642	—	– 2 834	– 702
FX exposure from balance sheet items (net amount) 3	– 1 645	– 245	– 710	– 218
FX derivatives not designated in a hedge relationship and carried at fair value through
profi t and loss (net amount) 3, 4	134	1 026	1 845	– 117

. The FX derivatives are used to hedge the foreign exchange risk from forecasted highly probable cashflows related to sales, purchases and business acquisition activities. In some of the currencies, especially in US Dollar, Nokia has substantial foreign exchange risks in both estimated cash inflows and outflows, which have been netted in the table. See Note for more details on hedge accounting. The underlying exposures hedged are not presented in the table, as they are not financial instruments as defined under IFRS .

• . The FX derivatives are used to hedge the Group's net investment exposure. The underlying exposures hedged are not presented in the table, as they are not financial instruments as defined under IFRS .
• . The balance sheet items and some probable forecasted cash flows which are denominated in foreign currencies are hedged by a portion of FX derivatives not designated in a hedge relationship and carried at fair value through the profit and loss statement.
• . The FX exposures for have been recalculated to include options' nominal instead of options' delta as a measure of exposure.

Interest rate risk

The Group is exposed to interest rate risk either through market value fl uctuations of balance sheet items (i.e. price risk) or through changes in interest income or expenses (i.e. refi nancing or reinvestment risk). Interest rate risk mainly arises through interest bearing liabilities and assets. Estimated future changes in cash fl ows and balance sheet structure also expose the Group to interest rate risk.

The objective of Interest rate risk management is to manage uncertainty caused by fl uctuations in interest rates and minimize net long-term debt funding costs.

The interest rate exposure of the Group is monitored and managed centrally. Nokia uses the Value-at-Risk (VaR) methodology complemented by selective shock sensitivity analyses to assess and measure the interest rate risk of interest-bearing assets, interest-bearing liabilities and related derivatives, which together create the Group's interest rate exposure.

At the reporting date, the interest rate profi le of the Group's interest-bearing assets and liabilities is presented in the table below:

		2011		2010
EURm	rate	Fixed Floating rate	rate	Fixed Floating rate
Assets	6 384	4 733	8 795	3 588
Liabilities	– 4 313	– 950	– 4 156	– 992
Assets and liabilities before derivatives	2 071	3 783	4 639	2 596
Interest rate derivatives	1 736	– 1 656	1 036	– 994
Assets and liabilities after derivatives	3 807	2 127	5 675	1 602

Equity price risk

Nokia is exposed to equity price risk as the result of market price fl uctuations in the listed equity instruments held mainly for strategic business reasons.

Nokia has certain strategic non-controlling investments in publicly listed equity shares. The fair value of the equity investments which are subject to equity price risk at December , was EUR million (EUR million in ). In addition, Nokia invests in private equity through venture funds, which, from time to time, may have holdings in equity instruments which are listed in stock exchanges. These investments are classifi ed as available-for-sale carried at fair value. See Note for more details on available-for-sale investments.

Due to the insignifi cant amount of exposure to equity price risk, there are currently no outstanding derivative fi nancial instruments designated as hedges for these equity investments.

Nokia is exposed to equity price risk on social security costs relating to its equity compensation plans. Nokia mitigates this risk by entering into cash settled equity option contracts as appropriate.

Value-at-Risk

Nokia uses the Value-at-Risk (VaR) methodology to assess the Group exposures to foreign exchange (FX), interest rate, and equity risks. The VaR gives estimates of potential fair value losses in market risk sensitive instruments as a result of adverse changes in specifi ed market factors, at a specifi ed confi dence level over a defi ned holding period.

In Nokia, the FX VaR is calculated with the Monte Carlo method which simulates random values for exchange rates in which the Group has exposures and takes the non-linear price function of certain FX derivative instruments into account. The variance-covariance methodology is used to assess and measure the interest rate risk and equity price risk.

The VaR is determined by using volatilities and correlations of rates and prices estimated from a one-year sample of historical market data, at % confi dence level, using a onemonth holding period. To put more weight on recent market conditions, an exponentially weighted moving average is performed on the data with an appropriate decay factor.

This model implies that within a one-month period, the potential loss will not exceed the VaR estimate in % of possible outcomes. In the remaining % of possible outcomes, the potential loss will be at minimum equal to the VaR fi gure, and on average substantially higher.

The VaR methodology relies on a number of assumptions, such as, a) risks are measured under average market conditions, assuming that market risk factors follow normal distributions; b) future movements in market risk factors follow estimated historical movements; c) the assessed exposures do not change during the holding period. Thus it is possible that, for any given month, the potential losses at % confi dence level are diff erent and could be substantially higher than the estimated VaR.

FX risk

The VaR fi gures for the Group's fi nancial instruments which are sensitive to foreign exchange risks are presented in Table below. As defi ned under IFRS , the VaR calculation includes foreign currency denominated monetary fi nancial instruments such as:

• » Available-for-sale investments, loans and receivables, investments at fair value through profi t and loss, cash, loans and accounts payable.
• » FX derivatives carried at fair value through profi t and loss which are not in a hedge relationship and are mostly used for hedging balance sheet FX exposure.
• » FX derivatives designated as forecasted cash fl ow hedges and net investment hedges. Most of the VaR is caused by these derivatives as forecasted cash fl ow and net investment exposures are not fi nancial instruments as defi ned under IFRS and thus not included in the VaR calculation.

Table Foreign exchange positions Value-at-Risk

VaR from fi nancial instruments, EURm	2011	2010
At December 31	141	245
Average for the year	218	223
Range for the year	141–316 174–299

Interest rate risk

The VaR for the Group interest rate exposure in the investment and debt portfolios is presented in Table below. Sensitivities to credit spreads are not refl ected in the below numbers.

Table Treasury investment and debt portfolios Value-at-Risk

EURm	2011	2010
At December 31	33	45
Average for the year	34	43
Range for the year	19–45	33–63

Equity price risk

The VaR for the Group equity investment in publicly traded companies is insignifi cant.

B) CREDIT RISK

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in fi nancial loss to the Group. Credit risk arises from bank and cash, fi xed income and money-market investments, derivative fi nancial instruments, loans receivable as well as credit exposures to customers, including outstanding receivables, fi nancial guarantees and committed transactions. Credit risk is managed separately for business related and fi nancial credit exposures.

Except as detailed in the following table, the maximum exposure to credit risk is limited to the book value of the fi nancial assets as included in Group's balance sheet:

EURm	2011	2010
Financial guarantees given on behalf of customers and other third parties	—	—
Loan commitments given but not used	86	85
	86	85

Business Related Credit Risk

The Company aims to ensure highest possible quality in accounts receivable and loans due from customers and other third parties. The Group Credit Policy, approved by the Nokia Leadership Team, lays out the framework for the management of the business related credit risks in all Nokia group companies.

Credit exposure is measured as the total of accounts receivable and loans outstanding due from customers and other third parties, and committed credits.

Group Credit Policy provides that credit decisions are based on credit evaluation including credit rating for larger exposures. Nokia & Nokia Siemens Networks Rating Policy defi nes the rating principles. Ratings are approved by Nokia & Nokia Siemens Networks Rating Committee. Credit risks are approved and monitored according to the credit policy of each business entity. These policies are based on the Group Credit Policy. Concentrations of customer or country risks are monitored at the Nokia Group level. When appropriate, credit risks are mitigated with the use of approved instruments, such as letters of credit, collateral or insurance and sale of selected receivables.

The accounts receivable do not include any major concentrations of credit risk by customer or by geography. Top three customers account for approximately .%, .% and .% (.%, .% and .% in ) of Group accounts receivable and loans due from customers and other third parties as at

December , , while the top three credit exposures by country amounted to .%, .% and .% (.%, .% and .% in ), respectively.

The Group has provided allowances for doubtful accounts as needed on accounts receivable and loans due from customers and other third parties not past due, based on the analysis of debtors' credit quality and credit history. The Group establishes allowances for doubtful accounts that represent an estimate of incurred losses as of the end of reporting period. All receivables and loans due from customers and other third parties are considered on an individual basis in establishing the allowances for doubtful accounts.

As at December , , the carrying amount before deducting any allowances for doubtful accounts as well as amounts expected to be uncollectible for acquired receivables relating to customers for which an allowance was provided or an uncollectible amount has been identifi ed amounted to EUR million (EUR million in ). The amount of provision taken against that portion of these receivables considered to be impaired as well as the amount expected to be uncollectible for acquired receivables was a total of EUR million (EUR million in ) (see also Note and Note ).

An amount of EUR million (EUR million in ) relates to past due receivables from customers for which no allowances for doubtful accounts were recognized. The aging of these receivables is as follows:

EURm	2011	2010
Past due 1–30 days	169	239
Past due 31–180 days	118	131
More than 180 days	29	102
	316	472

The carrying amount of accounts receivable that would otherwise be past due or impaired but whose terms have been renegotiated was EUR million (EUR million in ).

Financial Credit Risk

Financial instruments contain an element of risk of loss resulting from counterparties being unable to meet their obligations. This risk is measured and monitored centrally by Treasury. Nokia manages fi nancial credit risk actively by limiting its counterparties to a suffi cient number of major banks and fi nancial institutions and monitoring the credit worthiness and exposure sizes continuously as well as through entering into netting arrangements (which gives Nokia the right to off set in the event that the counterparty would not be able to fulfi ll the obligations) with all major counterparties and collateral agreements (which require counterparties to post collateral against derivative receivables) with certain counterparties.

Nokia's investment decisions are based on strict creditworthiness and maturity criteria as defi ned in the Treasury Policy and Operating Principles. As result of this investment policy approach and active management of outstanding investment exposures, Nokia has not been subject to any material credit losses in its fi nancial investments.

The table below presents the breakdown of the outstanding fi xed income and money market investments by sector and credit rating grades ranked as per Moody's rating categories.

	Rating 3	Total amount 1,2 EURm	Due within 3 months EURm	Due between 3 and 12 months EURm	Due between 1 and 3 years EURm	Due between 3 and 5 years EURm	Due beyond 5 years EURm
At December 31, 2011
Banks	Aaa	1 368	1 368	—	—	—	—
	Aa1–Aa3	1 319	1 316	—	1	2	—
	A1–A3	1 706	1 706	—	—	—	—
	Baa1–Baa3	616	616	—	—	—	—
	Non rated	270	260	10	—	—	—
Governments	Aaa	3 224	2 508	221	50	266	179
	Aa1–Aa3	408	400	6	2	—	—
Other	Aaa	—	—	—	—	—	—
	Aa1–Aa3	11	—	—	—	—	11
	A1–A3	18	—	—	12	—	6
	Baa1–Baa3	2	—	—	—	—	2
	Ba1–C	1	—	—	—	—	1
	Non rated	2	—	2	—	—	—
Total		8 945	8 174	239	65	268	199
At December 31, 2010
Banks	Aaa	1 152	1 152	—	—	—	—
	Aa1–Aa3	1 283	1 227	52	1	—	3
	A1–A3	2 971	2 942	21	2	1	5
	Baa1-Baa3	340	338	—	—	—	2
	Non rated	303	303	—	—	—	—
Governments	Aaa	3 408	1 499	899	376	18	616
	Aa1–Aa3	638	402	199	26	11	—
	Baa1–Baa3	5	—	—	—	5	—
Other	Aaa	167	30	32	43	28	34
	Aa1–Aa3	43	—	10	—	27	6
	A1–A3	9	—	3	—	—	6
	Baa1–Baa3	2	—	—	—	—	2
	Ba1–C	1	—	—	—	—	1
	Non rated	2	—	2	—	—	—
Total		10 324	7 893	1 218	448	90	675

Fixed income and money-market investments include term deposits, investments in liquidity funds and investments in fixed income instruments classified as available-for-sale investments and investments at fair value through profit and loss. Liquidity funds invested solely in government securities are included under Governments. Other liquidity funds are included under Banks.

% of Nokia's cash in bank accounts is held with banks of investment grade credit rating (% for ).

C) LIQUIDIT Y RISK

Liquidity risk is defi ned as fi nancial distress or extraordinary high fi nancing costs arising due to a shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require fi nancing. Transactional liquidity risk is defi ned as the risk of executing a fi nancial transaction below fair market value, or not being able to execute the transaction at all, within a specifi c period of time.

Included within fixed income and money-market investments is EUR million of restricted investment at December , (EUR million at December , ). They are restricted financial assets under various contractual or legal obligations.

Bank parent company ratings used here for bank groups. In some emerging markets countries actual bank subsidiary ratings may differ from parent company rating.

The objective of liquidity risk management is to maintain suffi cient liquidity, and to ensure that it is available fast enough without endangering its value, in order to avoid uncertainty related to fi nancial distress at all times.

Nokia guarantees a suffi cient liquidity at all times by effi cient cash management and by investing in short-term liquid interest bearing securities. The transactional liquidity risk is minimized by entering transactions where proper two-way quotes can be obtained from the market.

Due to the dynamic nature of the underlying business, Nokia and Nokia Siemens Networks aim at maintaining fl exibility in

funding by keeping committed and uncommitted credit lines available. Nokia and Nokia Siemens Networks manage their respective credit facilities independently and facilities do not include cross-default clauses between Nokia and Nokia Siemens Networks or any forms of guarantees from either party. At the end of December , the committed facilities totaled EUR million (EUR million in ).

The most signifi cant existing Committed Facilities include:

Borrower(s):

Nokia Corporation:	EUR 1 500 million Revolving Credit Facility, maturing 2016
Nokia Siemens Networks Finance B.V. and Nokia Siemens Networks Oy:	EUR 2 000 million Revolving Credit Facility, maturing 2012

EUR million Revolving Credit Facility of Nokia Corporation is used primarily for US and Euro Commercial Paper Programs

back up purposes. As at year end , this facility was fully undrawn.

On December , , Nokia Siemens Networks signed a forward starting term and multicurrency revolving facilities agreement valued at EUR million to replace Nokia Siemens Networks' existing EUR million revolving credit facility when it matures in June . The committed facilities are comprised in equal parts of a revolving credit facility maturing in June and a term loan facility that matures in June . They will be used for general corporate purposes. The amount of commitments available under the Forward Starting Credit Facilities may be increased until the forward starting date in June and by March the commitment has been increased by EUR million to EUR million. Both the EUR million Forward Starting Credit Facility and the existing EUR million Revolving Credit Facility include fi nancial covenants related to leverage and interest coverage of Nokia Siemens Networks. As of December , , EUR million of the existing EUR million Revolving Credit Facility was drawn and all fi nancial covenants were satisfi ed.

As of December , the weighted average commitment fee on the committed credit facilities was .% per annum (.% in ).

The most significant existing funding programs as of December , were:

Issuer(s):	Program	Issued
Nokia Corporation:	Shelf registration statement on fi le with the US Securities and Exchange Commission	USD 1 500 million
Nokia Corporation:	Euro Medium-Term Note Program, totaling EUR 5 000 million	EUR 1 750 million
Nokia Corporation:	Local commercial paper program in Finland, totaling EUR 750 million
Nokia Corporation:	US Commercial Paper program, totaling USD 4 000 million
Nokia Corporation and
Nokia Finance International B.V.:	Euro Commercial Paper program, totaling USD 4 000 million
Nokia Siemens Networks Finance B.V.:	Local commercial paper program in Finland, totaling EUR 500 million	EUR 148 million

The following table below is an undiscounted cash fl ow analysis for both fi nancial liabilities and fi nancial assets that are presented on the balance sheet, and off -balance sheet instruments such as loan commitments according to their remaining contractual maturity. Line-by-line reconciliation with the balance sheet is not possible.

At 31 December 2011, EURm	Total	Due within 3 months	Due between 3 and 12 months	Due between 1 and 3 years	Due between 3 and 5 years	Due beyond 5 years
Non-current fi nancial assets
Long-term loans receivable	112	1	2	43	62	4
Current fi nancial assets
Current portion of long-term loans receivable	59	10	49	—	—	—
Short-term loans receivable	14	12	2	—	—	—
Investments at fair value through profi t and loss	575	—	7	14	264	290
Available-for-sale investment	8 557	8 305	133	69	15	35
Cash	1 957	1 957	—	—	—	—
Cash fl ows related to derivative fi nancial assets net settled:
Derivative contracts–receipts	215	72	– 46	90	17	82
Cash fl ows related to derivative fi nancial assets gross settled:
Derivative contracts–receipts	16 014	14 272	1 226	41	41	434
Derivative contracts–payments	– 15 779	– 14 113	– 1 200	– 27	– 27	– 412
Accounts receivable 1	5 872	5 030	802	40	—	—
Non-current fi nancial liabilities
Long-term liabilities	– 5 391	– 106	– 153	– 2 374	– 316	– 2 442
Current fi nancial liabilities
Current portion of long-term loans	– 387	– 61	– 326	—	—	—
Short-term liabilities	– 1 002	– 915	– 87	—	—	—
Cash fl ows related to derivative fi nancial liabilities net settled:
Derivative contracts–payments	– 107	—	– 3	– 2	– 3	– 99
Cash fl ows related to derivative fi nancial liabilities gross settled:
Derivative contracts–receipts	17 354	15 480	1 874	—	—	—
Derivative contracts–payments	– 17 775	– 15 775	– 2 000	—	—	—
Accounts payable	– 5 532	– 5 449	– 65	– 18	—	—
Contingent fi nancial assets and liabilities
Loan commitments given undrawn 2	– 86	– 37	– 49	—	—	—
Loan commitments obtained undrawn 3	2 937	50	1 387	—	1 500	—

		Due	Due between	Due between	Due between	Due
		within 3	3 and 12	1 and 3	3 and 5	beyond
At 31 December 2010, EURm	Total	months	months	years	years	5 years
Non-current fi nancial assets
Available-for-sale investments	41	—	3	3	35	—
Long-term loans receivable	68	—	—	59	8	1
Other non-current assets	2	—	—	2	—	—
Current fi nancial assets
Current portion of long-term loans receivable	42	9	33	—	—	—
Short-term loans receivable	1	—	1	—	—	—
Investments at fair value through profi t and loss	1 437	10	18	322	44	1 043
Available-for-sale investment	9 470	7 904	1 229	163	97	77
Cash	1 951	1 951	—	—	—	—
Cash fl ows related to derivative fi nancial assets net settled :
Derivative contracts–receipts	– 172	72	– 53	38	47	– 276
Cash fl ows related to derivative fi nancial assets gross settled:
Derivative contracts–receipts	18 686	14 136	3 718	456	123	253
Derivative contracts–payments	– 18 611	– 14 075	– 3 704	– 457	– 128	– 247
Accounts receivable 1	6 335	5 476	838	21	—	—
Non-current fi nancial liabilities
Long-term liabilities	– 5 995	– 119	– 90	– 839	– 2 351	– 2 596
Current fi nancial liabilities
Current portion of long-term loans	– 127	– 2	– 125	—	—	—
Short-term liabilities	– 922	– 849	– 73	—	—	—
Cash fl ows related to derivative fi nancial liabilities net settled:
Derivative contracts–payments	60	– 3	—	—	5	58
Cash fl ows related to derivative fi nancial liabilities gross settled:
Derivative contracts–receipts	23 757	18 836	3 506	655	310	450
Derivative contracts–payments	– 23 996	– 19 085	– 3 545	– 651	– 295	– 420
Other fi nancial liabilities 4	– 88	– 88	—	—	—	—
Accounts payable	– 6 106	– 5 942	– 155	– 9	—	—
Contingent fi nancial assets and liabilities
Loan commitments given undrawn 2	– 85	– 27	– 38	– 20	—	—
Loan commitments obtained undrawn 3	3 405	50	—	3 355	—	—

Accounts receivable maturity analysis does not include receivables accounted based on the percentage of completion method of EUR million (: EUR million).

Loan commitments obtained undrawn have been included based on the period in which they expire.

Other financial liabilities in included EUR million non-derivative short-term financial liabilities disclosed in Note .

Loan commitments given undrawn have been included in the earliest period in which they could be drawn or called.

Hazard risk

Nokia strives to ensure that all fi nancial, reputation and other losses to the Group and our customers are minimized through preventive risk management measures. Insurance is purchased for risks, which cannot be effi ciently internally managed and where insurance markets off er acceptable terms and conditions. The objective is to ensure that hazard risks, whether related to physical assets (e.g. buildings) or intellectual assets (e.g. Nokia) or potential liabilities (e.g. product liability) are optimally insured taking into account both cost and retention levels.

Nokia purchases both annual insurance policies for specifi c risks as well as multiline and/or multiyear insurance policies, where available.

PARENT COMPANY FINANCIAL STATEMENTS ACCORDING TO FINNISH ACCOUNTING STANDARDS

INCOME STATEMENTS, PARENT COMPANY, FAS

BALANCE SHEETS, PARENT COMPANY, FAS

Financial year ended	2011	2010
December 31 Notes	EURm	EURm
Net sales	17 240	20 639
Cost of sales		– 12 979 – 15 363
Gross margin	4 261	5 276
Selling and marketing expenses	– 1 384	– 1 453
Research and development expenses	– 2 888	– 3 142
Administrative expenses	– 227	– 217
Other operating expenses	– 586	– 124
Other operating income	203	341
Operating profi t 2, 3	– 621	681
Financial income and expenses
Income from long-term investments
Dividend income from Group companies	3 696	396
Dividend income from other companies	1	1
Other interest and fi nancial income
Interest income from Group companies	20	8
Interest income from other companies	5	4
Other fi nancial income from other companies	8	15
Exchange gains and losses	65	– 374
Interest expenses and other fi nancial expenses
Interest expenses to Group companies	– 53	– 24
Interest expenses to other companies	– 72	– 63
Impairment loss on investments in subsidiaries	– 1 461	—
Other fi nancial expenses	– 98	– 113
Financial income and expenses, total	2 111	– 150
Profi t before extraordinary items and taxes	1 490	531
Extraordinary items
Group contributions	—	– 6
Extraordinary items, total	—	– 6
Profi t before taxes	1 490	525
Income taxes
for the year 18	– 138	– 106
from previous years	– 14	– 2
deferred taxes	204	123
Net profi t	1 542	540

December 31 Notes	2011 EURm	2010 EURm
ASSETS
Fixed assets and other non-current assets
Intangible assets 4
Capitalized development costs	—	3
Intangible rights	36	35
Other intangible assets	319	446
	355	484
Tangible assets
Machinery and equipment 5	1	—
	1	—
Investments
Investments in subsidiaries 6	11 199	12 054
Investments in associated companies 6	11	58
Long-term loan receivables
from Group companies	—	10
Long-term loan receivables from other companies	13	—
Other non-current assets 6	85	107
	11 308	12 229
Current assets
Inventories and work in progress
Raw materials and supplies	74	57
Work in progress	72	65
Finished goods	78	98
	224	220
Receivables
Deferred tax assets	371	124
Trade debtors from Group companies	1 277	1 163
Trade debtors from other companies	497	568
Short-term loan receivables from Group companies	2 673	3 970
Prepaid expenses and accrued income from Group companies	278	54
Prepaid expenses and accrued income
from other companies	2 194	2 133
	7 290	8 012
Short-term investments	37	37
Bank and cash	290	207
Total	19 505	21 189

See Notes to the financial statements of the parent company.

See Notes to the financial statements of the parent company.

December 31	Notes	2011 EURm	2010 EURm
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity	7
Share capital		246	246
Share issue premium		46	—
Treasury shares	7, 8	– 649	– 669
Fair value reserve	7, 8	68	—
Reserve for invested non-restricted equity	7, 8	3 132	3 145
Retained earnings	7, 8	2 128	3 072
Net profi t for the year	7, 8	1 542	540
		6 513	6 334
Liabilities
Long-term liabilities Long-term fi nance liabilities
to other companies	9	3 528	3 430
Short-term liabilities
Deferred tax liabilities		65	—
Current fi nance liabilities
from Group companies		4 215	4 876
Current fi nance liabilities
from other companies Advance payments		—	379
from other companies		614	323
Trade creditors to Group companies		1 799	3 433
Trade creditors to other companies		621	525
Accrued expenses and prepaid
income to Group companies		52	32
Accrued expenses and prepaid income to other companies		2 098	1 857
		9 464	11 425
Total liabilities		12 992	14 855
Total		19 505	21 189

STATEMENTS OF C A SH FLOWS, PARENT COMPANY, FAS

Financial year ended December 31	Notes	2011 EURm	2010 EURm
Cash fl ow from operating activities
Net profi t		1 542	540
Adjustments, total	13	– 1 740	457
Cash fl ow before change
in net working capital		– 198	997
Change in net working capital	13	– 440	478
Cash generated from operations		– 638	1 475
Interest received		28	10
Interest paid		– 205	– 127
Other fi nancial income and expenses		87	– 158
Income taxes paid		– 165	– 223
Cash fl ow before extraordinary items		– 893	977
Extraordinary income and expenses		– 6	10
Net cash used in/from operating activities		– 899	987
Cash fl ow from investing activities
Investments in shares		– 563	– 104
Capital expenditures		– 66	– 191
Proceeds from sale of shares		2	14
Proceeds from sale of other
intangible assets		17	—
Proceeds from other long-term receivables		21	– 123
Proceeds from short-term receivables		1 179	– 717
Dividends received		2 656	324
Net cash from/used in investing activities		3 246	– 797
Cash fl ow from fi nancing activities
Other contribution from shareholders		46	—
Repayments/proceeds
from short-term borrowings		– 938	1 335
Proceeds from long-term borrowings		112	97
Dividends paid		– 1 484	– 1 483
Net cash used in fi nancing activities		– 2 264	– 51
Net increase/decrease in cash and cash equivalents		83	139
Cash and cash equivalents
at beginning of period		244	105
Cash and cash equivalents at end of period		327	244

See Notes to the financial statements of the parent company.

See Notes to the financial statements of the parent company.

NOTES TO THE FINANCIAL STATEMENTS OF THE PARENT COMPANY

1. ACCOUNTING PRINCIPLE S

The Parent company Financial Statements are prepared according to Finnish Accounting Standards (FAS). See Note to Notes to the consolidated fi nancial statements.

2. PERSONNEL E XPENSES

EURm	2011	2010
Wages and salaries	800	912
Pension expenses	136	141
Other social expenses	27	39
Personnel expenses as per profi t
and loss account	963	1 092

Management compensation

The following table sets forth the salary and cash incentive information awarded and paid or payable by the company to the Chief Executive Offi cer and President of Nokia Corporation for fi scal years – as well as the share-based compensation expense relating to equity-based awards, expensed by the company.

		2011			2010			2009
EUR	Base salary	Cash incentive payments	Share-based compensation expense	Base salary	Cash incentive payments	Share-based compensation expense	Base salary	Cash payments	Share-based incentive compensation expense
Stephen Elop President and CEO	1 020 000	473 070	2 086 351	280 303	440 137	67 018	—	—	—

Total remuneration of the Nokia Leadership Team awarded for the fi scal years – was EUR in (EUR in and EUR in ), which consisted of base salaries and cash incentive payments. Total share-based compensation expense relating to equity-based awards expensed by the company was EUR in (EUR in and EUR in ).

Board of Directors

The following table depicts the annual remuneration structure paid to the members of our Board of Directors, as resolved by the Annual General Meetings in the respective years.

	2011			2010
Board of Directors	Gross annual fee 1 EUR	Shares received	Gross annual fee 1 EUR	Shares received	2009 Gross annual fee 1 EUR	Shares received
Jorma Ollila, Chairman	440 000	29 604	440 000	20 710	440 000	16 575
Dame Marjorie Scardino, Vice Chairman	150 000	10 092	150 000	7 058	150 000	5 649
Georg Ehrnrooth 2	—	—	—	—	155 000	5 838
Stephen Elop 3	—	—	—	—	—	—
Lalita D. Gupte 4	—	—	140 000	6 588	140 000	5 273
Bengt Holmström	130 000	8 746	130 000	6 117	130 000	4 896
Henning Kagermann 5	155 000	10 428	130 000	6 117	130 000	4 896
Olli-Pekka Kallasvuo 6	—	—	130 000	6 117	130 000	4 896
Per Karlsson 7	130 000	8 746	155 000	7 294	155 000	5 838
Jouko Karvinen 8	140 000	9 419	—	—	—	—
Helge Lund	130 000	8 746	—	—	—	—
Isabel Marey-Semper 9	140 000	9 419	140 000	6 588	140 000	5 273
Risto Siilasmaa 10	155 000	10 428	155 000	7 294	140 000	5 273
Kari Stadigh	130 000	8 746	—	—	—	—
Keijo Suila	—	—	130 000	6 117	130 000	4 896

• Approximately % of each Board member's gross annual fee is paid in Nokia shares purchased from the market (included in the table under "Shares Received") and the remaining approximately % of the gross annual fee is paid in cash. Further, it is Nokia policy that the directors retain all company stock received as director compensation until the end of their board membership, subject to the need to finance any costs relating to the acquisition of the shares, including taxes.
• The fee of Georg Ehrnrooth amounted to an annual total of EUR , consisting of a fee of EUR for services as a member of the Board and EUR for services as Chairman of the Audit Committee.
• Stephen Elop did not receive remuneration for his services as a member of the Board. This table does not include remuneration paid to Mr. Elop for services as the President and CEO.
• The and fees of Lalita D. Gupte amounted to an annual total of EUR each year indicated, consisting of a fee of EUR for services as a member of the Board and EUR for services as a member of the Audit Committee.
• The fee of Henning Kagermann amounted to an annual total of EUR , consisting of a fee of EUR for services as a member of the Board and EUR for services as Chairman of the Personnel Committee.
• Olli-Pekka Kallasvuo left his position on the Nokia Board of Directors in . This table includes fees paid to Olli-Pekka Kallasvuo for his services as a member of the Board, only.
• The and fees of Per Karlsson amounted to an annual total of EUR each year indicated, consisting of a fee of EUR for services as a member of the Board and EUR for services as Chairman of the Personnel Committee.
• The fee of Jouko Karvinen amounted to an annual total of EUR , consisting of a fee of EUR for services as a member of the Board and EUR for services as a member of the Audit Committee.
• The , and fees paid to Isabel Marey-Semper amounted to an annual total of EUR each year indicated, consisting of a fee of EUR for services as a member of the Board and EUR for services as a member of the Audit Committee.
• The and fees paid to Risto Siilasmaa amounted to an annual total of EUR each year indicated, consisting of a fee of EUR for service as a member of the Board and EUR for service as Chairman of the Audit Committee. The fee of Risto Siilasmaa amounted to an annual total of EUR , consisting of a fee of EUR for services as a member of the Board and EUR for services as a member of the Audit Committee.

Pension arrangements of certain Nokia Leadership Team Members

Stephen Elop, President and CEO, participates in the Finnish TyEL pension system, which provides for a retirement benefi t based on years of service and earnings according to prescribed statutory rules. Under the Finnish TyEL pension system, base pay, incentives and other taxable fringe benefi ts are included in the defi nition of earnings, although gains realized from equity are not. The Finnish TyEL pension scheme provides for early retirement benefi ts at age with a reduction in the amount of retirement benefi ts. Standard retirement benefi ts are available from age to , according to an increasing scale.

Personnel average	2011	2010
Production	2 473	2 560
Marketing	1 064	1 117
R&D	5 985	7 860
Administration	2 373	2 290
	11 895	13 827
Personnel, December 31	10 262	13 017

3. DEPRECIATION AND AMORTIZATION

EURm	2011	2010
Depreciation and amortization by asset class category
Intangible assets
Capitalized development costs	3	10
Intangible rights	25	23
Other intangible assets	143	143
Tangible assets	—	—
Total	171	176
Depreciation and amortization by function
R&D	131	143

Production 1 — Selling, marketing and administration 39 33 Total 171 176

4. INTANGIBLE ASSETS

EURm	2011	2010
Capitalized development costs
Acquisition cost January 1	284	288
Disposals during the period	—	– 4
Accumulated acquisition cost December 31	284	284
Accumulated amortization January 1	– 281	– 275
Disposals during the period	—	4
Amortization during the period	– 3	– 10
Accumulated amortization December 31	– 284	– 281
Net book value January 1	3	13
Net book value December 31	—	3
Intangible rights
Acquisition cost January 1	228	304
Additions during the period	28	20
Disposals during the period	– 5	– 96
Accumulated acquisition cost December 31	251	228
Accumulated amortization January 1	– 193	– 258
Disposals during the period	3	88
Amortization during the period	– 25	– 23
Accumulated amortization December 31	– 215	– 193
Net book value January 1	35	46
Net book value December 31	36	35
Other intangible assets
Acquisition cost January 1	790	619
Additions during the period	36	171
Disposals during the period	– 44	—
Accumulated acquisition cost December 31	782	790
Accumulated amortization January 1	– 344	– 201
Disposals during the period	24	—
Amortization during the period	– 143	– 143
Accumulated amortization December 31	– 463	– 344
Net book value January 1	446	418
Net book value December 31	319	446

5. TANGIBLE A SSETS

At the end of and the parent company had no tangible assets. These assets were leased from Nokia Asset Management Oy, a company wholly owned by Nokia Corporation.

6. INVESTMENTS

EURm	2011	2010
Investments in subsidiaries
Acquisition cost January 1	12 054	12 109
Additions	608	96
Impairments	– 1 360	—
Disposals	– 103	– 151
Net carrying amount December 31	11 199	12 054
Investments in associated companies
Acquisition cost January 1	58	30
Additions	2	28
Impairments	– 49	—
Net carrying amount December 31	11	58
Investments in other shares
Acquisition cost January 1	107	74
Additions	32	57
Impairments	– 52	—
Disposals	– 2	– 24
Net carrying amount December 31	85	107

7. SHAREHOLDERS' EQUIT Y

					Reserve for invested
Parent Company, EURm	Share capital	Share issue premium	Treasury shares	Fair value reserve	non-restricted equity	Retained earnings	Total
Balance at December 31, 2008	246	—	– 1 885	—	3 291	6 238	7 890
Cancellation of treasury shares			969			– 969	—
Settlement of performance and restricted shares			231		– 137		94
Dividend						– 1 481	– 1 481
Net profi t						767	767
Balance at December 31, 2009	246	—	– 685	—	3 154	4 555	7 270
Settlement of performance and restricted shares			16		– 9		7
Dividend						– 1 483	– 1 483
Net profi t						540	540
Balance at December 31, 2010	246	—	– 669	—	3 145	3 612	6 334
Other contribution from shareholders		46					46
Settlement of performance and restricted shares			20		– 13		7
Fair value reserve increase				68			68
Dividend						– 1 484	– 1 484
Net profi t						1 542	1 542
Balance at December 31, 2011	246	46	– 649	68	3 132	3 670	6 513

8. DISTRIBUTABLE E ARNINGS

EURm	2011	2010
Reserve for invested non-restricted equity	3 132	3 145
Retained earnings from previous years	2 128	3 072
Net profi t for the year	1 542	540
Retained earnings, total	6 802	6 757
Treasury shares	– 649	– 669
Distributable earnings, December 31	6 153	6 088

9. LONG-TERM LIABILITIES

EURm	2011	2010
Long-term fi nancial liabilities
Bonds	3 028	2 930
Loans from fi nancial institutions	500	500
Long-term liabilities, total	3 528	3 430

Long-term liabilities repayable after 5 years
Bonds			1 731	1 640
	Loans from fi nancial institutions		—	—
Long-term liabilities, total	1 731	1 640
Bonds	Million	Interest, %
2009 –2014	1 250 EUR	5.534	1 297	1 290
2009–2019	1 000 USD	5.572	799	753
2009–2019	500 EUR	6.792	543	524
2009–2039	500 USD	6.775	389	363
			3 028	2 930

10. COMMITMENTS AND CONTINGENCIES

EURm	2011	2010
Contingent liabilities on behalf of Group companies
Guarantees for loans	2	68
Leasing guarantees	204	243
Other guarantees	65	63
Contingent liabilities on behalf of other companies
Guarantees for loans	—	—
Other guarantees	3	3

11. LE A SING CONTR AC TS

At December , the leasing contracts of the Parent Company amounted to EUR million (EUR million in ). EUR million will expire in (EUR million in ).

12. LOANS GR ANTED TO THE MANAGEMENT OF THE COMPANY

There were no loans granted to the members of the Group Executive Board and Nokia Leadership team at December , .

13. NOTES TO CASH FLOW STATEMENTS

EURm	2011	2010
Adjustments for:
Depreciation	171	176
Income taxes	– 107	– 14
Financial income and expenses	– 3 529	248
Impairment of intangible assets	6	– 5
Impairment of non-current available-for-sale investments	1 461	—
Other operating income and expenses	258	52
Adjustments, total	– 1 740	457
Change in net working capital
Short-term trade receivables, increase (–), decrease (+)	209	– 200
Inventories, increase (–), decrease (+)	—	– 3
Interest-free short-term liabilities, increase (+), decrease (–)	– 649	681
Change in net working capital	– 440	478

14. PRINCIPAL NOKIA GROUP COMPANIES ON DECEMBER 31, 2011

See note to Notes to the consolidated fi nancial statements.

15. NOKIA SHARES AND SHAREHOLDERS

See Nokia shares and shareholders p. –.

16. ACCRUED INCOME

EURm	2011	2010
Taxes	85	67
Other	2 386	2 119
Total	2 471	2 186

17. ACCRUED E XPENSE S

EURm	2011	2010
Personnel expenses	134	201
Taxes	—	—
Other	2 016	1 688
Total	2 150	1 889

18. INCOME TA X

EURm	2011	2010
Income tax from operations	138	108
Other income tax	—	– 2
Total	138	106

Income taxes are shown separately in the Notes to the fi nancial statements as they have been shown as a one-line item on the face of the profi t and loss statement.

NOKIA SHARES AND SHAREHOLDERS

SHARES AND SHARE CAPITAL

Nokia has one class of shares. Each Nokia share entitles the holder to one vote at General Meetings of Nokia.

On December , , the share capital of Nokia Corporation was EUR . and the total number of shares issued was . On December , , the total number of shares included shares owned by

Group companies representing approximately .% of the share capital and the total voting rights.

Under the Articles of Association of Nokia, Nokia

Corporation does not have minimum or maximum share capital or a par value of a share.

Share capital and shares December 31, 2011	2011	2010	2009	2008	2007
Share capital, EURm	246	246	246	246	246
Shares (1 000)	3 744 956	3 744 956	3 744 956	3 800 949	3 982 812
Shares owned by the Group (1 000)	34 767	35 826	36 694	103 076	136 862
Number of shares excluding shares owned by the Group (1 000) 3 710 189		3 709 130	3 708 262	3 697 872	3 845 950
Average number of shares excluding shares owned by the Group during the year (1 000), basic	3 709 947	3 708 816	3 705 116	3 743 622	3 885 408
Average number of shares excluding shares owned by the Group during the year (1 000), diluted	3 709 947	3 713 250	3 721 072	3 780 363	3 932 008
Number of registered shareholders 1	229 096	191 790	156 081	122 713	103 226

Each account operator is included in the figure as only one registered shareholder

Key ratios December 31, 2011, IFRS (calculation see page 86)	2011	2010	2009	2008	2007
Earnings per share for profi t attributable to equity holders of the parent, EUR
Earnings per share, basic	– 0.31	0.50	0.24	1.07	1.85
Earnings per share, diluted	– 0.31	0.50	0.24	1.05	1.83
P/E ratio	neg.	15.48	37.17	10.37	14.34
(Nominal) dividend per share, EUR	0.20 1	0.40	0.40	0.40	0.53
Total dividends paid, EURm 2	749 1	1 498	1 498	1 520	2 111
Payout ratio	neg. 1	0.80	1.67	0.37	0.29
Dividend yield, %	5.30 1	5.17	4.48	3.60	2.00
Shareholders' equity per share, EUR 3	3.20	3.88	3.53	3.84	3.84
Market capitalization, EURm 3	13 987	28 709	33 078	41 046	101 995

Dividend to be proposed by the Board of Directors for shareholders' approval at the Annual General Meeting convening on May , .

Calculated for all the shares of the company as of the applicable year-end.

Shares owned by the Group companies are not included.

AUTHORIZATIONS

Authorization to increase the share capital

At the Annual General Meeting held on May , , Nokia shareholders authorized the Board of Directors to issue a maximum of million shares through one or more issues of shares or special rights entitling to shares, including stock options. The Board of Directors may issue either new shares or shares held by the Company. The authorization includes the right for the Board to resolve on all the terms and conditions of such issuances of shares and special rights, including to whom the shares and the special rights may be issued. The authorization may be used to develop the Company's capital structure, diversify the shareholder base, fi nance or carry out acquisitions or other arrangements, settle the Company's equitybased incentive plans, or for other purposes resolved by the Board. The authorization is eff ective until June , .

At the end of , the Board of Directors had no other authorizations to issue shares, convertible bonds, warrants or stock options.

Other authorizations

At the Annual General Meeting held on May , , Nokia shareholders authorized the Board of Directors to repurchase a maximum of million Nokia shares by using funds in the unrestricted equity. Nokia did not repurchase any shares on the basis of this authorization. This authorization was eff ective until June , as per the resolution of the Annual

General Meeting on May , , but it was terminated by the resolution of the Annual General Meeting on May , .

At the Annual General Meeting held on May , , Nokia shareholders authorized the Board of Directors to repurchase a maximum of million Nokia shares by using funds in the unrestricted equity. The amount of shares corresponds to less than % of all the shares of the Company. The shares may be repurchased under the buyback authorization in order to develop the capital structure of the Company. In addition, shares may be repurchased in order to fi nance or carry out acquisitions or other arrangements, to settle the Company's equity-based incentive plans, to be transferred for other purposes, or to be cancelled. The authorization is eff ective until June , .

Authorizations proposed to the Annual General Meeting 2012

On January , , Nokia announced that the Board of Directors will propose that the Annual General Meeting convening on May , authorize the Board to resolve to repurchase a maximum of million Nokia shares. The proposed maximum number of shares that may be repurchased is the same as the Board's current share repurchase authorization and it corresponds to less than % of all the shares of the company. The shares may be repurchased in order to develop the capital structure of the Company, fi nance or carry out acquisitions or other arrangements, settle the company's equity-based incentive plans, be transferred for other purposes, or be cancelled. The shares may be repurchased either through a tender off er made to all shareholders on equal terms, or through public trading from the stock market. The authorization would be eff ective until June , and terminate the current authorization for repurchasing of the Company's shares resolved at the Annual General Meeting on May , .

Stock Option exercises –

		Subscription price	Number of new shares	Date of	Net proceeds	New share capital
Year	Stock Option Category	EUR	(1 000)	payment	EURm	EURm
2007	Nokia Stock Option Plan 2002 A/B	17.89	43 513	2007	778.00	—
	Nokia Stock Option Plan 2001C 1Q/02	26.06	17	2007	0.44	—
	Nokia Stock Option Plan 2001C 3Q/02	12.99	243	2007	3.00	—
	Nokia Stock Option Plan 2001C 4Q/02	16.86	49	2007	0.83	—
	Nokia Stock Option Plan 2003 2Q	14.95	9 683	2007	145.00	0.15
	Nokia Stock Option Plan 2003 3Q	12.71	53	2007	0.67	—
	Nokia Stock Option Plan 2003 4Q	15.05	48	2007	0.72	—
	Nokia Stock Option Plan 2004 2Q	11.79	1 569	2007	18.00	0.03
	Nokia Stock Option Plan 2004 3Q	9.44	30	2007	0.29	—
	Nokia Stock Option Plan 2004 4Q	12.35	25	2007	0.30	—
	Nokia Stock Option Plan 2005 2Q	12.79	1 350	2007	17.00	0.02
	Nokia Stock Option Plan 2005 3Q	13.09	4	2007	0.06	—
	Nokia Stock Option Plan 2005 4Q	14.48	13	2007	0.19	—
	Nokia Stock Option Plan 2006 1Q	14.99	13	2007	0.19	—
	Nokia Stock Option Plan 2006 2Q	18.02	631	2007	11.00	—
	Nokia Stock Option Plan 2006 3Q	15.37	7	2007	0.12	—
	Total		57 248		975.81	0.20
2008	Nokia Stock Option Plan 2003 2Q	14.95	2 444	2008	36.53	—
	Nokia Stock Option Plan 2003 3Q	12.71	11	2008	0.15	—
	Nokia Stock Option Plan 2003 4Q	15.05	82	2008	1.24	—
	Nokia Stock Option Plan 2004 2Q	11.79	415	2008	4.90	—
	Nokia Stock Option Plan 2004 3Q	9.44	5	2008	0.05	—
	Nokia Stock Option Plan 2004 4Q	12.35	13	2008	0.16	—
	Nokia Stock Option Plan 2005 2Q	12.79	361	2008	4.62	—
	Nokia Stock Option Plan 2005 3Q	13.09	5	2008	0.07	—
	Nokia Stock Option Plan 2005 4Q	14.48	0	2008	0.00	—
	Nokia Stock Option Plan 2006 1Q	14.99	1	2008	0.01	—
	Nokia Stock Option Plan 2006 2Q	18.02	192	2008	3.46	—
	Nokia Stock Option Plan 2006 3Q	15.37	11	2008	0.17	—
	Nokia Stock Option Plan 2006 4Q	15.38	6	2008	0.09	—
	Nokia Stock Option Plan 2007 1Q	17.00	0	2008	0.00	—
	Nokia Stock Option Plan 2007 2Q	18.39	0	2008	0.00	—
	Nokia Stock Option Plan 2007 3Q	21.86	0	2008	0.00	—
	Total		3 546		51.45

Year	Stock option category	Subscription price EUR	Number of new shares (1 000)	Date of payment	Net proceeds EURm	New share capital EURm
2009	Nokia Stock Option Plan 2004 2Q	11.79	0	2009	0.00	—
	Nokia Stock Option Plan 2004 3Q	9.44	8	2009	0.07	—
	Nokia Stock Option Plan 2004 4Q	12.35	0	2009	0.00	—
	Nokia Stock Option Plan 2005 2Q	12.79	0	2009	0.00	—
	Nokia Stock Option Plan 2005 3Q	13.09	0	2009	0.00	—
	Nokia Stock Option Plan 2005 4Q	14.48	0	2009	0.00	—
	Nokia Stock Option Plan 2006 1Q	14.99	0	2009	0.00	—
	Nokia Stock Option Plan 2006 2Q	18.02	0	2009	0.00	—
	Nokia Stock Option Plan 2006 3Q	15.37	0	2009	0.00	—
	Nokia Stock Option Plan 2006 4Q	15.38	0	2009	0.00	—
	Nokia Stock Option Plan 2007 1Q	17.00	0	2009	0.00	—
	Nokia Stock Option Plan 2007 2Q	18.39	0	2009	0.00	—
	Nokia Stock Option Plan 2007 3Q	21.86	0	2009	0.00	—
	Nokia Stock Option Plan 2007 4Q	27.53	0	2009	0.00	—
	Nokia Stock Option Plan 2008 1Q	24.15	0	2009	0.00	—
	Nokia Stock Option Plan 2008 2Q	19.16	0	2009	0.00	—
	Nokia Stock Option Plan 2008 3Q	17.80	0	2009	0.00	—
	Total		8		0.07
2010	Nokia Stock Option Plan 2005 2Q	12.79	0	2010	0.00	—
	Nokia Stock Option Plan 2005 3Q	13.09	0	2010	0.00	—
	Nokia Stock Option Plan 2005 4Q	14.48	0	2010	0.00	—
	Nokia Stock Option Plan 2006 1Q	14.99	0	2010	0.00	—
	Nokia Stock Option Plan 2006 2Q	18.02	0	2010	0.00	—
	Nokia Stock Option Plan 2006 3Q	15.37	0	2010	0.00	—
	Nokia Stock Option Plan 2006 4Q	15.38	0	2010	0.00	—
	Nokia Stock Option Plan 2007 1Q	17.00	0	2010	0.00	—
	Nokia Stock Option Plan 2007 2Q	18.39	0	2010	0.00	—
	Nokia Stock Option Plan 2007 3Q	21.86	0	2010	0.00	—
	Nokia Stock Option Plan 2007 4Q	27.53	0	2010	0.00	—
	Nokia Stock Option Plan 2008 1Q	24.15	0	2010	0.00	—
	Nokia Stock Option Plan 2008 2Q	19.16	0	2010	0.00	—
	Nokia Stock Option Plan 2008 3Q	17.80	0	2010	0.00	—
	Nokia Stock Option Plan 2008 4Q	12.43	0	2010	0.00	—
	Nokia Stock Option Plan 2009 1Q	9.82	0	2010	0.00	—
	Nokia Stock Option Plan 2009 2Q	11.18	0	2010	0.00	—
	Nokia Stock Option Plan 2009 3Q Total	9.28	0 0	2010	0.00 0.00	—
2011	Nokia Stock Option Plan 2006 1Q	14.99	0	2011	0.00	—
	Nokia Stock Option Plan 2006 2Q	18.02	0	2011	0.00	—
	Nokia Stock Option Plan 2006 3Q	15.37	0	2011	0.00	—
	Nokia Stock Option Plan 2006 4Q	15.38	0	2011	0.00	—
	Nokia Stock Option Plan 2007 1Q	17.00	0	2011	0.00	—
	Nokia Stock Option Plan 2007 2Q	18.39	0	2011	0.00	—
	Nokia Stock Option Plan 2007 3Q	21.86	0	2011	0.00	—
	Nokia Stock Option Plan 2007 4Q	27.53	0	2011	0.00	—
	Nokia Stock Option Plan 2008 1Q	24.15	0	2011	0.00	—
	Nokia Stock Option Plan 2008 2Q	19.16	0	2011	0.00	—
	Nokia Stock Option Plan 2008 3Q	17.80	0	2011	0.00	—
	Nokia Stock Option Plan 2008 4Q	12.43	0	2011	0.00	—
	Nokia Stock Option Plan 2009 1Q	9.82	0	2011	0.00	—
	Nokia Stock Option Plan 2009 2Q	11.18	0	2011	0.00	—
	Nokia Stock Option Plan 2009 3Q	9.28	0	2011	0.00	—
	Nokia Stock Option Plan 2009 4Q	8.76	0	2011	0.00	—
	Nokia Stock Option Plan 2010 1Q	10.11	0	2011	0.00	—
	Nokia Stock Option Plan 2010 2Q Nokia Stock Option Plan 2010 3Q	8.86	0	2011	0.00	—
		7.29	0	2011	0.00	—

Reductions of share capital

Type of reduction	Year	Number of shares (1 000)	Amount of reduction of the share capital EURm	Amount of reduction of the restricted capital EURm	Amount of reduction of the retained earnings EURm
Cancellation of shares	2007	169 500	—	—	—
Cancellation of shares	2008	185 410	—	—	—
Cancellation of shares	2009	56 000	—	—	—
Cancellation of shares	2010	—	—	—	—
Cancellation of shares	2011	—	—	—	—

Share turnover

	2011 1	2010 1	2009 1	2008 2	2007 2
Share turnover (1 000)	15 696 008	12 299 112	11 025 092	12 962 489	12 695 999
Total number of shares (1 000)	3 744 956	3 744 956	3 744 956	3 800 949	3 982 812
% of total number of shares	419	328	294	341	319

Includes share turnover in NASDAQ OMX Helsinki, New York Stock Exchange and Frankfurter Wertpapierbörse.

Includes share turnover in all exchanges.

Share prices, EUR (NASDAQ OMX Helsinki)

	2011	2010	2009	2008	2007
Low/high	3.33/8.49	6.59/11.82	6.67/12.25		9.95/25.78 14.63/28.60
Average 1	5.19	8.41	9.64	17.35	20.82
Year-end	3.77	7.74	8.92	11.10	26.52

Calculated by weighting average price with daily volumes.

Share prices, USD (New York Stock Exchange)

ADS	2011	2010	2009	2008	2007
Low/high	4.46/11.75	8.00/15.89	8.47/16.58	12.35/38.25	19.08/41.10
Average 1	7.13	11.11	13.36	24.88	29.28
Year-end	4.82	10.32	12.85	15.60	38.39

Calculated by weighting average price with daily volumes.

Shareholders, December 31, 2011

Shareholders registered in Finland represented .% and shareholders registered in the name of a nominee represented .% of the total number of shares of Nokia Corporation. The number of registered shareholders was on December , . Each account operator () is included in this fi gure as only one registered shareholder.

Nominee registered shareholders include holders of American Depositary Receipts (ADR). As of December , , ADRs represented .% of the total number of shares in Nokia.

Largest shareholders registered in Finland, December ,

Shareholder	Total number of shares (1 000)	% of all shares	% of all voting rights
Ilmarinen Mutual Pension Insurance Company	79 889	2.13	2.15
Varma Mutual Pension Insurance Company	40 002	1.07	1.08
The State Pension Fund	23 000	0.61	0.62
Svenska Litteratursällskapet i Finland rf	14 226	0.38	0.38
OP-Delta Fund	12 600	0.34	0.34
Sigrid Jusélius Foundation	9 400	0.25	0.25
Mutual Insurance Company Pension Fennia	8 181	0.22	0.22
Schweizerische Nationalbank	7 923	0.21	0.21
Nordea Suomi Fund	7 300	0.19	0.20
Keva (Local Government Pensions Institutions)	5 836	0.16	0.16

Excluding nominee registered shares and shares owned by Nokia Corporation. Nokia Corporation owned shares as of December , .

By number of shares owned	Number of shareholders	% of shareholders	Total number of shares	% of all shares
1–100	47 949	20.93	2 939 023	0.08
101–1 000	115 427	50.38	52 109 957	1.39
1 001–10 000	58 462	25.52	175 741 877	4.69
10 001–100 000	6 812	2.97	165 606 238	4.42
100 001–500 000	341	0.15	68 676 745	1.83
500 001–1 000 000	43	0.02	30 491 834	0.81
1 000 001–5 000 000	43	0.02	105 647 022	2.82
Over 5 000 000	19	0.01	3 143 743 356	83.95
Total	229 096	100.00	3 744 956 052	100.00

By nationality, %	Shares
Non-Finnish shareholders	78.15
Finnish shareholders	21.85
Total	100.00
By shareholder category (Finnish shareholders), %	Shares
Corporations	2.86
Households	9.94
Financial and insurance institutions	2.47
Non-profi t organizations	1.86
General government	4.72
Total	21.85

Please note that the breakdown covers only shareholders registered in Finland, and each account operator () is included in the number of shareholders as only one registered shareholder. Due to this, the breakdown is not illustrative to the entire shareholder base of Nokia.

SHARES AND STOCK OPTIONS OWNED BY THE MEMBERS OF THE BOARD OF DIRECTORS AND NOKIA LE ADERSHIP TE AM

Members of the Board of Directors and the Nokia Leadership Team owned on December , , an aggregate of shares which represented approximately .% of the aggregate number of shares and voting rights. They also owned stock options which, if exercised in full, including both exercisable and unexercisable stock options, would be exercisable for additional shares representing approximately .% of the total number of shares and voting rights on December , .

NOKIA GROUP 2007–2011, IFRS*

	2011	2010	2009	2008	2007
Profi t and loss account, EURm
Net sales	38 659	42 446	40 984	50 710	51 058
Cost and expenses	– 39 732	– 40 376	– 39 787	– 45 744	– 43 073
Operating profi t	– 1 073	2 070	1 197	4 966	7 985
Share of results of associated companies	– 23	1	30	6	44
Financial income and expenses	– 102	– 285	– 265	– 2	239
Profi t before tax	– 1 198	1 786	962	4 970	8 268
Tax	– 290	– 443	– 702	– 1 081	– 1 522
Profi t	– 1 488	1 343	260	3 889	6 746
Profi t attributable to equity holders of the parent	– 1 164	1 850	891	3 988	7 205
Non-controlling interests	– 324	– 507	– 631	– 99	– 459
	– 1 488	1 343	260	3 889	6 746
Balance sheet items, EURm
Fixed assets and other non-current assets	10 750	11 978	12 125	15 112	8 305
Current assets	25 455	27 145	23 613	24 470	29 294
Inventories	2 330	2 523	1 865	2 533	2 876
Accounts receivable and prepaid expenses	12 223	12 347	12 875	15 117	14 665
Total cash and other liquid assets	10 902	12 275	8 873	6 820	11 753
Total equity	13 916	16 231	14 749	16 510	17 338
Capital and reserves attributable to the Company's equity holders	11 873	14 384	13 088	14 208	14 773
Non-controlling interests	2 043	1 847	1 661	2 302	2 565
Long-term liabilities	4 845	5 352	5 801	2 717	1 285
Long-term interest-bearing liabilities	3 969	4 242	4 432	861	203
Deferred tax liabilities	800	1 022	1 303	1 787	963
Other long-term liabilities	76	88	66	69	119
Current liabilities	17 444	17 540	15 188	20 355	18 976
Current portion of long-term loans	357	116	44	13	173
Short-term borrowings	995	921	727	3 578	714
Other fi nancial liabilities	483	447	245	924	184
Accounts payable	5 532	6 101	4 950	5 225	7 074
Accrued expenses and other liabilities Provisions	7 450 2 627	7 365 2 590	6 504 2 718	7 023 3 592	7 114 3 717
Total assets	36 205	39 123	35 738	39 582	37 599

* As of April , , Nokia results include those of Nokia Siemens Networks on a fully consolidated basis. Nokia Siemens Networks, a company jointly owned by Nokia and Siemens, is comprised of Nokia's former Networks business group and Siemens' carrier-related operations for fixed and mobile networks. Accordingly, the results of the Nokia Group and Nokia Siemens Networks for the full years – are not directly comparable to the results for the full year . Nokia's first quarter results included Nokia's former Networks business group only.

On July , , Nokia completed the acquisition of NAVTEQ Corporation. NAVTEQ was a separate reportable segment of Nokia starting from the third quarter until end of third quarter . Accordingly, the results of NAVTEQ are not available for prior period. As of October , , Location & Commerce was formed by combining the NAVTEQ business with Devices & Services social location services operations.

Key ratios and economic indicators 1	2011	2010	2009	2008	2007
Net sales, EURm	38 659	42 446	40 984	50 710	51 058
Change, %	– 8.9	3.6	– 19.2	– 0.7	24.2
Exports and foreign subsidiaries, EURm	38 342	42 075	40 594	50 348	50 736
Salaries and social expenses, EURm	7 516	6 947	6 734	6 847	5 702
Operating profi t, EURm	– 1 073	2 070	1 197	4 966	7 985
% of net sales	– 2.8	4.9	2.9	9.8	15.6
Financial income and expenses, EURm	– 102	– 285	– 265	– 2	239
% of net sales	– 0.3	0.7	0.6	—	0.5
Profi t before tax, EURm	– 1 198	1 786	962	4 970	8 268
% of net sales	– 3.0	4.2	2.3	9.8	16.2
Profi t from continuing operations, EURm	– 1 164	1 850	891	3 988	7 205
% of net sales	– 3.0	4.4	2.2	7.9	14.1
Taxes, EURm	290	443	702	1 081	1 522
Dividends, EURm	749 2	1 498	1 498	1 520	2 111
Capital expenditure, EURm	597	679	531	889	715
% of net sales	1.5	1.6	1.3	1.8	1.4
Gross investments 3, EURm	710	836	683	1 166	1 017
% of net sales	1.8	2.0	1.7	2.3	2.0
R&D expenditure, EURm	5 612	5 863	5 909	5 968	5 647
% of net sales	14.5	13.8	14.4	11.8	11.1
Average personnel	134 171	129 355	123 171	121 723	100 534
Non-interest bearing liabilities, EURm	16 168	16 591	14 483	16 833	18 208
Interest-bearing liabilities, EURm	5 321	5 279	5 203	4 452	1 090
Return on capital employed, %	neg.	11.0	6.7	27.2	54.8
Return on equity, %	neg.	13.5	6.5	27.5	53.9
Equity ratio, %	40.1	42.8	41.9	42.3	46.7
Net debt to equity, %	– 40	– 43	– 25	– 14	– 62

As of April , , Nokia results include those of Nokia Siemens Networks on a fully consolidated basis. Nokia Siemens Networks, a company jointly owned by Nokia and Siemens, is comprised of Nokia's former Networks business group and Siemens' carrier-related operations for fixed and mobile networks. Accordingly, the results of the Nokia Group and Nokia Siemens Networks for the full years – are not directly comparable to the results for the full year . Nokia's first quarter results included Nokia's former Networks business group only.

On July , , Nokia completed the acquisition of NAVTEQ Corporation. NAVTEQ was a separate reportable segment of Nokia starting from the third quarter until end of third quarter . Accordingly, the results of NAVTEQ are not available for prior period. As of October , , Location & Commerce was formed by combining the NAVTEQ business with Devices & Services social location services operations.

Board's proposal

Includes acquisitions, investments in shares and capitalized development costs.

Calculation of Key Ratios, see page .

CALCULATION OF KEY RATIOS

KEY RATIOS UNDER IFRS

Operating profi t Profi t after depreciation

Shareholders' equity

Share capital + reserves attfi butable to the Company's equity holders

Earnings per share (basic)

Profi t attributable to equity holders of the parent Average of adjusted number of shares during the year

P/E ratio

Adjusted share price, December Earnings per share

Dividend per share

Nominal dividend per share The adjustment coeffi cients of the share issues that have taken place during or after the year in question

Payout ratio

Dividend per share Earnings per share

Dividend yield, %

Nominal dividend per share Share price

Shareholders' equity per share

Capital and reserves attributable to the Company's equity holders Adjusted number of shares at year end

Market capitalization

Number of shares x share price per share class

Adjusted average share price

Amount traded, in EUR, during the period Adjusted number of shares traded during the period

Share turnover, %

Number of shares traded during the period Average number of shares during the period

Return on capital employed, %

Profi t before taxes + interest and other net fi nancial expenses Average capital and reserves attributable to the Company's equity holders + short-term borrowings + long-term interest-bearing liabilities (including the current portion thereof) + non-controlling interests

Return on shareholders' equity, %

Profi t attributable to the equity holders of the parent Average capital and reserves attributable to the Company's equity holders during the year

Equity ratio, %

Capital and reserves attributable to the Company's equity holders + non-controlling interests Total assets – advance payments received

Net debt to equity (gearing), %

Long-term interest-bearing liabilities (including the current portion thereof) + short-term borrowings – cash and other liquid assets Capital and reserves attributable to the equity holders of the parent + non-controlling interests

Year-end currency rates

	1 EUR =
USD	1.3059
GBP	0.8391
CNY	8.2723
INR	69.0430
RUB	41.7680
JPY	101.70

SIGNING OF THE ANNUAL ACCOUNTS 2011 AND PROPOSAL BY THE BOARD OF DIRECTORS FOR DISTRIBUTION OF PROFIT

The distributable funds in the balance sheet of the Company as per December , amount to EUR million.

The Board proposes that from the retained earnings a dividend of EUR . per share is to be paid out on the shares of the Company. As per December , , the number of shares of the Company amounted to , based on which the maximum amount to be distributed as dividend is EUR million.

The proposed dividend is in line with the Company's distribution policy and it signifi cantly exceeds the minority dividend required by law.

Espoo, March ,

Jorma Ollila Marjorie Scardino Bengt Holmström Chairman

Henning Kagermann Per Karlsson

Jouko Karvinen Helge Lund Isabel Marey-Semper

Risto Siilasmaa Kari Stadigh

Stephen Elop President and CEO

AUDITORS' REPORT

TO THE ANNUAL GENER AL MEETING OF NOKIA CORPORATION

We have audited the accounting records, the fi nancial statements, the review by the Board of Directors and the administration of Nokia Corporation for the year ended December . The fi nancial statements comprise the consolidated statement of fi nancial position, income statement, statement of comprehensive income, statement of cash fl ows, statement of changes in shareholders' equity and notes to the consolidated fi nancial statements, as well as the parent company's balance sheet, income statement, statement of cash fl ows and notes to the fi nancial statements.

Responsibility of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of consolidated fi nancial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of fi nancial statements and the review by the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the fi nancial statements and the review by the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and fi nances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its fi nancial aff airs have been arranged in a reliable manner.

Auditor's responsibility

Our responsibility is to express an opinion on the fi nancial statements, on the consolidated fi nancial statements and on the review by the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements and the review by the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company and the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements and the review by the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the fi nancial statements and the review by the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements and the review by the Board of Directors.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion on the consolidated fi nancial statements

In our opinion, the consolidated fi nancial statements give a true and fair view of the fi nancial position, fi nancial performance, and cash fl ows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

Opinion on the company's fi nancial statements and the review by the Board of Directors

In our opinion, the fi nancial statements and the review by the Board of Directors give a true and fair view of both the consolidated and the parent company's fi nancial performance and fi nancial position in accordance with the laws and regulations governing the preparation of the fi nancial statements and the review by the Board of Directors in Finland. The information in the review by the Board of Directors is consistent with the information in the fi nancial statements.

Other opinions

We support that the fi nancial statements should be adopted. The proposal by the Board of Directors regarding the distribution of the profi t shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the Members of the Board of Directors and the Managing Director should be discharged from liability for the fi nancial period audited by us.

Helsinki, March,

PricewaterhouseCoopers Oy Authorised Public Accountants

Merja Lindh Authorised Public Account

Critical accounting policies 90
Corporate governance statement
Corporate governance 98
Board of Directors 104
Nokia Leadership Team 107
Compensation of the Board of Directors and the Nokia Leadership Team 110
Auditors fees and services 132
Investor information 133
Contact information 135

CRITICAL ACCOUNTING POLICIES

Our accounting policies aff ecting our fi nancial condition and results of operations are more fully described in Note to our consolidated fi nancial statements. Some of our accounting policies require the application of judgment by management in selecting appropriate assumptions for calculating fi nancial estimates, which inherently contain some degree of uncertainty. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. The related results form the basis for making judgments about reported carrying values of assets and liabilities and reported amounts of revenues and expenses that may not be readily apparent from other sources. The Group will revise material estimates if changes occur in the circumstances on which an estimate was based or as a result of new information or more experience. Actual results may diff er from current estimates under diff erent assumptions or conditions. The estimates aff ect all our businesses equally unless otherwise indicated.

The following paragraphs discuss critical accounting policies and related judgments and estimates used in the preparation of our consolidated fi nancial statements. We have discussed the application of these critical accounting estimates with our Board of Directors and Audit Committee.

RE VENUE RECOGNITION

Majority of the Group's sales are recognized when the signifi cant risks and rewards of ownership have transferred to the buyer, continuing managerial involvement usually associated with ownership and eff ective control have ceased, the amount of revenue can be measured reliably, it is probable that economic benefi ts associated with the transaction will fl ow to the Group, and the costs incurred or to be incurred in respect of the transaction can be measured reliably. The remainder of revenue is recorded under the percentage of completion method.

Devices & Services and certain Local & Commerce and Nokia Siemens Networks revenues are generally recognized when the signifi cant risks and rewards of ownership have transferred to the buyer, continuing managerial involvement usually associated with ownership and eff ective control have ceased, the amount of revenue can be measured reliably, it is probable that economic benefi ts associated with the transaction will fl ow to the Group and the costs incurred or to be incurred in respect of the transaction can be measured reliably. This requires us to assess at the point of delivery whether these criteria have been met. When management determines that such criteria have been met, revenue is recognized. We record estimated reductions to revenue for special pricing agreements, price protection and other volume based discounts at the time of sale, mainly in the mobile device business. Sales adjustments for volume based discount programs are estimated largely based on historical activity under similar programs. Price protection adjustments are based on estimates of future price reductions and certain agreed customer inventories at the date of the price adjustment. Devices & Services and certain Nokia Siemens Networks service revenue is generally recognized on a straight line basis over the service period unless there is evidence that some other method better represents the stage of completion. Devices & Services and Location & Commerce license fees from usage are recognized in the period when they are reliably measurable which is normally when the customer reports them to the Group.

Devices & Services, Location & Commerce and Nokia Siemens Networks may enter into multiple component transactions consisting of any combination of hardware, services and software. The commercial eff ect of each separately identifi able element of the transaction is evaluated in order to refl ect the substance of the transaction. The consideration from these transactions is allocated to each separately identifi able component based on the relative fair value of each component. The consideration allocated to each component is recognized as revenue when the revenue recognition criteria for that element have been met. The Group determines the fair value of each component by taking into consideration factors such as the price when the component is sold separately by the Group, the price when a similar component is sold separately by the Group or a third party and cost plus a reasonable margin.

Nokia Siemens Networks revenue and cost of sales from contracts involving solutions achieved through modifi cation of complex telecommunications equipment is recognized on the percentage of completion basis when the outcome of the contract can be estimated reliably. This occurs when total contract revenue and the cost to complete the contract can be estimated reliably, it is probable that economic benefi ts associated with the contract will fl ow to the Group, and the stage of contract completion can be measured. When we are not able to meet one or more of those conditions, the policy is to recognize revenues only equal to costs incurred to date,

to the extent that such costs are expected to be recovered. Completion is measured by reference to costs incurred to date as a percentage of estimated total project costs using the cost-to-cost method.

The percentage of completion method relies on estimates of total expected contract revenue and costs, as well as the dependable measurement of the progress made towards completing the particular project. Recognized revenues and profi t are subject to revisions during the project in the event that the assumptions regarding the overall project outcome are revised. The cumulative impact of a revision in estimates is recorded in the period such revisions become probable and can be estimated reliably. Losses on projects in progress are recognized in the period they become probable and can be estimated reliably.

Nokia Siemens Networks' current sales and profi t estimates for projects may change due to the early stage of a long-term project, new technology, changes in the project scope, changes in costs, changes in timing, changes in customers' plans, realization of penalties, and other corresponding factors.

CUSTOMER FINANCING

We have provided a limited number of customer fi nancing arrangements and agreed extended payment terms with selected customers. In establishing credit arrangements, management must assess the creditworthiness of the customer and the timing of cash fl ows expected to be received under the arrangement. However, should the actual fi nancial position of our customers or general economic conditions diff er from our assumptions, we may be required to reassess the ultimate collectability of such fi nancings and trade credits, which could result in a write-off of these balances in future periods and thus negatively impact our profi ts in future periods. Our assessment of the net recoverable value considers the collateral and security arrangements of the receivable as well as the likelihood and timing of estimated collections. From time to time, the Group endeavors to mitigate this risk through transfer of its rights to the cash collected from these arrangements to third-party fi nancial institutions on a non-recourse basis in exchange for an upfront cash payment. During the past three fi scal years the Group has not had any write-off s or impairments regarding customer fi nancing. The fi nancial impact of the customer fi nancing related assumptions mainly aff ects the Nokia Siemens Networks business. See also Note (b) to our

consolidated fi nancial statements for a further discussion of long-term loans to customers and other parties.

ALLOWANCES FOR DOUBTFUL ACCOUNTS

We maintain allowances for doubtful accounts for estimated losses resulting from the subsequent inability of our customers to make required payments. If fi nancial conditions of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required in future periods. Management specifi cally analyzes accounts receivables and historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in our customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. Based on these estimates and assumptions the allowance for doubtful accounts was EUR million at the end of (EUR million at the end of ).

INVENTORY-REL ATED ALLOWANCES

We periodically review our inventory for excess, obsolescence and declines in market value below cost and record an allowance against the inventory balance for any such declines. These reviews require management to estimate future demand for our products. Possible changes in these estimates could result in revisions to the valuation of inventory in future periods. Based on these estimates and assumptions, the allowance for excess and obsolete inventory was EUR million at the end of (EUR million at the end of ). The fi nancial impact of the assumptions regarding this allowance aff ects mainly the cost of sales of the Devices & Services and Nokia Siemens Networks businesses.

WARR ANT Y PROVISIONS

We provide for the estimated cost of product warranties at the time revenue is recognized. Our products are covered by product warranty plans of varying periods, depending on local practices and regulations. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers, our warranty obligations are aff ected by actual product failure rates (fi eld failure rates) and by material usage and service delivery costs incurred in correcting a product failure. Our warranty provision is established based upon our best estimates of the amounts necessary to settle future

and existing claims on products sold as of the balance sheet date. As we continuously introduce new products which incorporate complex technology, and as local laws, regulations and practices may change, it will be increasingly diffi cult to anticipate our failure rates, the length of warranty periods and repair costs. While we believe that our warranty provisions are adequate and that the judgments applied are appropriate, the ultimate cost of product warranty could diff er materially from our estimates. When the actual cost of quality of our products is lower than we originally anticipated, we release an appropriate proportion of the provision, and if the cost of quality is higher than anticipated, we increase the provision. Based on these estimates and assumptions the warranty provision was EUR million at the end of (EUR million at the end of ). The fi nancial impact of the assumptions regarding this provision mainly aff ects the cost of sales of our Devices & Services business.

PROVISION FOR INTELLECTUAL PROPERTY RIGHTS, OR IPR, INFRINGEMENTS

We provide for the estimated future settlements related to asserted and unasserted past alleged IPR infringements based on the probable outcome of each potential infringement.

Our products include increasingly complex technologies involving numerous patented and other proprietary technologies. Although we proactively try to ensure that we are aware of any patents and other intellectual property rights related to our products under development and thereby avoid inadvertent infringement of proprietary technologies, the nature of our business is such that patent and other intellectual property right infringements may and do occur. We identify potential IPR infringements through contact with parties claiming infringement of their patented or otherwise exclusive technology, or through our own monitoring of developments in patent and other intellectual property right cases involving our competitors.

We estimate the outcome of all potential IPR infringements made known to us through assertion by third parties, or through our own monitoring of patent- and other IPR-related cases in the relevant legal systems. To the extent that we determine that an identifi ed potential infringement will result in a probable outfl ow of resources, we record a liability based on our best estimate of the expenditure required to settle infringement proceedings. Based on these estimates and

assumptions the provision for IPR infringements was EUR million at the end of (EUR million at the end of ). The fi nancial impact of the assumptions regarding this provision mainly aff ects our Devices & Services business.

Our experience with claims of IPR infringement is that there is typically a discussion period with the accusing party, which can last from several months to years. In cases where a settlement is not reached, the discovery and ensuing legal process typically lasts a minimum of one year. For this reason, IPR infringement claims can last for varying periods of time, resulting in irregular movements in the IPR infringement provision. In addition, the ultimate outcome or actual cost of settling an individual infringement may materially vary from our estimates.

LEGAL CONTINGENCIES

As discussed in Note to the consolidated fi nancial statements, legal proceedings covering a wide range of matters are pending or threatened in various jurisdictions against the Group. We record provisions for pending litigation when we determine that an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertain nature of litigation, the ultimate outcome or actual cost of settlement may materially vary from estimates.

C APITALIZED DE VELOPMENT COSTS

We capitalize certain development costs primarily in the Nokia Siemens Networks business when it is probable that a development project will be a success, the development project will generate further economic benefi ts and certain criteria, including commercial and technical feasibility, have been met. These costs are then amortized on a systematic basis over their expected useful lives, which due to the constant development of new technologies is between two to fi ve years. During the development stage, management must estimate the commercial and technical feasibility of these projects as well as their expected useful lives. Should a product fail to substantiate its estimated feasibility or life cycle, we may be required to write off excess development costs in future periods.

Whenever there is an indicator that development costs capitalized for a specifi c project may be impaired, the recoverable amount of the asset is estimated. An asset is impaired when the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is defi ned as the higher of

an asset's net selling price and value in use. Value in use is the present value of discounted estimated future cash fl ows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. For projects still in development, these estimates include the future cash outfl ows that are expected to occur before the asset is ready for use. See Note to our consolidated fi nancial statements.

Impairment reviews are based upon our projections of anticipated discounted future cash fl ows. The most signifi cant variables in determining cash fl ows are discount rates, terminal values, the number of years on which to base the cash fl ow projections, as well as the assumptions and estimates used to determine the cash infl ows and outfl ows. Management determines discount rates to be used based on the risk inherent in the related activity's current business model and industry comparisons. Terminal values are based on the expected life of products and forecasted life cycle and forecasted cash fl ows over that period. While we believe that our assumptions are appropriate, such amounts estimated could diff er materially from what will actually occur in the future.

BUSINE SS COMBINATIONS

We apply the acquisition method of accounting to account for acquisitions of businesses. The consideration transferred in a business combination is measured as the aggregate of the fair values of the assets transferred, liabilities incurred towards the former owners of the acquired business and equity instruments issued. Acquisition-related costs are recognized as expense in profi t and loss in the periods when the costs are incurred and the related services are received. Identifi able assets acquired and liabilities assumed are measured separately at their fair value as of the acquisition date. Non-controlling interests in the acquired business are measured separately based on their proportionate share of the identifi able net assets of the acquired business. The excess of the cost of the acquisition over our interest in the fair value of the identifi able net assets acquired is recorded as goodwill.

The determination and allocation of fair values to the identifi able assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment. The most signifi cant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash fl ow projections, as well as the assumptions and estimates used to determine the cash infl ows and outfl ows. Management determines the discount rates to be used based on the risk inherent in the related activity's current business model and industry comparisons. Terminal values are based on the expected life of products and forecasted life cycle and forecasted cash fl ows over that period. Although we believe that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may diff er from the forecasted amounts and the diff erence could be material.

VALUATION OF LONG-LIVED ASSETS, INTANGIBLE A SSETS AND GOODWILL

We assess the carrying amount of identifi able intangible assets and long-lived assets if events or changes in circumstances indicate that such carrying amount may not be recoverable. We assess the carrying amount of our goodwill at least annually, or more frequently based on these same indicators. Factors that we consider important, and which could trigger an impairment review, include the following:

• » signifi cant underperformance relative to historical or projected future results;
• » signifi cant changes in the manner of our use of these assets or the strategy for our overall business; and
• » signifi cantly negative industry or economic trends.

When we determine that the carrying amount of intangible assets, long-lived assets or goodwill may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on discounted projected cash fl ows.

This review is based upon our projections of anticipated discounted future cash fl ows. The most signifi cant variables in determining cash fl ows are discount rates, terminal values, the number of years on which to base the cash fl ow projections, as well as the assumptions and estimates used to determine the cash infl ows and outfl ows. Management determines discount rates to be used based on the risk inherent in the related activity's current business model and industry comparisons. Terminal values are based on the expected life of products and forecasted life cycle and forecasted cash fl ows over that period. While we believe that our assumptions are appropriate, such amounts estimated could diff er materially from what will actually occur in the future. In assessing goodwill, these discounted cash fl ows are prepared at a cash generating unit level. Amounts estimated could diff er materially from what will actually occur in the future.

Goodwill is allocated to the Group's cash-generating units (CGU) and discounted cash fl ows are prepared at CGU level for the purpose of impairment testing. The allocation of goodwill to our CGUs is made in a manner that is consistent with the level at which management monitors operations and the CGUs are expected to benefi t from the synergies arising from each of our acquisitions. Accordingly, goodwill has been allocated to the Group's reportable segments; Smart Devices CGU, Mobile Phones CGU, Location & Commerce CGU and Nokia Siemens Networks CGU. For the purposes of the Group's annual impairment testing, the amount of goodwill previously allocated in to the Devices & Services CGU has been reallocated to the Smart Devices CGU and the Mobile Phones CGU based on their relative fair values. Based on the Group's assessment, no goodwill was allocated from Devices & Services to Location & Commerce pursuant to the formation of Location & Commerce business unit and segment on October , . The organizational changes were not a driver of, and did not result in an impairment in the Location & Commerce CGU. Goodwill amounting to EUR million, EUR million and EUR million was allocated to the Smart Devices CGU, Mobile Phones CGU and Nokia Siemens Networks CGU, respectively, at the date of the impairment testing.

In the fourth quarter of , we conducted our annual impairment testing to assess if events or changes in circumstances indicated that the carrying amount of our goodwill may not be recoverable. The impairment testing was carried out based on management's assessment of fi nancial performance and future strategies in light of current and expected market and economic conditions.

The recoverable amounts for the Smart Devices CGU and the Mobile Phones CGU are based on value in use calculations. A discounted cash fl ow calculation was used to estimate the value in use for both CGUs. Cash fl ow projections determined by management are based on information available, to refl ect the present value of the future cash fl ows expected to be derived through the continuing use of the Smart Devices CGU and the Mobile Phones CGU.

The recoverable amounts for the Location & Commerce CGU and the Nokia Siemens Networks CGU are based on fair value less costs to sell. A discounted cash fl ow calculation was used to estimate the fair value less costs to sell for both CGUs. The cash fl ow projections employed in the discounted cashfl ow calculation have been determined by management based on the information available, to refl ect the amount that an entity could obtain from separate disposal of each of the Location & Commerce CGU and the Nokia Siemens Networks CGU, in an arm's length transaction between knowledgeable, willing parties, after deducting the estimated costs of disposal.

The cash fl ow projections employed in the value in use and the fair value less costs to sell calculations are based on detailed fi nancial plans approved by management, covering a three-year planning horizon. Cash fl ows in subsequent periods refl ect a realistic pattern of slowing growth that declines towards an estimated terminal growth rate utilized in the terminal period. The terminal growth rate utilized does not exceed long-term average growth rates for the industry and economies in which the CGU operates. All cash fl ow projections are consistent with external sources of information, wherever available.

The goodwill impairment testing conducted for the Smart Devices CGU, Mobile Phones CGU and Nokia Siemens Networks CGU did not result in any impairment charges for the year ended December , .

A charge to operating profi t of EUR million was recorded for the impairment of goodwill in our Location & Commerce business in the fourth quarter . The impairment loss was allocated in its entirety to the carrying amount of goodwill in the balance sheet of the Location & Commerce CGU. This impairment loss is presented as impairment of goodwill in the consolidated income statement. As a result of the impairment loss, the amount of goodwill allocated to the Location & Commerce CGU has been reduced to EUR million at December , .

The impairment charge is the result of an evaluation of the projected fi nancial performance and net cash fl ows of the Location & Commerce CGU. The main drivers for management's net cash fl ow projections include license fees related to digital map data, fair value of the services sold within the Group and estimated average revenue per user with regard to mobile media advertising. The average revenue per user is estimated based on peer market data for mobile advertising

revenue. Projected device sales volumes impact the overall forecasted intercompany and advertising revenues. This takes into consideration the market dynamics in digital map data and related location-based content markets, including the Group's long-term view that the market will move from feebased models towards advertising-based models especially in some more mature markets. It also refl ects recently announced results and related competitive factors in local search and advertising market resulting in lower estimated growth prospects from location-based assets integrated with diff erent advertising platforms. After consideration of all relevant factors, the Group reduced the net sales projections for the Location & Commerce CGU which, in turn, reduced projected profi tability and cash fl ows.

The Group has concluded that the recoverable amount for the Location & Commerce CGU is most sensitive to the valuation assumptions for discount rate and long-term growth rate. A reasonably possible increase in the discount rate or decrease in long-term growth rate would give rise to an additional material impairment loss.

The key assumptions applied in the impairment testing for each CGU in the annual goodwill impairment testing for each year indicated are presented in the table below:

Cash generating units	2011	2010	2009
Devices & Services
Terminal growth rate	—	2.0	2.0
Post-tax discount rate	—	8.7	—
Pre-tax discount rate	—	11.1	11.5
Nokia Siemens Networks
Terminal growth rate	1.0	—	1.0
Post-tax discount rate	10.4	—	—
Pre-tax discount rate	13.8	—	13.2
Location & Commerce
Terminal growth rate	3.1	4.0	5.0
Post-tax discount rate	9.7	9.6	—
Pre-tax discount rate	13.1	12.8	12.6
Smart Devices
Terminal growth rate	1.9
Post-tax discount rate	9.0
Pre-tax discount rate	12.2
Mobile Phones
Terminal growth rate	1.5
Post-tax discount rate	9.0
Pre-tax discount rate	13.1

Both value in use of Smart Devices CGU and Mobile Phones CGU and fair value less costs to sell for Location & Commerce CGU and Nokia Siemens Networks CGU are determined on a pre-tax value basis using pre-tax valuation assumptions including pre-tax cash fl ows and pre-tax discount rate. As market-based rates of return for the Group's CGUs are available only on a post-tax basis, the pre-tax discount rates are derived by adjusting the post-tax discount rates to refl ect the specifi c amount and timing of future tax cash fl ows. The discount rates applied in the impairment testing for each CGU have been determined independently of capital structure refl ecting current assessments of the time value of money and relevant market risk premiums. Risk premiums included in the determination of the discount rate refl ect risks and uncertainties for which the future cash fl ow estimates have not been adjusted.

In , the Group recorded an impairment loss of EUR million to reduce the carrying amount of the Nokia Siemens Networks CGU to its recoverable amount. The impairment loss was allocated in its entirety to the carrying amount of goodwill arising from the formation of Nokia Siemens Networks and from subsequent acquisitions completed by Nokia Siemens Networks. As a result of the impairment loss, the amount of goodwill allocated to the Nokia Siemens Networks CGU in the year ended December , , was reduced to zero. Goodwill allocated to the Nokia Siemens Networks CGU has subsequently increased during , primarily as a result of the acquisition of Motorola Solutions' Networks business.

The goodwill impairment testing conducted for each of the Group's CGUs for the year ended December , did not result in any impairment charges. See also Note to our consolidated fi nancial statements for further information regarding "Valuation of long-lived and intangible assets and goodwill."

FAIR VALUE OF DERIVATIVE S AND OTHER FINANCIAL INSTRUMENTS

The fair value of fi nancial instruments that are not traded in an active market (for example, unlisted equities, currency options and embedded derivatives) are determined using valuation techniques. We use judgment to select an appropriate valuation methodology and underlying assumptions based principally on existing market conditions. If quoted market prices are not available for unlisted shares, fair value is estimated by using various factors, including, but not limited to: () the current market value of similar instruments, () prices established from a recent arm's length fi nancing transaction of the target companies, () analysis of market prospects and operating performance of the target companies taking into consideration of public market comparable companies in similar industry sectors. Changes in these assumptions may cause the Group to recognize impairments or losses in the future periods. During the Group received distributions of EUR million (EUR million in ) included in other fi nancial income from a private fund held as non-current available-forsale. Due to a reduction in estimated future cash fl ows the Group also recognized an impairment loss of EUR million (EUR million in ) for the fund included in other fi nancial expenses.

INCOME TA XES

The Group is subject to income taxes both in Finland and in numerous other jurisdictions. Signifi cant judgment is required in determining income tax expense, tax provisions, deferred tax assets and liabilities recognized in the consolidated fi nancial statements. We recognize deferred tax assets to the extent that it is probable that suffi cient taxable income will be available in the future against which the temporary diff erences and unused tax losses can be utilized. We have considered future taxable income and tax planning strategies in making this assessment. Deferred tax assets are assessed for realizability each reporting period, and when circumstances indicate that it is no longer probable that deferred tax assets will be utilized, they are adjusted as necessary.

At December , , the Group had loss carry forwards, temporary diff erences and tax credits of EUR million (EUR million in ) for which no deferred tax assets were recognized in the consolidated fi nancial statements due to uncertainty of utilization of these items.

We recognize tax provisions based on estimates and assumptions when, despite our belief that tax return positions are supportable, it is more likely than not that certain positions will be challenged and may not be fully sustained upon review by tax authorities.

If the fi nal outcome of these matters diff ers from the amounts initially recorded, diff erences may positively or negatively impact the current taxes and deferred taxes in the period in which such determination is made.

PENSIONS

The determination of our pension benefi t obligation and expense for defi ned benefi t pension plans is dependent on our selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions are described in Note to our consolidated fi nancial statements and include, among others, the discount rate, expected long-term rate of return on plan assets and annual rate of increase in future compensation levels. A portion of our plan assets is invested in equity securities. The equity markets have experienced volatility, which has aff ected the value of our pension plan assets. This volatility may make it diffi cult to estimate the long-term rate of return on plan assets. Actual results that diff er from our assumptions are accumulated and amortized over future

periods and therefore generally aff ect our recognized expense and recorded obligation in such future periods. Our assumptions are based on actual historical experience and external data regarding compensation and discount rate trends. While we believe that our assumptions are appropriate, signifi cant diff erences in our actual experience or signifi cant changes in our assumptions may materially aff ect our pension obligation and our future expense. The fi nancial impact of the pension assumptions aff ects mainly the Devices & Services and Nokia Siemens Networks businesses.

SHARE-BA SED COMPENSATION

We have various types of equity-settled share-based compensation schemes for employees mainly in Devices & Services and Location & Commerce. Employee services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments as at the date of grant, excluding the impact of any non-market vesting conditions. Fair value of stock options is estimated by using the Black-Scholes model on the date of grant based on certain assumptions. Those assumptions are described in Note to our consolidated fi nancial statements and include, among others, the dividend yield, expected volatility and expected life of stock options. The expected life of stock options is estimated by observing general option holder behavior and actual historical terms of Nokia stock option programs, whereas the assumption of the expected volatility has been set by reference to the implied volatility of stock options available on Nokia shares in the open market and in light of historical patterns of volatility. These variables make estimation of fair value of stock options diffi cult.

Non-market vesting conditions attached to the performance shares are included in assumptions about the number of shares that the employee will ultimately receive relating to projections of sales and earnings per share. On a regular basis, we review the assumptions made and revise the estimates of the number of performance shares that are expected to be settled, where necessary. At the date of grant, the number of performance shares granted that are expected to be settled is assumed to be two times the amount at threshold. Any subsequent revisions to the estimates of the number of performance shares expected to be settled may increase or decrease total compensation expense. Such increase or

decrease adjusts the prior period compensation expense in the period of the review on a cumulative basis for unvested performance shares for which compensation expense has already been recognized in the profi t and loss account, and in subsequent periods for unvested performance shares for which the expense has not yet been recognized in the profi t and loss account. Signifi cant diff erences in employee option activity, equity market performance, and our projected and actual net sales and earnings per share performance may materially aff ect future expense. In addition, the value, if any, an employee ultimately receives from share-based payment awards may not correspond to the expense amounts recorded by the Group.

CORPORATE GOVERNANCE

This Corporate Governance statement is prepared in accordance with Chapter , Section of the Finnish Securities Markets Act and the recommendation of the Finnish Corporate Governance Code and is issued separately from the review by the Board of Directors. The review by the Board of Directors is available on page of the 'Nokia in ' publication.

REGULATORY FRAMEWORK

Nokia's corporate governance practices comply with Finnish laws and regulations as well as with Nokia's Articles of Association. Nokia also complies with the Finnish Corporate Governance Code with the following two exceptions:

Nokia is not in full compliance with the recommendation of the Finnish Corporate Governance Code as Nokia's Restricted Share Plans do not include any performance criteria but are time-based only, with a restriction period of at least three years from the grant. However, restricted shares are granted only on a selective basis to promote long-term retention of functional mastery and other employees and executives deemed critical for the future success of Nokia, as well as to support attraction of promising external talent in a competitive environment in which Nokia's peers, especially in the United States, commonly use such shares. The Restricted Share Plans also promote employee share ownership, and are used in conjunction with the Performance Share and Stock Option Plans.

Further, in , Nokia did not fully comply with the recommendation of the Finnish Corporate Governance Code as Helge Lund, who was proposed for the fi rst time to the Board, was not able to attend the Annual General Meeting held on May , . However, there were well-founded reasons for his absence and all of the prospective directors proposed for the fi rst time to the Board, including Mr. Lund, were introduced to the shareholders via video messages. The Finnish Corporate Governance Code is accessible at www.cgfi nland.fi .

In addition, as a result of Nokia's listing of its shares on the New York Stock Exchange and its registration under the US Securities Exchange Act of , Nokia must comply with the US federal securities laws and regulations, including the Sarbanes-Oxley Act of as well as the requirements of the New York Stock Exchange, in particular the corporate governance rules under section A of the New York Stock Exchange Listed Company Manual, which is accessible at http://nysemanual.nyse.com/lcm/. Nokia complies with the above rules in each case to the extent that those provisions are applicable to foreign private issuers. Nokia also complies with any other mandatory corporate governance rules applicable due to listing of Nokia share in Helsinki and New York stock exchanges. In , Nokia decided to delist its shares from the Frankfurt Stock Exchange, and the fi nal day of trading was March , .

Nokia's aim is to comply in all material respects with applicable rules and regulations. To the extent any non-domestic rules and regulations would require a violation of the laws of Finland, Nokia is obliged to comply with the Finnish requirements. Nevertheless, Nokia aims to minimize the necessity for, or consequences of, confl icts between the laws of Finland and applicable non-domestic requirements.

MAIN CORPOR ATE GOVERNANCE BODIES OF NOKIA

Pursuant to the provisions of 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 of Directors (the "Board"), the President and the Nokia Leadership Team chaired by the Chief Executive Offi cer.

General Meeting of shareholders

The shareholders may exercise their decision-making power and their right to speak and ask questions at the General Meeting of shareholders. Each Nokia share entitles the shareholder to one vote at General Meetings of Nokia. Pursuant to the Finnish Companies Act, an Annual General Meeting must be convened each year by June . The Annual General Meeting decides, among other things, on the election and remuneration of the Board of Directors, on the election and fees of external auditor as well as on distribution of profi t.

In addition to the Annual General Meeting, an Extraordinary General Meeting shall be convened when the Board considers such meeting to be necessary, or, when the provisions of the Finnish Companies Act mandate that such a meeting must be held.

The Board of Directors

The operations of Nokia are managed under the direction of the Board of Directors, within the framework set by the Finnish Companies Act and Nokia's Articles of Association as well as any complementary rules of procedure as defi ned by

the Board, such as the Corporate Governance Guidelines and related Board Committee charters.

THE RESPONSIBILITIES OF THE BOARD OF DIRECTORS

The Board represents and is accountable to the shareholders of Nokia. The Board's responsibilities are active, not passive, and include the responsibility regularly to evaluate the strategic direction of Nokia, management policies and the eff ectiveness with which management implements them. The Board's responsibilities also include overseeing the structure and composition of Nokia's top management and monitoring legal compliance and the management of risks related to Nokia's operations. In doing so, the Board may set annual ranges and/ or individual limits for capital expenditures, investments and divestitures and fi nancial commitments not to be exceeded without Board approval.

In risk management policies and processes the Board's role includes risk analysis and assessment in connection with each fi nancial and business review, update and decision-making proposal. Risk oversight is an integral part of all Board deliberations. For a more detailed description of Nokia's risk management policies and processes, please see the chapter "Main features of the internal control and risk management systems in relation to the fi nancial reporting process" below.

The Board has the responsibility for appointing and discharging the Chief Executive Offi cer, the Chief Financial Offi cer and the other members of the Nokia Leadership Team. The Chief Executive Offi cer, who is separate from Chairman, also acts as President, and his rights and responsibilities include those allotted to the President under Finnish law. Subject to the requirements of Finnish law, the independent directors of the Board confi rm the compensation and the employment conditions of the Chief Executive Offi cer upon the recommendation of the Personnel Committee. The compensation and employment conditions of the other members of the Nokia Leadership Team are approved by the Personnel Committee upon the recommendation of the Chief Executive Offi cer.

It is the responsibility of the members of the Board to act in good faith and with due care so as to exercise their business judgment on an informed basis in what they reasonably and honestly believe to be in the best interests of the company and its shareholders. In discharging that obligation, the directors must inform themselves of all relevant information reasonably available to them. The Board and each Board Committee also have the power to hire independent legal, fi nancial or other advisors as they deem necessary.

The Board has three committees: Audit Committee, Corporate Governance and Nomination Committee and Personnel Committee. These assist the Board in its duties pursuant to their respective committee charters. The Board may also establish ad hoc committees for detailed reviews or considerations of particular topics to be proposed for the approval of the Board.

The Board conducts annual performance self-evaluations, which also include evaluations of the Board Committees' work, the results of which are discussed by the Board. In line with past years' practice, in , the self-evaluation process consisted of a questionnaire, a one-to-one discussion between the Chairman and each director and a discussion by the entire Board of the outcome of the evaluation, possible measures to be taken, as well as measures taken based on the Board's self-evaluation of the previous year. In addition, performance of the Board Chairman was evaluated in a process led by the Vice Chairman.

ELECTION, COMPOSITION AND MEETINGS OF THE BOARD OF DIRECTORS

Pursuant to the Articles of Association, Nokia Corporation has a Board of Directors composed of a minimum of seven and a maximum of members. The members of the Board are elected for a one-year term at each Annual General Meeting, i.e., as from the close of that Annual General Meeting until the close of the following Annual General Meeting, which convenes each year by June . The Annual General Meeting held on May , elected the following members to the Board of Directors: Stephen Elop, Bengt Holmström, Henning Kagermann, Per Karlsson, Jouko Karvinen, Helge Lund, Isabel Marey-Semper, Jorma Ollila, Dame Marjorie Scardino, Risto Siilasmaa and Kari Stadigh.

Nokia Board's leadership structure consists of a Chairman and Vice Chairman, elected annually by the Board and confi rmed by the independent directors of the Board from among the Board members upon the recommendation of the Corporate Governance and Nomination Committee. On May , , the independent directors of the Board elected Jorma Ollila to continue as Chairman and Dame Marjorie Scardino to continue as Vice Chairman of the Board. The Chairman has certain specifi c duties as defi ned by Finnish standards and the Nokia Corporate Governance Guidelines. The Vice Chairman assumes the duties of the Chairman in case the Chairman is prevented from performing his duties. The Board has determined that Nokia Board Chairman, Jorma Ollila, and the Vice Chairman, Dame Marjorie Scardino, are independent as defi ned by Finnish standards and relevant stock exchange rules.

Nokia does not have a policy concerning the combination or separation of the roles of Chairman and Chief Executive Offi cer, but the Board leadership structure is dependent on the company needs, shareholder value and other relevant factors applicable from time to time, and respecting the highest corporate governance standards. In , the roles were separate and Jorma Ollila was the Chairman of the Board and the Chief Executive Offi cer was Stephen Elop.

The current members of the Board are all non-executive, except the President and CEO, who is an executive member of the Board. The Board has determined that all ten non-executive Board members are independent as defi ned by Finnish standards. Also, the Board has determined that nine of the Board's ten non-executive members are independent directors as defi ned by the rules of the New York Stock Exchange. Bengt Holmström was determined not to be independent under the rules of the New York Stock Exchange due to a family relationship with an executive offi cer of a Nokia supplier whose consolidated gross revenue from Nokia accounts for an amount that exceeds the limit provided in the New York Stock Exchange corporate governance standards, but that is less than %.

The Board held meetings during , the majority of which were regularly scheduled meetings held in person, complemented by meetings through conference call and other means. In addition, in the non-executive directors held a meeting without management in connection with each regularly scheduled Board meeting. Also, the independent directors held one meeting separately in .

Directors' attendance at the Board meetings, including Committee meetings, but excluding meetings among the non-executive directors or independent directors only, was as follows in :

In addition, many of the directors attended as non-voting observers meetings of a committee in which they were not a member.

According to the Nokia Board practices, the non-executive directors meet without management in connection with each regularly scheduled meeting. Such sessions are chaired by the non-executive Chairman of the Board. If the non-executive Chairman of the Board is unable to chair any of the meetings of non-executive directors, the non-executive Vice Chairman of the Board chairs the meeting.

In addition, the independent directors meet separately at least once annually. All the directors who served on the Board for the term until the close of the Annual General Meeting , except for Per Karlsson, attended Nokia's Annual General Meeting held on May , . The Finnish Corporate Governance Code recommends attendance by the Board Chairman and a suffi cient number of directors in the general meeting of shareholders to allow the shareholders to exercise their right to present questions to the Board and management. Also all of the persons proposed for the fi rst time to the Board, except for Helge Lund, attended the Annual General Meeting held on May , , which elected them. The Finnish Corporate Governance Code recommends that a person proposed for the fi rst time as director shall participate in the general meeting that decides on his or her election in order to

	Board meetings	Audit Committee meetings	Personnel Committee meetings	Corporate Governance & Nomination Committee meetings
Stephen Elop (as of May 3, 2011)	100%	N/A	N/A	N/A
Lalita Gupte (until May 3, 2011)	100%	100%	N/A	N/A
Bengt Holmström	95%	N/A	N/A	N/A
Henning Kagermann	95%	N/A	100%	100%
Per Karlsson	10% 1	N/A	20% 1	0% (until May 3, 2011) 1
Jouko Karvinen (as of May 3, 2011)	100%	100%	N/A	N/A
Helge Lund (as of May 3, 2011)	100%	N/A	67%	N/A
Isabel Marey-Semper	90%	100%	N/A	N/A
Jorma Ollila	100%	N/A	N/A	N/A
Marjorie Scardino	85%	N/A	80%	100%
Risto Siilasmaa	100%	100%	N/A	100%
Kari Stadigh (as of May 3, 2011)	100%	N/A	100%	N/A
Keijo Suila (until May 3, 2011)	84%	N/A	N/A	N/A

Per Karlsson was absent from the Board and Committee meetings in

due to illness requiring medication and hospitalization. After recovering he was able to rejoin the Board and Committee meetings as from November .

be introduced to the shareholders. All of the persons proposed for the fi rst time to the Board were introduced to the shareholders via video messages.

The independent directors of the Board confi rm the election of the members and Chairmen for the Board's committees from among the Board's independent directors upon the recommendation of the Corporate Governance and Nomination Committee and based on each committee's member qualifi cation standards.

The Corporate Governance Guidelines concerning the directors' responsibilities, the composition and selection of the Board, its committees and certain other matters relating to corporate governance are available on Nokia's website, www.nokia.com/global/about-nokia. Also, the Committee Charters of the Audit Committee, Corporate Governance and Nomination Committee and Personnel Committee are available on Nokia's website, www.nokia.com/global/about-nokia. Nokia also has a Code of Conduct which is equally applicable to all of Nokia's employees, directors and management, and a Code of Ethics for the Principal Executive Offi cers and the Senior Financial Offi cers. Both the Code of Conduct and Code of Ethics are available on Nokia's website, www.nokia.com/ global/about-nokia.

COMMITTEES OF THE BOARD OF DIRECTORS

The Audit Committee consists of a minimum of three members of the Board who meet all applicable independence, fi nancial literacy and other requirements of Finnish law and the rules of the stock exchanges where Nokia shares are listed, i.e. NASDAQ OMX Helsinki and the New York Stock Exchange. Since May , , the Audit Committee consists of the following three members of the Board: Risto Siilasmaa (Chairman), Jouko Karvinen and Isabel Marey-Semper.

The Audit Committee is established by the Board primarily for the purpose of overseeing the accounting and fi nancial reporting processes of the company and audits of the fi nancial statements of the company. The Committee is responsible for assisting the Board's oversight of () the quality and integrity of the company's fi nancial statements and related disclosure, () the statutory audit of the company's fi nancial statements, () the external auditor's qualifi cations and independence, () the performance of the external auditor subject to the requirements of Finnish law, () the performance of the company's internal controls and risk management and assurance function, () the performance of the internal audit function, and () the company's compliance with legal and regulatory requirements, including also the performance of its ethics and compliance program. The Committee also maintains procedures for the receipt, retention and treatment of complaints received by the company regarding accounting, internal controls, or auditing matters and for the confi dential, anonymous submission by employees of the company of concerns regarding accounting or auditing matters. Nokia's disclosure controls and procedures, which are reviewed by the Audit Committee and approved by the Chief Executive Offi cer and the Chief Financial Offi cer, as well as Nokia's internal controls over fi nancial reporting, are designed to provide reasonable assurance regarding the quality and integrity of the company's fi nancial statements and related disclosures. The Disclosure Committee chaired by the Chief Financial Offi cer is responsible for the preparation of the quarterly and annual results announcements, and the process includes involvement by business managers, business controllers and other functions, like internal audit, as well as a fi nal review and confi rmation by the Audit Committee and the Board. For further information on internal control over fi nancial reporting, see chapter "Main features of the internal control and risk management systems in relation to the fi nancial reporting process" below.

Under Finnish law, Nokia's external auditor is elected by Nokia's shareholders by a simple majority vote at the Annual General Meeting for one fi scal year at a time. The Audit Committee makes a proposal to the shareholders in respect of the appointment of the external auditor based upon its evaluation of the qualifi cations and independence of the auditor to be proposed for election or re-election. Under Finnish law, the fees of the external auditor are also approved by Nokia's shareholders by a simple majority vote at the Annual General Meeting. The Committee makes a proposal to the shareholders in respect of the fees of the external auditor, and approves the external auditor's annual audit fees under the guidance given by the Annual General Meeting. For information about the fees paid to Nokia's external auditor, PricewaterhouseCoopers, during see "Auditor fees and services" on page .

In discharging its oversight role, the Audit Committee has full access to all company books, records, facilities and personnel. The Committee may retain counsel, auditors or other advisors in its sole discretion, and must receive appropriate funding, as determined by the Committee, from the company for the payment of compensation to such outside advisors.

The Audit Committee meets at least four times a year based upon a schedule established at the fi rst meeting following the appointment of the Committee. The Committee meets separately with the representatives of Nokia's management, heads of the internal audit and ethics and compliance functions, and the external auditor in connection with each regularly scheduled meeting. The head of the internal audit function has at all times a direct access to the Audit Committee, without involvement of management.

The Audit Committee had eight meetings in . The attendance at all meetings was %. In addition, any directors who wish to may attend Audit Committee meetings as nonvoting observers.

The Personnel Committee consists of a minimum of three members of the Board who meet all applicable independence requirements of Finnish law and the rules of the stock exchanges where Nokia shares are listed, i.e. NASDAQ OMX Helsinki and the New York Stock Exchange. Since May , , the Personnel Committee consists of the following fi ve members of the Board: Henning Kagermann (Chairman), Per Karlsson, Helge Lund, Dame Marjorie Scardino and Kari Stadigh.

The primary purpose of the Personnel Committee is to oversee the personnel policies and practices of the company. It assists the Board in discharging its responsibilities relating to all compensation, including equity compensation, of the company's executives and their terms of employment. The Committee has overall responsibility for evaluating, resolving and making recommendations to the Board regarding () compensation of the company's top executives and their employment conditions, () all equity-based plans, () incentive compensation plans, policies and programs of the company aff ecting executives and () other signifi cant incentive plans. The Committee is responsible for overseeing compensation philosophy and principles and ensuring the above compensation programs are performance-based, designed with an intention to contribute to the long-term value sustainability of the company, properly motivate management, support overall corporate strategies and are aligned with shareholders' interests. The Committee is responsible for the review of senior management development and succession plans.

The Personnel Committee had fi ve meetings in . The average attendance at the meetings was %. In addition, any directors who wish to may attend Personnel Committee meetings as non-voting observers.

For further information on the activities of the Personnel Committee, see "Executive compensation philosophy, programs and decision-making process" on page .

The Corporate Governance and Nomination Committee

consists of three to fi ve members of the Board who meet all applicable independence requirements of Finnish law and the rules of the stock exchanges where Nokia shares are listed, i.e. NASDAQ OMX Helsinki and the New York Stock Exchange. Since May , , the Corporate Governance and Nomination Committee consists of the following three members of the Board: Dame Marjorie Scardino (Chairman), Henning Kagermann and Risto Siilasmaa.

The Corporate Governance and Nomination Committee's purpose is () to prepare the proposals for the general meetings in respect of the composition of the Board and the director remuneration to be approved by the shareholders and () to monitor issues and practices related to corporate governance and to propose necessary actions in respect thereof.

The Committee fulfi lls its responsibilities by (i) actively identifying individuals qualifi ed to become members of the Board and considering and evaluating the appropriate level and structure of director remuneration, (ii) proposing to the shareholders the director nominees for election at the Annual General Meetings as well as the director remuneration, (iii) monitoring signifi cant developments in the law and practice of corporate governance and of the duties and responsibilities of directors of public companies, (iv) assisting the Board and each Committee of the Board in its annual performance self-evaluations, including establishing criteria to be used in connection with such evaluations, (v) developing and recommending to the Board and administering Nokia's Corporate Governance Guidelines, and (vi) reviewing the company's disclosure in the Corporate Governance Statement.

The Committee has the power to retain search fi rms or advisors to identify candidates. The Committee may also retain counsel or other advisors, as it deems appropriate. The Committee has the sole authority to retain or terminate such search fi rms or advisors and to review and approve such search fi rm or advisor's fees and other retention terms. It is the Committee's practice to retain a search fi rm to identify new director candidates.

The Corporate Governance and Nomination Committee had fi ve meetings in . The average attendance at the meetings was %. In addition, any directors who wish to may attend Corporate Governance and Nomination Committee meetings as non-voting observers.

The charters of each of the committees are available on Nokia's website, www.nokia.com/global/about-nokia.

Nokia Leadership Team and CEO

Under its Articles of Association, in addition to the Board of Directors, Nokia has a Nokia Leadership Team that is responsible for the operative management of Nokia. The Chairman and members of the Nokia Leadership Team are appointed by the Board of Directors. Nokia Leadership Team is chaired by the Chief Executive Offi cer. Only the Chairman of the Nokia Leadership Team, the Chief Executive Offi cer, can be a member of both the Board of Directors and the Nokia Leadership Team. The Chief Executive Offi cer also acts as President, and his rights and responsibilities include those allotted to the President under Finnish law.

MAIN FE ATURES OF THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS IN REL ATION TO THE FINANCIAL REPORTING PROCESS

Nokia has a Risk Policy which outlines Nokia's risk management policies and processes and is approved by the Audit Committee. The Board's role in risk oversight includes risk analysis and assessment in connection with each fi nancial and business review, update and decision-making proposal and is an integral part of all Board deliberations. The Audit Committee is responsible for, among other matters, the risk management relating to the fi nancial reporting process and assisting the Board's oversight of the risk management function. Nokia applies a common and systematic approach to the risk management across all business operations and processes based on a strategy approved by the Board. Accordingly, the risk management at Nokia is not a separate process but a normal daily business and management practice.

The management is responsible for establishing and maintaining adequate internal control over fi nancial reporting for Nokia. Nokia's internal control over fi nancial reporting is designed to provide reasonable assurance to the management and the Board of Directors regarding the reliability of fi nancial reporting and the preparation and fair presentation of published fi nancial statements.

The management conducts a yearly assessment of Nokia's internal controls over fi nancial reporting in accordance with the Committee of Sponsoring Organizations (COSO) framework and the Control Objectives for Information and related Technology (CoBiT) of internal controls. For the year , the assessment was performed based on a top down risk assessment of Nokia's fi nancial statements covering signifi cant accounts, processes and locations, corporate level controls, control activities and information systems' general controls.

As part of its assessment the management documented:

• » The corporate-level controls, which create the "tone from the top" containing Nokia values and Code of Conduct and provide discipline and structure to the decision making and ways of working. Selected items from Nokia's operational mode and governance principles are separately documented as corporate level controls.
• » The control activities, which consist of policies and procedures to ensure the management's directives are carried out and the related documentation is stored according to Nokia's document retention practices and local statutory requirements.
• » The information systems' general controls to ensure that suffi cient information technology general controls, including change management, system development, computer operations as well as access and authorizations, are in place.
• » The signifi cant processes, including six fi nancial cycles and underlying IT cycle identifi ed by Nokia to address control activities implementing a top down risk based approach. These cycles include revenue cycle, delivery cycle, indirect

purchase cycle, treasury cycle, human resources cycle, accounting and reporting cycle and IT cycle. Financial cycles have been designed to (i) give a complete end-to-end view to all fi nancial processes (ii) identify key control points (iii) identify involved organizations, (iv) ensure coverage for important accounts and fi nancial statement assertions and (v) enable internal control management within Nokia.

Further, the management also:

• » assessed the design of controls in place to mitigate the fi nancial reporting risks;
• » tested operating eff ectiveness of all key controls;
• » evaluated all noted defi ciencies in internal controls over fi nancial reporting as of year-end; and
• » performed a quality review on assessment documentation and provided feedback for improvement.

Based on this evaluation, the management has assessed the eff ectiveness of Nokia's internal control over fi nancial reporting, as at December , , and concluded that such internal control over fi nancial reporting is eff ective.

Nokia also has an internal audit function that acts as an independent appraisal function by examining and evaluating the adequacy and eff ectiveness of Nokia's system of internal control.

Internal audit resides within the Chief Financial Offi cer's organization and reports to the Audit Committee of the Board of Directors. The head of internal audit function has at all times direct access to the Audit Committee, without involvement of the management.

For more information on Nokia's risk management, please see Note of Nokia's consolidated fi nancial statements.

BOARD OF DIRECTORS

The current members of the Board of Directors were elected at the Annual General Meeting on May , , based on the proposal of the Board's Corporate Governance and Nomination Committee. On the same date, the Chairman and Vice Chairman, as well as the Chairmen and members of the committees of the Board, were elected among the Board members and among the independent directors of the Board, respectively.

The members of the Board of Directors are elected on an annual basis for a one-year term ending at the close of the next Annual General Meeting. The election is made by a simple majority of the shareholders' votes represented at the Annual General Meeting.

THE CURRENT MEMBERS OF THE BOARD OF DIREC TORS AND ITS COMMIT TEE S ARE SET FORTH BELOW.

Chairman Jorma Ollila, b. 1950

Chairman of the Board of Directors of Nokia Corporation. Chairman of the Board of Directors of Royal Dutch Shell Plc. Board member since . Chairman since .

Master of Political Science (University of Helsinki). Master of Science (Econ.) (London School of Economics). Master of Science (Eng.) (Helsinki University of Technology).

Chairman and CEO, Chairman of the Group Executive Board of Nokia Corporation –. President and CEO, Chairman of the Group Executive Board of Nokia Corporation –. President of Nokia Mobile Phones –. Senior Vice President, Finance of Nokia –. Holder of various managerial positions at Citibank within corporate banking –.

Vice Chairman of the Board of Directors of Otava Ltd. Member of the Board of Directors of the University of Helsinki. Chairman of the Boards of Directors and the Supervisory Boards of The Research Institute of the Finnish Economy ETLA and Finnish Business and Policy Forum EVA. Member of the Executive Committee of the World Business Council for Sustainable Development (WBCSD). Member of the Board of Directors of Ford Motor Company –. Vice Chairman of UPM-Kymmene Corporation –.

Vice Chairman Dame Marjorie Scardino, b. 1947

Chief Executive and member of the Board of Directors of Pearson plc. Board member since . Vice Chairman since . Chairman of the Corporate Governance and Nomination Committee. Member of the Personnel Committee.

Bachelor of Arts (Baylor University). Juris Doctor (University of San Francisco).

Chief Executive of The Economist Group –. President of the North American Operations of The Economist Group –. Lawyer – and publisher of The Georgia Gazette newspaper –.

Stephen Elop, b. 1963

President and CEO of Nokia Corporation. Chairman of the Nokia Leadership Team. Board member since May , .

Bachelor of Computer Engineering and Management (McMaster University, Hamilton, Canada). Doctor of Laws, honorary (McMaster University, Hamilton, Canada).

President of Microsoft Business Division and member of senior membership team of Microsoft Corporation –. COO, Juniper Networks, Inc. –. President, Worldwide Field Operations, Adobe Systems Inc. –. President and CEO (last position), Macromedia Inc. –.

Bengt Holmström, b. 1949

Paul A. Samuelson Professor of Economics at MIT, joint appointment at the MIT Sloan School of Management. Board member since .

Bachelor of Science (Helsinki University). Master of Science (Stanford University). Doctor of Philosophy (Stanford University).

Edwin J. Beinecke Professor of Management Studies at Yale University –.

Member of the American Academy of Arts and Sciences and Foreign Member of The Royal Swedish Academy of Sciences. Member of the Boards of Directors of The Research Institute of the Finnish Economy ETLA and Finnish Business and Policy Forum EVA. Member of Aalto University Foundation Board.

Henning Kagermann, b. 1947

Board member since . Chairman of the Personnel Committee. Member of the Corporate Governance and Nomination Committee.

Ph.D. (Theoretical Physics) (Technical University of Brunswick). Co-CEO and Chairman of the Executive Board of SAP AG –. CEO of SAP –. Co-chairman of the Executive Board of SAP AG –. A number of leadership positions in SAP AG since . Member of SAP Executive Board –. Taught physics and computer science at the Technical University of Brunswick and the University of Mannheim –, became professor in .

Member of the Supervisory Boards of Bayerische Motoren Werke Aktiengesellschaft (BMW AG), Deutsche Bank AG, Deutsche Post AG and Münchener Rückversicherungs-Gesellschaft AG (Munich Re). Member of the Board of Directors of Wipro Ltd. President of Deutsche Akademie der Technikwissenschaften. Member of the Honorary Senate of the Foundation Lindau Nobelprizewinners.

Per Karlsson, b. 1955

Independent Corporate Advisor. Board member since . Member of the Personnel Committee.

Degree in Economics and Business Administration (Stockholm School of Economics).

Executive Director, with mergers and acquisitions advisory responsibilities, at Enskilda M&A, Enskilda Securities (London) –. Corporate strategy consultant at the Boston Consulting Group (London) –.

Member of the Board of Directors of IKANO Group S.A.

Jouko Karvinen, b. 1957

CEO of Stora Enso Oyj. Board member since May , . Member of the Audit Committee.

Master of Science (Eng.) (Tampere University of Technology). CEO of Philips Medical Systems Division –. Member of Board of Management of Royal Philips Electronics and Group Management Committee –. Holder of executive and managerial positions at ABB Group Limited from , including Executive Vice President, Head of Automation Technology Products Division and Member of Group Executive Committee –, Senior Vice President, Business Area Automation Power Products –, Vice President, Business Unit Drives Products & Systems –, Vice President, Power Electronics Division of ABB Drives Oy, Global AC Drives Feeder Factory and R&D Centre –.

Member of the Board of Directors of Aktiebolaget SKF. Member of the Board of Directors of the Finnish Forest Industries Federation and the Confederation of European Paper Industries (CEPI).

Helge Lund, b. 1962

President and CEO of Statoil ASA. Board member since May , . Member of the Personnel Committee.

MA in Business Economics (School of Economics and Business Administration, Bergen). Master of Business Administration (MBA) (INSEAD).

CEO of StatoilHydro –. CEO of Statoil –. CEO of Aker Kvaerner ASA until , central managerial positions in the Aker RGI system from . Deputy Managing Director of Nycomed Pharma AS. Political adviser to the Conservative Party of the parliamentary group of Norway. Consultant of McKinsey & Co.

Isabel Marey-Semper, b. 1967

Director of Advanced Research of L'Oréal Group. Board member since . Member of the Audit Committee.

Ph.D. (Neuro-Pharmacology) (Université Paris Pierre et Marie Curie–Collège de France). MBA (Collège des Ingénieurs, Paris).

Director of Shared Services of L'Oréal Group –. Chief Financial Offi cer, Executive Vice President in charge of strategy of PSA Peugeot Citroën –. COO, Intellectual Property and Licensing Business Unit of Thomson –. Vice President Corporate Planning at Saint-Gobain –. Director of Corporate Planning, High Performance Materials of Saint-Gobain –. Principal of A.T. Kearney (Telesis, prior to acquisition by A.T. Kearney) –.

Member of the Board of Directors of Faurecia S.A. –.

Risto Siilasmaa, b. 1966

Board member since . Chairman of the Audit Committee. Member of the Corporate Governance and Nomination Committee.

Master of Science (Eng.) (Helsinki University of Technology). President and CEO of F-Secure Corporation –. Chairman of the Boards of Directors of F-Secure

Corporation and Elisa Corporation. Chairman of the Board of Directors of Fruugo Inc. Member of the Boards of Directors of Blyk Ltd, Efecte Corporation and Mendor Ltd. Member of the Board of Directors of The Federation of Finnish Technology Industries.

Kari Stadigh, b. 1955

Group CEO and President of Sampo plc. Board member since May , . Member of the Personnel Committee.

Master of Science (Eng.) (Helsinki University of Technology). Bachelor of Business Administration (Swedish School of Economics and Business Administration, Helsinki).

Deputy CEO of Sampo plc –. President of Sampo Life Insurance Company Limited –. President of Nova Life Insurance Company Ltd –. President and COO of Jaakko Pöyry Group -.

Member of the Board of Directors of Nordea Bank AB (publ). Chairman of the Board of Directors of If P&C Insurance Holding Ltd (publ), Kaleva Mutual Insurance Company and Mandatum Life Insurance Company Limited. Member of the Board of Directors of Varma Mutual Pension Insurance Company. Chairman of the Board of Directors of The Federation of Finnish Financial Services. Vice Chairman of Confederation of Finnish Industries (EK). Member of the Board of Directors of Central Chamber of Commerce of Finland. Chairman of the Board of Directors of Alma Media Corporation -. Member of the Board of Directors of Aspo Plc. . Chairman of the Board of Directors of Aspo Plc. -.

ELEC TION OF THE BOARD MEMBERS

Proposal of the Corporate Governance and Nomination Committee for Composition of the Board of Directors in 2012

On January , , the Corporate Governance and Nomination Committee announced its proposal to the Annual General Meeting convening on May , regarding the composition of the Board of Directors for a one-year term from the Annual General Meeting until the close of the Annual General Meeting . The Committee will propose that the number of Board members be and that the following current Nokia Board members be re-elected as members of the Nokia Board of Directors for a term until the close of the Annual General Meeting : Stephen Elop, Henning Kagermann, Jouko Karvinen, Helge Lund, Isabel Marey-Semper, Dame Marjorie Scardino, Risto Siilasmaa and Kari Stadigh.

In addition, the Committee will propose that Bruce Brown, Chief Technology Offi cer, The Procter & Gamble Company, Mårten Mickos, CEO of Eucalyptus Systems, Inc., and Elizabeth Nelson, independent corporate advisor, be elected as members of the Nokia Board of Directors for the same term until the close of the Annual General Meeting .

Election of the Chairman and Vice Chairman of the Board and the Chairmen and members of the Board's Committees

The Chairman and the Vice Chairman are elected by the new Board and confi rmed by the independent directors of the Board from among the Board members upon the recommendation of the Corporate Governance and Nomination Committee. The independent directors of the new Board will also confi rm the election of the members and Chairmen for the Board's committees from among the Board's independent directors upon the recommendation of the Corporate Governance and Nomination Committee and based on each committee's member qualifi cation standards. These elections will take place at the Board's assembly meeting following the Annual General Meeting.

On January , , the Corporate Governance and Nomination Committee announced that it will propose in the assembly meeting of the new Board of Directors after the Annual General Meeting on May , that Risto Siilasmaa be elected as Chairman of the Board and Dame Marjorie Scardino as Vice Chairman of the Board.

NOKIA LEADERSHIP TEAM

According to Nokia's Articles of Association, the Nokia Leadership Team is responsible for the operative management of Nokia. The Chairman and members of the Nokia Leadership Team are appointed by the Board of Directors. Only the Chairman of the Nokia Leadership Team, the Chief Executive Offi cer, can be a member of both the Board of Directors and the Nokia Leadership Team.

CHANGE S IN THE NOKIA LE ADERSHIP TE AM

During and subsequently, the following appointments to the Nokia Leadership Team were made:

• » Jerri DeVard was appointed Executive Vice President, Chief Marketing Offi cer, and member of the Nokia Leadership Team as from January , .
• » Colin Giles was appointed Executive Vice President of Sales and member of the Nokia Leadership Team as from February , .
• » Jo Harlow was appointed Executive Vice President of Smart Devices and member of the Nokia Leadership Team as from February , .
• » Louise Pentland, Chief Legal Offi cer, was appointed Executive Vice President and member of the Nokia Leadership Team as from February , .
• » Michael Halbherr was appointed Executive Vice President of Location & Commerce and member of the Nokia Leadership Team as from July , .
• » Henry Tirri was appointed Executive Vice President, Chief Technology Offi cer, and member of the Nokia Leadership Team as from September , .
• » Marko Ahtisaari was appointed Executive Vice President of Design and member of the Nokia Leadership Team as from February , .

Further, during , the following Nokia Leadership Team members resigned:

• » Alberto Torres, formerly Executive Vice President of MeeGo Computers, resigned from the Nokia Leadership Team effective as from February , and left Nokia on March , .
• » Richard Green, formerly Executive Vice President and Chief Technology Offi cer, resigned from the Nokia Leadership Team and left Nokia eff ective as from September , .
• » Dr. Tero Ojanperä formerly Executive Vice President of Services and Developer Experience resigned from the Nokia Leadership Team and left Nokia eff ective as from October , .

THE CURRENT MEMBERS OF THE NOKIA LEADERSHIP TEAM ARE SET FORTH BELOW.

Stephen Elop, b. 1963

President and CEO of Nokia Corporation. Member of the Board of Directors of Nokia Corporation. Nokia Leadership Team member and Chairman since . Joined Nokia .

Bachelor of Computer Engineering and Management (McMaster University, Hamilton, Canada). Doctor of Laws, honorary (McMaster University, Hamilton, Canada).

President of Microsoft Business Division and member of senior membership team of Microsoft Corporation –. COO, Juniper Networks, Inc. –. President, Worldwide Field Operations, Adobe Systems Inc. –. President and CEO (last position), Macromedia Inc. –.

Esko Aho, b. 1954

Executive Vice President, Corporate Relations and Responsibility. Nokia Leadership Team member since . Joined Nokia .

Master of Social Sciences (University of Helsinki).

President of the Finnish Innovation Fund, Sitra –. Private consultant –. Lecturer, Harvard University –. Prime Minister of Finland –. Chairman of the Centre Party –. Member of the Finnish Parliament –. Elector in the presidential elections of , and .

Member of the Board of Directors of Fortum Corporation. Member of the Board of Directors of Terveystalo. Member of the Board of Directors of Technology Academy Finland. Vice Chairman of the Board of Directors of the Federation of Finnish Technology Industries. Member of the Club de Madrid, the InterAction Council, the Science and Technology in Society Forum (STS). Member of the ICC World Council and Vice Chair of ICC Finland.

Marko Ahtisaari, b. 1969

Executive Vice President, Design. Nokia Leadership Team member since February , . With Nokia –, rejoined .

Master of Arts in Philosophy (Graduate School of Arts and Sciences, Columbia University, New York, USA). Bachelor of Arts in Economics and Philosophy (Columbia College, New York, USA).

Senior Vice President, Design, Nokia –. CEO and Co-founder, Dopplr –. Head of Brand & Design, Blyk –. Director, Design Strategy, Nokia –. Director, Insight & Innovation, Nokia –. Designer, Satama Interactive –. Faculty Fellow, Graduate School of Arts and Sciences, Columbia University –.

Member of the Board of Directors of Artek oy ab. Member of the Board of Directors of WITNESS.

Jerri DeVard, b. 1958

Executive Vice President, Chief Marketing Offi cer. Nokia Leadership Team member since January , . Joined Nokia on January , .

B.A. (Economics) (Spelman College, Atlanta, Georgia, USA). M.B.A. (Marketing) (Clark Atlanta University Graduate School of Business, Atlanta, Georgia, USA).

Principal, DeVard Marketing Group –. Senior Vice President, Marketing and Brand Management, Verizon Communications Inc. –. Senior Vice President, Marketing Communications and Brand Management, Verizon Communications Inc. –. Chief Marketing Offi cer of e-Consumer, Citigroup –. Management positions at Citigroup –. Vice President, Marketing, Color Cosmetics, Revlon Inc. –. Vice President, Sales and Marketing, Harrah's Entertainment –. Several brand management positions at the Pillsbury Co. –.

Member of the Board of Directors of Belk Inc. Member of the Board of Trustees of Spelman College. Member of the PepsiCo African-American Advisory Board.

Colin Giles, b. 1963

Executive Vice President, Sales. Nokia Leadership Team member since February , . Joined Nokia .

Bachelor's degree engineering (University of Western Australia). EMBA (London Business School).

Senior Vice President, Sales, Markets, Nokia –. President and Senior Vice President for Greater China, Japan and Korea, Nokia –. Senior Vice President, Sales, Distribution East, Nokia –. Senior Vice President, CMO, Greater China, Nokia –. Vice President Sales and Marketing, China, Nokia –. General Manager, Taiwan, Nokia –. Director, Marketing, Asia Pacifi c, Nokia –. Management positions in several telecommunications companies in Australia and the United Kingdom.

Michael Halbherr, b. 1964

Executive Vice President, Location & Commerce. Nokia Leadership Team member since July , . Joined Nokia .

PhD. (Electrical Engineering) (ETH, Zurich, Switzerland). Work at MIT Laboratory for Computer Science (Cambridge, MA, USA).

Vice President, Ovi Product Development, Nokia Services –. Vice President, Nokia Maps, Nokia Services – . CEO, gate AG, Berlin, Germany –. Managing Director, Europeatweb, Munich, Germany –. Manager, The Boston Consulting Group, in the USA and Switzerland –.

Jo Harlow, b. 1962

Executive Vice President, Smart Devices. Nokia Leadership Team member since February , . Joined Nokia .

Bachelor of science (psychology) (Duke University, Durham, North Carolina, USA).

Senior Vice President, Symbian Smartphones, Mobile Solutions, Nokia –. Senior Vice President, Smartphones Product Management, Nokia . Vice President, Live Category, Nokia –. Senior Vice President, Marketing, Mobile Phones, Nokia –. Vice President, Marketing, North America, Mobile Phones, Nokia –. Marketing, sales and management roles at Reebok – and Procter & Gamble –.

Timo Ihamuotila, b. 1966

Executive Vice President, Chief Financial Offi cer. Nokia Leadership Team member since . With Nokia –, rejoined .

Master of Science (Economics) (Helsinki School of Economics). Licentiate of Science (Finance) (Helsinki School of Economics).

Executive Vice President, Sales, Markets, Nokia –. Executive Vice President, Sales and Portfolio Management, Mobile Phones, Nokia . Senior Vice President, CDMA Business Unit, Mobile Phones, Nokia –. Vice President, Finance, Corporate Treasurer, Nokia –. Director, Corporate Finance, Nokia –. Vice President of Nordic Derivates Sales, Citibank plc. –. Manager, Dealing & Risk Management, Nokia –. Analyst, Assets and Liability Management, Kansallis Bank –.

Member of the Board of Directors of Nokia Siemens Networks B.V. Member of the Board of Directors of Central Chamber of Commerce of Finland.

Mary T. McDowell, b. 1964

Executive Vice President, Mobile Phones. Nokia Leadership Team member since . Joined Nokia .

Bachelor of Science (Computer Science) (College of Engineering at the University of Illinois).

Executive Vice President and Chief Development Offi cer, Nokia –. Executive Vice President and General Manager of Enterprise Solutions, Nokia –. Senior Vice President & General Manager, Industry-Standard Servers, Hewlett-Packard Company –. Senior Vice President & General Manager, Industry-Standard Servers, Compaq Computer Corporation –. Vice President, Marketing, Server Products Division of Compaq Computer Corporation –. Holder of executive, managerial and other positions at Compaq Computer Corporation –.

Member of the Board of Directors of Autodesk, Inc. Member of the Board of Visitors of the College of Engineering at the University of Illinois.

Louise Pentland, b. 1972

Executive Vice President, Chief Legal Offi cer. Nokia Leadership Team member since February , . Joined Nokia .

LL.B honors (law degree) (Newcastle upon Tyne). Qualifi ed and active Solicitor (England and Wales). Licensed attorney (Member of the New York Bar).

Senior Vice President and Chief Legal Offi cer, Nokia –. Acting Chief Legal Offi cer, Nokia –. Vice President and Head of Legal, Enterprise Solutions, Nokia –. Senior Legal Counsel, Nokia Networks –. Before joining Nokia, corporate in-house legal positions at Avon Cosmetics Ltd. and law fi rm positions prior to that in the United Kingdom.

Member of Association of General Counsel, CLO Roundtable–Europe, Global Leaders in Law, Corporate Counsel Forum. Vice chair of the International Bar Association.

Niklas Savander, b. 1962

Executive Vice President, Markets. Nokia Leadership Team member since . Joined Nokia .

Master of Science (Eng.) (Helsinki University of Technology). Master of Science (Economics and Business Administration) (Swedish School of Economics and Business Administration, Helsinki).

Executive Vice President, Services, Nokia –. Executive Vice President, Technology Platforms, Nokia –. Senior Vice President and General Manager of Nokia Enterprise Solutions, Mobile Devices Business Unit –. Senior Vice President, Nokia Mobile Software, Market Operations –. Vice President, Nokia Mobile Software, Strategy, Marketing & Sales –. Vice President and General Manager of Nokia Networks, Mobile Internet Applications –. Vice President, Marketing, Nokia Networks –. Vice President of Nokia Network Systems, Marketing –. Holder of executive and managerial positions at Hewlett-Packard Company –.

Member of the Board of Directors of Nokia Siemens Networks B.V. Member of the Board of Directors and secretary of Waldemar von Frenckells Stiftelse.

Henry Tirri, b. 1956

Executive Vice President, Chief Technology Offi cer. Nokia Leadership Team member since September , . Joined Nokia .

Ph.D. (computer science) (University of Helsinki). Dr. h.c. (University of Tampere).

Head of Nokia Research Center (NRC), CTO Offi ce –. Head of NRC Systems Research laboratory –. Nokia Research Fellow –.

Adjunct Professor in computer science (University of Helsinki). Adjunct Professor in computational engineering (Aalto University, Helsinki). Member of the Industry Advisory Board of IEEE Computer Society. Member of the Scientifi c Advisory Board of Institute for Infocom Research. Member of the international Advisory Committee of Tsinghua National Laboratory for Information Science and Technology.

Juha Äkräs, b. 1965

Executive Vice President, Human Resources. Nokia Leadership Team member since . Joined Nokia .

Master of Science (Eng.) (Helsinki University of Technology).

Senior Vice President, Human Resources, Nokia –. Vice President, Global Operational Human Resources, Nokia –. Senior Vice President and General Manager, Core Networks, Nokia Networks –. Vice President and General Manager, IP Networks, Nokia Networks –. Vice President, Strategy and Business Development, Nokia Networks –. Vice President, Customer Services APAC, Nokia Telecommunications –. Head of Marketing and Business Development, Customer Services, Nokia Tele communications –. Business Development Manager and Controller, Customer Services, Nokia Cellular Systems –. Project Manager, Nokia Telecom AB (Sweden) –.

Member of the Board of Directors of Confederation of Finnish Industries (EK).

Dr. Kai Öistämö, b. 1964

Executive Vice President, Chief Development Offi cer. Nokia Leadership Team member since . Joined Nokia .

Doctor of Technology (Signal Processing). Master of Science (Engineering) (Tampere University of Technology).

Executive Vice President, Devices, Nokia –. Executive Vice President and General Manager of Mobile Phones, Nokia –. Senior Vice President, Business Line Management, Mobile Phones, Nokia –. Senior Vice President, Mobile Phones Business Unit, Nokia Mobile Phones –. Vice President, TDMA/GSM Product Line, Nokia Mobile Phones –. Vice President, TDMA Product Line –. Various technical and managerial positions in Nokia Consumer Electronics and Nokia Mobile Phones –.

Member of the Board of Directors of Sanoma Corporation. Chairman of the Board of The Funding Agency for Technology and Innovation (TEKES).

COMPENSATION OF THE BOARD OF DIRECTORS AND THE NOKIA LEADERSHIP TEAM

BOARD OF DIREC TORS

The following table sets forth the annual remuneration of the members of the Board of Directors for service on the Board and its committees, as resolved at the respective Annual General Meetings in , and .

Position, EUR	2011	2010	2009
Chairman	440 000	440 000	440 000
Vice Chairman	150 000	150 000	150 000
Member	130 000	130 000	130 000
Chairman of Audit Committee	25 000	25 000	25 000
Member of Audit Committee	10 000	10 000	10 000
Chairman of Personnel Committee	25 000	25 000	25 000
Total		1 700 000 1 1 700 000 1,2 1 840 000 1,2

The changes in the aggregate amount of Board pay from year to year are due to changes in the number of Board members and changes in committee composition. The amount of fees paid to the Board and Committee members for the services rendered remained the same. The President and CEO Stephen Elop did not receive remuneration for his service as a member of the Board in .

The aggregate amount of Board pay also includes the remuneration paid to the former President and CEO in his capacity as a member of the Board of Directors, but in that capacity only.

It is Nokia's policy that director remuneration consists of an annual fee only and no fees are paid for meeting attendance. Approximately % of director compensation is paid in the form of Nokia shares that are purchased from the market. It is also Nokia's policy that the Board members retain all Nokia shares received as director compensation until the end of their board membership (except for those shares needed to off set any costs relating to the acquisition of the shares, including taxes). In addition, it is Nokia's policy that non-executive members of the Board do not participate in any of Nokia's equity programs and do not receive stock options, performance shares, restricted shares or any other equity-based or otherwise variable compensation for their duties as Board members.

The President and CEO did not receive compensation for his duties as a member of the Board of Directors in . The total compensation of the President and CEO is described below in "Summary Compensation Table " on page .

The remuneration of the Board of Directors is set annually by our Annual General Meeting by a resolution of a simple majority of the shareholders' votes represented at the meeting, upon the proposal of the Corporate Governance and Nomination Committee of the Board of Directors. The remuneration is set for the period as from the respective Annual General Meeting until the close of the next Annual General Meeting.

When preparing the proposal for the Board remuneration for the shareholders' approval in the Annual General Meeting, it is the policy of the Corporate Governance and Nomination Committee to review and compare the remuneration levels and their criteria paid in other global companies with net sales and business complexity comparable to that of Nokia. The Committee's aim is to ensure that Nokia has an effi cient Board of international professionals representing a diverse mix of skills and experience. A competitive Board remuneration contributes to the achievement of this target.

Remuneration of the Board of Directors in 2011

For the year ended December , , the aggregate amount of remuneration paid to the members of the Board of Directors for their services as members of the Board and its committees was EUR .

The following table sets forth the total annual remuneration paid to the members of the Board of Directors in , as resolved by the shareholders at the Annual General Meeting on May , . For information with respect to the Nokia shares and equity awards held by the members of the Board of Directors, please see "Share Ownership of the Board of Directors" on page .

	Year	Fees earned or paid in cash EUR 1	Stock awards EUR 2	Option EUR 2	Non-Equity awards compensation EUR 2	Change in pension value and nonqualifi ed deferred incentive plan compensation earnings EUR 2	All other compensation EUR 2	Total EUR
Jorma Ollila, Chairman 3	2011	440 000	—	—	—	—	—	440 000
Marjorie Scardino, Vice Chairman 4	2011	150 000	—	—	—	—	—	150 000
Stephen Elop 5	2011	—	—	—	—	—	—	—
Bengt Holmström	2011	130 000	—	—	—	—	—	130 000
Henning Kagermann 6	2011	155 000	—	—	—	—	—	155 000
Per Karlsson	2011	130 000						130 000
Jouko Karvinen 7	2011	140 000	—	—	—	—	—	140 000
Helge Lund	2011	130 000						130 000
Isabel Marey-Semper 8	2011	140 000	—	—	—	—	—	140 000
Risto Siilasmaa 9	2011	155 000	—	—	—	—	—	155 000
Kari Stadigh	2011	130 000	—	—	—	—	—	130 000
Total		1 700 000						1 700 000

Approximately % of each Board member's annual remuneration is paid in Nokia shares purchased from the market and the remaining approximately % is paid in cash.

• Not applicable to any non-executive member of the Board of Directors. Not applicable to the President and CEO with respect to his service as a member of the Board of Directors.
• Represents the fee of Jorma Ollila for service as Chairman of the Board.
• Represents the fee of Dame Marjorie Scardino for service as Vice Chairman of the Board.
• Stephen Elop did not receive remuneration for his service as a member of the Board. This table does not include remuneration paid to Mr. Elop for his service as the President and CEO. For the compensation paid for his service as the President and CEO, see "Summary Compensation Table " on page .

Proposal by the Corporate Governance and Nomination Committee for remuneration to the Board of Directors in 2012

On January , , the Corporate Governance and Nomination Committee of the Board announced its proposal to the Annual General Meeting convening on May , regarding the remuneration to the Board of Directors in . The Committee will propose that the annual fee payable to the Board members elected at the same meeting for a term until the close of the Annual General Meeting in , remain at the same level as during the past four years and be as follows: EUR for the Chairman, EUR for the Vice Chairman and EUR for each member (excluding the President and CEO of Nokia if elected to the Nokia Board); for the Chairman of the Audit Committee and the Chairman of the Personnel Committee an additional annual fee of EUR , and for each member of the Audit Committee an additional annual fee of EUR . Further, the Corporate Governance and Nomination Committee will propose that, as in the past, approximately percent of the remuneration be paid in Nokia shares purchased from the market, which shares shall be retained until the end of the board membership in line with the Nokia policy (except for those shares needed to off set any costs relating to the acquisition of the shares, including taxes).

• Represents the fees paid to Henning Kagermann, consisting of a fee of EUR for service as a member of the Board and EUR for service as Chairman of the Personnel Committee.
• Represents the fees paid to Jouko Karvinen, consisting of a fee of EUR for service as a member of the Board and EUR for service as a member of the Audit Committee.
• Represents the fees paid to Isabel Marey-Semper, consisting of a fee of EUR for service as a member of the Board and EUR for service as a member of the Audit Committee.
• Represents the fees paid to Risto Siilasmaa, consisting of a fee of EUR for service as a member of the Board and EUR for service as Chairman of the Audit Committee.

E XECUTIVE COMPENSATION

Executive compensation philosophy, programs and decision-making process

The basic principles of our executive compensation philosophy are to attract, retain and motivate talented executive offi cers on a global basis with the right mix of skills and capabilities to drive Nokia's success in an extremely complex and rapidly evolving mobile communications industry. As a result, we have developed an overall compensation framework that provides competitive base pay rates combined with short- and longterm incentives that are intended to result in a competitive total compensation package.

Our executive compensation programs have been designed to enable Nokia to eff ectively execute our strategy announced in early . Specifi cally, our programs are designed to:

• » incorporate specifi c measures that align directly with the execution of our new strategy over the next year;
• » deliver an appropriate amount of performance-related variable compensation for the achievement of strategic goals and fi nancial targets in both the short- and long-term;
• » appropriately balance rewards between both Nokia's and an individual's performance; and

» foster an ownership culture that promotes sustainability and long-term value creation and align the interests of the executive offi cers with those of the shareholders through long-term equity-based incentives.

The competitiveness of Nokia's executive compensation levels and practices is one of several key factors the Personnel Committee of the Board considers in its determination of compensation for Nokia executive offi cers. The Personnel Committee compares, on an annual basis, Nokia's compensation practices, base salaries and total compensation, including short- and long-term incentives against those of other relevant companies with the same or similar revenue, size, global reach and complexity that we believe we compete against for executive talent. The relevant sample includes companies in high technology, telecommunications and Internet services industries, as well as companies from other industries that are headquartered in Europe and the United States. The peer group is determined by the Personnel Committee and reviewed for appropriateness from time to time as deemed necessary due to such factors as changes in the business environment or industry.

The Personnel Committee retains and uses an external compensation consultant from Mercer Human Resources to obtain benchmark data and information on current market trends. The consultant works directly for the Chairman of the Personnel Committee and meets annually with the Personnel Committee, without management present, to provide an assessment of the competitiveness and appropriateness of Nokia's executive pay levels and programs. Management provides the consultant with information regarding Nokia's programs and compensation levels in preparation for meeting with the Committee. The consultant of Mercer Human Resources that works for the Personnel Committee is independent of Nokia and does not have any other business relationships with Nokia.

The Personnel Committee reviews the executive offi cers' compensation on an annual basis, and from time to time during the year when special needs arise. Without management present, the Personnel Committee reviews and recommends to the Board the corporate goals and objectives relevant to the compensation of the President and CEO, evaluates the performance of the President and CEO in light of those goals and objectives, and proposes to the Board the compensation level of the President and CEO. All compensation for the President and CEO, including long-term equity incentives, is approved by the Board and is confi rmed by the independent members of the Board. Management's role is to provide any information requested by the Personnel Committee to assist in their deliberations.

In addition, upon recommendation of the President and CEO, the Personnel Committee approves all compensation for all the members of the Nokia Leadership Team (other than the President and CEO of Nokia) and other executive level direct reports to the President and CEO, including long-term equity incentives and goals and objectives relevant to compensation. The Personnel Committee also reviews the results of the evaluation of the performance of the Nokia Leadership Team members (excluding the President and CEO) and other executive level direct reports to the President and CEO and approves their incentive compensation based on such evaluation.

The Personnel Committee considers the following factors, among others, in its review when determining the compensation of Nokia's executive offi cers or recommending the compensation of the President and CEO to the Board:

• » the compensation levels for similar positions (in terms of scope of position, revenues, number of employees, global responsibility and reporting relationships) in relevant comparison companies;
• » the performance demonstrated by the executive offi cer during the last year;
• » the size and impact of the particular offi cer's role on Nokia's overall performance and strategic direction;
• » the internal comparison to the compensation levels of the other executive offi cers of Nokia;
• » past experience and tenure in role; and
• » the potential and expected future contributions of the executive.

The above factors are assessed by the Personnel Committee in totality.

Nokia's management performed an internal risk assessment of Nokia's compensation policies and practices for all its employees specifi cally to understand any potential risk factors that would be associated with the changes made to Nokia's

compensation programs in in alignment to our new strategy. Management assessed such factors as Nokia's proportion of fi xed compensation in relation to variable compensation, the caps on incentive compensation that can be earned under our plans, performance metrics tied to the incentive programs and the time horizon over which variable compensation may be earned, as well as Nokia's share ownership, severance and recoupment policies and our overall governance structure and practices. Based on the assessment, management concluded that there are no risks arising from Nokia's compensation programs, policies and practices or the changes implemented that are likely to have a material adverse eff ect on Nokia. The fi ndings of the analysis were reported to the Personnel Committee.

COMPONENTS OF E XECUTIVE COMPENSATION

Our compensation program for executive offi cers includes annual cash compensation in the form of a base salary and short-term cash incentives as well as long-term equity-based incentive awards in the form of performance shares, stock options and restricted shares.

Annual cash compensation

Base salaries are targeted at globally competitive market levels. The Personnel Committee evaluates and weighs as a whole the appropriate salary levels based on both our US and European peer companies.

Short-term cash incentives are an important element of our variable pay programs and are tied directly to Nokia's and the individual executives' performance. The short-term cash incentive opportunity is expressed as a percentage of each executive offi cer's annual base salary. These award opportunities and measurement criteria are presented in the table below.

Short-term incentives are determined for each executive based on their performance as measured on an individual scorecard. Measurement criteria for the scorecard include a common set of objectives and targets shared by all Nokia Leadership Team members related to the change in strategy, individual strategic objectives for each executive offi cer and Business Unit-specifi c key operative targets which consist of key fi nancial targets, key delivery milestones (products and services) and other key performance indicators such as quality and customer satisfaction. A broad range of sustainability and competitive factors are also taken into consideration when

assessing an executive's performance. The measures to be included in the scorecard for each executive and the specifi c targets require the Personnel Committee's approval with respect to the members of the Nokia Leadership Team, and the Board's approval with respect to the President and CEO.

The following table refl ects the measurement criteria that are established for the President and CEO and members of the Nokia Leadership Team and the relative weighting of each component for the year . The short-term incentive payout is based on performance relative to targets set for each measurement criteria listed in the table and includes a comparison of each executive offi cer's individual performance to his/her predefi ned scorecard objectives and targets.

Short-term incentive as a % of annual base salary in

Position	Minimum performance	Target performance	Maximum performance	Measurement criteria
President and CEO	0%	100%	225%	(a) Shared Strategic Change Goals applicable to all Nokia Leadership Team members (including but not limited to targets for Nokia's product and service portfolio, partnerships and organizational performance) (b) Individual Strategic / Change Goals 1
				(c) Key Operative Targets (including net sales, operating profi t and gross margin)
Total	0%	100%	225%
Nokia Leadership Team	0%	75%	168.75%	(a) Shared Strategic Change Goals applicable to all Nokia Leadership Team members (including but not limited to targets for Nokia's product and service portfolio, partnerships and organizational performance)
				(b) Individual Strategic / Change Goals 1
				(c) Key Operative Targets (including net sales, operating profi t and gross margin)
	0%	25%	37.5%	(d) Total Shareholder Return 2,3 (comparison made with key competitors in the high technology, telecommunications and Internet services industries over one-, three- and fi ve-year periods)
Total	0%	100%	206.25%

The individual strategic objectives in the scorecard include key criteria which are the cornerstone for the success of Nokia's long-term strategy. Such strategic objectives may include, but are not limited to, Nokia's product and service portfolio, consumer relationships, developer ecosystem, partnerships and other strategic assets.

Only certain members of the Nokia Leadership Team are eligible for the additional % total shareholder return element. For Stephen Elop, Total Shareholder Return is measured in the one-time special CEO incentive program approved by the Board of Directors for the two-year period –.

Total shareholder return reflects the change in Nokia's share price during an established time period, including the amount of dividends paid, divided by Nokia's share price at the beginning of the period. The calculation is conducted in the same manner for each company in the peer group.

When determining the fi nal incentive payout, the Personnel Committee determines an overall score for each executive based on the evaluation (including both qualitative and quantitative scores) of the individual scorecard. The fi nal incentive payout is determined by multiplying each executive's eligible salary by: (i) his/her incentive target percentage; and (ii) the score resulting from scorecard evaluation above. The resulting score for each executive is then multiplied by an "aff ordability factor", which is determined based on overall net sales, profi tability and cash fl ow management of Nokia and which is applicable in a similar manner to all Nokia employees within the short-term cash incentive program. The Personnel Committee applies discretion when evaluating actual results against targets and the resulting incentive payouts. In certain exceptional situations, the actual short-term cash incentive awarded to the executive offi cer could be zero. The maximum payout is only possible with maximum performance on all measures.

In , the portion of the short-term cash incentive that is tied to the predefi ned individual scorecard was paid twice a year based on the performance for Nokia's short-term plans that ended on June and December , . The portion of the short-term cash incentive that is tied to Total Shareholder Return is paid annually at the end of the year to eligible Nokia Leadership Team members. The payment is based on the Personnel Committee's assessment of Nokia's total shareholder return compared to key peer group companies that are selected by the Personnel Committee in the high technology, Internet services and telecommunications industries and relevant market indices over one-, three- and fi ve-year periods.

For more information on the actual cash compensation paid in to our executive offi cers, see "Summary compensation table " on page .

Long-term equity-based incentives

Long-term equity-based incentive awards in the form of performance shares, stock options and restricted shares are used to align executive offi cers' interests with shareholders' interests, reward for long-term fi nancial performance and encourage retention, while also considering evolving regulatory requirements and recommendations and changing economic conditions. These awards are determined on the basis of the factors discussed above in "Executive Compensation Philosophy, Programs and Decision-making Process," including a comparison of an executive offi cer's overall compensation with that of other executives in the relevant market and the impact on the competitiveness of the executive's compensation package in that market. Performance shares are Nokia's main vehicle for long-term equity-based incentives and reward the achievement of both Nokia's long-term fi nancial results and an increase in share price. Performance shares vest as shares, if at least one of the pre-determined threshold performance levels, tied to Nokia's fi nancial performance, is achieved by the end of the performance period and the value that the executive receives is dependent on Nokia's share price. Stock options are granted with the purpose of creating value for the executive offi cer, once vested, only if the Nokia share price at the time of vesting is higher than the exercise price of the stock option established at grant. This is also intended to focus executives on share price appreciation and thus aligning the interests of the executives with those of the shareholders. Restricted shares are used primarily for long-term retention purposes and they vest fully after the close of a pre-determined restriction period. Any shares granted are subject to the share ownership guidelines as explained below. All of these equity-based incentive awards are generally forfeited if the executive leaves Nokia prior to their vesting.

Recoupment of certain equity gains

The Board of Directors has approved a policy allowing for the recoupment of equity gains realized by Nokia Leadership Team members under Nokia equity plans in case of a fi nancial restatement caused by an act of fraud or intentional misconduct. This policy applies to equity grants made to Nokia Leadership Team members after January , .

Information on the actual equity-based incentives granted to the members of our Nokia Leadership Team in is included in "Stock option ownership of the Nokia Leadership Team" on page and "Performance shares and restricted shares of the Nokia Leadership Team" on page .

AC TUAL E XECUTIVE COMPENSATION FOR 2011

Service contracts

Stephen Elop's service contract covers his position as President and CEO as from September , . As at December , , Mr. Elop's annual base salary, which is subject to an annual review by the Board of Directors and confi rmation by the independent members of the Board, is EUR . His incentive targets under the Nokia short-term cash incentive plan are % of annual base salary as at December , (description of a separate plan approved by the Board of Directors for - is below). Mr. Elop is entitled to the customary benefi ts in line with our policies applicable to the top management, however, some of them are being provided on a tax assisted basis. Mr. Elop is also eligible to participate in Nokia's long-term equity-based compensation programs according to Nokia policies and guidelines and as determined by the Board of Directors.

In case of termination by Nokia for reasons other than cause, Mr. Elop is entitled to a severance payment of up to months of compensation (both annual base salary and target incentive) and his equity will be forfeited as determined in the applicable equity plan rules, with the exception of the equity out of the Nokia Equity Program which will vest in an accelerated manner. In case of termination by Mr. Elop, the notice period is six months and he is entitled to a payment for such notice period (both annual base salary and target incentive for six months) and all his equity will be forfeited. In the event of a change of control of Nokia, Mr. Elop may terminate his employment upon a material reduction of his duties and responsibilities, upon which he will be entitled to a compensation of

months (both annual base salary and target incentive), and his unvested equity will vest in an accelerated manner. In case of termination by Nokia for cause, Mr. Elop is entitled to no additional compensation and all his equity will be forfeited. In case of termination by Mr. Elop for cause, he is entitled to a severance payment equivalent to months of notice (both annual base salary and target incentive), and his unvested equity will vest in an accelerated manner. Mr. Elop is subject to a -month non-competition obligation after termination of the contract. Unless the contract is terminated by Nokia for cause, Mr. Elop may be entitled to compensation during the non-competition period or a part of it. Such compensation amounts to the annual base salary and target incentive for the respective period during which no severance payment is paid.

The Board of Directors decided in March that in order to align Stephen Elop's compensation to the successful execution of the new strategy announced on February , , his compensation structure for and would be modifi ed. This one-time special CEO incentive program is designed to align Mr. Elop's compensation to increased shareholder value and links a meaningful portion of his compensation directly to the performance of Nokia's share price over the period of –. To participate in this program, Mr. Elop invested a portion of his short-term cash incentive opportunity and a portion of the value of his expected annual equity grants into the program as follows:

• His target short-term cash incentive level is reduced from % to % and
• His equity grants are reduced to a level below the competitive market value.

In consideration, Mr. Elop has the opportunity to earn a number of Nokia shares at the end of based on two independent criteria, with half of the opportunity tied to each criterion:

Total Shareholder Return (TSR) relative to a peer group of companies over the two-year period from December , until December , : Minimum payout will require performance at the th percentile of the peer group and the maximum payout will occur if the rank is among the top three of the peer group. The peer group consists of a number of relevant companies in the high technology/mobility, telecommunications and Internet services industries.

Nokia's absolute share price at the end of : Minimum payout if the Nokia share price is EUR , with maximum payout if the Nokia share price is EUR .

Nokia share price under both criteria is calculated as a day trade volume weighted average share price on the NASDAQ OMX Helsinki. If the minimum performance for neither of the two performance criterion is reached, no share delivery will take place. If the minimum level for one of the criterion is met, a total of Nokia ordinary shares will be delivered to Mr. Elop. At maximum level for both criteria, a total of Nokia ordinary shares will be delivered to him. Shares earned under this plan during – will be subject to an additional one-year vesting period until the fi rst quarter , at which point the earned and vested shares will be delivered to Mr. Elop. The number of shares earned and to be settled may be adjusted by the Board of Directors under certain exceptional circumstances. Until the shares are settled, no shareholder rights, such as voting or dividend rights, associated with the shares would be applicable. No shares will be delivered if Mr. Elop resigns without cause or is terminated for cause by Nokia before the settlement.

For information about the compensation and benefi ts received by Mr. Elop during , see "Summary compensation table " on page and "Equity grants in " on page .

Pension arrangements for the members of the Nokia Leadership Team

The members of the Nokia Leadership Team participate in the local retirement programs applicable to employees in the country where they reside. Executives in Finland, including Mr. Elop, participate in the Finnish TyEL pension system, which provides for a retirement benefi t based on years of service and earnings according to prescribed statutory rules. Under the Finnish TyEL pension system, base pay, incentives and other taxable fringe benefi ts are included in the defi nition of earnings, although gains realized from equity are not. The Finnish TyEL pension scheme provides for early retirement benefi ts at age with a reduction in the amount of retirement benefi ts. Standard retirement benefi ts are available from age to , according to an increasing scale.

Actual compensation for the members of the Nokia Leadership Team in 2011

At December , , Nokia had a Nokia Leadership Team consisting of members. Changes in the composition in the Nokia Leadership Team during and subsequently are explained above in "Nokia Leadership Team" on page .

The following tables summarize the aggregate cash compensation paid and the long-term equity-based incentives granted to the members of the Nokia Leadership Team under our equity plans in .

Gains realized upon exercise of stock options and sharebased incentive grants vested for the members of the Nokia Leadership Team during are included in "Stock option exercises and settlement of shares" on page .

Aggregate cash compensation to the Nokia Leadership Team for

Year	Number of members on December 31	Base salaries EUR	Cash incentive payments 2 EUR
2011	13	6 229 909	2 166 514

Includes base salary and cash incentives paid or payable by Nokia for the fiscal year. The cash incentives are paid as a percentage of annual base salary Includes base salary and cash incentives paid or payable by Nokia for the fiscal year. The cash incentives are paid as a percentage of annual base salary based on Nokia's short-term cash incentives. Includes compensation paid to Alberto Torres for the period until February , , Richard Green until September , , Tero Ojanperä until September , and Colin Giles, Jo Harlow and Louise Pentland as from February , , Michael Halbherr as from July , and Henry Tirri as from September , .

Excluding any gains realized upon exercise of stock options, which are described in "Stock option exercises and settlement of shares" on page .

Long-term equity-based incentives granted in

	Nokia Leadership Team 4, 5		Total number of Total participants
Performance shares at threshold 2, 3	716 500	5 410 211	4 350
Stock options		3 383 000 11 751 907	3 200
Restricted shares	726 000	8 024 880	1 050

The equity-based incentive grants are generally forfeited if the employment relationship terminates with Nokia prior to vesting. The settlement is conditional upon performance and/or service conditions, as determined in the relevant plan rules. For a description of our equity plans, see Note to our consolidated financial statements.

• Includes also the threshold number of shares under the one-time special CEO incentive program.
• For performance shares granted under Nokia Performance Share Plans, at maximum performance, the settlement amounts to four times the number at threshold. For the one-time special CEO incentive program, at maximum performance, the settlement amounts to three times the number at threshold.
• Includes Alberto Torres for the period until February , , Richard Green until September , , Tero Ojanperä until September , and Colin Giles, Jo Harlow and Louise Pentland as from February , , Michael Halbherr as from July , and Henry Tirri as from September , .
• For the Nokia Leadership Team members whose employment terminated during , the long-term equity-based incentives were forfeited following termination of employment in accordance with plan rules

Summary compensation table

						Change in pension value and nonqualifi ed deferred
Name and principal position 1	Year	Salary EUR	Bonus 2 EUR	Stock awards 3 EUR	Option awards 3 EUR	compensation earnings 5 EUR	All other compensation EUR	Total
Stephen Elop, President and CEO	2011 2010	1 020 000 280 303	473 070 440 137	3 752 396 4 1 682 607	539 443 800 132	73 956 340 471	2 085 948 6 3 115 276	7 944 813 6 658 926
Timo Ihamuotila, EVP, Chief Financial Offi cer	2011 2010 2009	550 000 423 524 396 825	173 924 245 634 234 286	479 493 1 341 568 752 856	185 448 166 328 135 834	150 311 31 933 15 575	8 743 7 8 893 21 195	1 547 919 2 217 880 1 556 571
Mary T. McDowell, EVP, Mobile Phones 8	2011 2010 2009	559 177 559 637 508 338	202 294 314 782 349 911	479 493 1 233 368 800 873	185 448 142 567 152 283		249 517 9,10 71 386 33 726	1 675 929 2 321 740 1 845 131
Jerri DeVard, EVP, Chief Marketing Offi cer 8	2011	402 489	98 069	609 789	131 503		284 867 9,11	1 526 717
Niklas Savander, EVP, Markets	2011 2010	550 000 441 943	134 809 247 086	479 493 1 233 368	185 448 142 567	103 173	21 905 12 23 634	1 474 828 2 088 598
Tero Ojanperä, EVP, Services and Developer Experience, until September 30, 2011	2011	341 222	45 339	212 480 15	30 329 15	55 550	1 085 713 13	1 770 634
Richard Green, EVP, Chief Technology Offi cer, February 11–September 21, 2011	2011	303 472	69 628	320 942 15	45 494 15		684 368 9,14	1 423 904

The positions set forth in this table are the current positions of the named executives. Mr. Ojanperä served as Executive Vice President, Services and Developer Experience until September , and Mr. Green served as Executive Vice President and Chief Technology Officer from February , until September , .

• Bonus payments are part of Nokia's short-term cash incentives. The amount consists of the annual cash bonus earned and paid or payable by Nokia for the respective fiscal year.
• Amounts shown represent the grant date fair value of equity grants awarded for the respective fiscal year. The fair value of stock options equals the estimated fair value on the grant date, calculated using the Black-Scholes model. The fair value of performance shares and restricted shares equals the estimated fair value on grant date. The estimated fair value is based on the grant date market price of a Nokia share, less the present value of dividends expected to be paid during the vesting period. The value of the performance shares is presented on the basis of granted number of shares, which is two times the number of shares at threshold. The value of the stock awards with performance shares valued at maximum (four times the number of shares at threshold), for each of the named executive officers, is as follows: Mr. Elop EUR , Mr. Ihamuotila EUR , Ms. McDowell EUR , Ms. DeVard EUR , Mr. Savander EUR , Mr. Ojanperä EUR and Mr. Green EUR .
• The value of stock awards for Mr. Elop includes EUR as the fair value of the one-time special CEO incentive program based on the estimated fair value on the grant date. It was calculated using the Black-Scholes model, taking into consideration the two performance criteria, Nokia's share price on an absolute and relative basis to a peer group, as defined by the incentive program rules. Based on the stock price at December , , the actual value of this award would be zero.
• The change in pension value represents the proportionate change in the liability related to the individual executives. These executives are covered by the Finnish State employees' pension act ("TyEL") that provides for a retirement benefit based on years of service and earnings according to the prescribed statutory system. The TyEL system is a partly funded and a partly pooled "pay as you go" system. Effective March , , Nokia transferred its TyEL pension liability and assets to an external Finnish insurance company and no longer carries the liability on its financial statements. The figures shown represent only the change in liability for the funded portion. The method used to derive the actuarial IFRS valuation is based upon available salary information at the respective year end. Actuarial assumptions including salary increases and inflation have been determined to arrive at the valuation at the respective year end.

• All other compensation for Mr. Elop in includes: final one-time payment of EUR as compensation for lost income from his prior employer which resulted due to his move to Nokia and EUR taxable benefit for premiums paid under supplemental medical and disability insurance and for mobile phone and driver.

• All other compensation for Mr. Ihamuotila in includes: EUR for car allowance and EUR taxable benefit for premiums paid under supplemental medical and disability insurance and for mobile phone and driver.

• Salaries, benefits and perquisites for Ms. McDowell and Ms. DeVard were paid and denominated in GBP and USD. Amounts were converted using year-end USD/EUR exchange rate of . and GPB/EUR rate of .. For year disclosure, amounts were converted using year-end USD/EUR exchange rate of .. For year disclosure, amounts were converted using year-end USD/EUR exchange rate of ..
• Ms. McDowell, Ms. DeVard and Mr. Green participated in Nokia's U.S Retirement Savings and Investment Plan. Under this (k) plan, participants elect to make voluntary pre-tax contributions that are % matched by Nokia up to % of eligible earnings. % of the employer's match vests for the participants during each of the first four years of their employment. Participants earning in excess of the Internal Revenue Service (IRS) eligible earning limits may participate in the Nokia Restoration and Deferral Plan, which allows employees to defer up to % of their salary and % of their short-term cash incentive. Contributions to the Restoration and Deferral Plan are matched % up to % of eligible earnings, less contributions made to the (k) plan. The company's contributions to the plan are included under "All Other Compensation" column and noted hereafter.
• All other compensation for Ms. McDowell in includes: EUR provided under Nokia's international assignment policy in the UK, EUR for car allowance and EUR company contributions to the (k) Plan.
• All other compensation for Ms. DeVard in includes: EUR provided under Nokia's international assignment policy in the UK, EUR for car allowance, EUR company contributions to the (k) Plan and EUR accrued US-related benefits.
• All other compensation for Mr. Savander in includes: EUR for car allowance and EUR taxable benefit for premiums paid under supplemental medical and disability insurance and for mobile phone and driver.
• All other compensation for Mr. Ojanperä in includes: EUR for severance compensation, EUR taxable benefit for premiums paid under supplemental medical and disability insurance and for mobile phone and driver, EUR for medical-related benefits and EUR for service award.
• All other compensation for Mr. Green in includes: EUR for severance compensation, EUR for accrued vacation time and EUR for company contributions to the (k) Plan.
• Mr. Green's and Mr. Ojanperä's equity grants were forfeited and cancelled upon their respective terminations of employment in accordance with plan rules.

Equity grants in

			Option awards				Stock awards
Name and principal position	Year	Grant date	Number of shares underlying options	Grant price EUR	Grant date fair value 2 EUR	shares at threshold (number)	Performance Performance maximum (number)	shares at Restricted Grant date shares (number)	fair value 3 EUR
Stephen Elop, President and CEO	2011 2011 2011	Mar. 11 May 13 Aug. 5	250 000 500 000	6.02 3.76	252 745 286 698	250 000 4 125 000	750 000 4 500 000	180 000	2 033 572 5 1 718 824
Timo Ihamuotila, EVP, Chief Financial Offi cer	2011 2011	May 13 Aug. 5	70 000 200 000	6.02 3.76	70 769 114 679	35 000	140 000	50 000	479 493
Mary T. McDowell, EVP, Mobile Phones	2011 2011	May 13 Aug. 5	70 000 200 000	6.02 3.76	70 769 114 679	35 000	140 000	50 000	479 493
Jerri DeVard, EVP, Chief Marketing Offi cer	2011 2011	May 13 Aug. 5	45 000 150 000	6.02 3.76	45 494 86 009	22 500	90 000	100 000	609 789
Niklas Savander, EVP, Markets	2011 2011	May 13 Aug. 5	70 000 200 000	6.02 3.76	70 769 114 679	35 000	140 000	50 000	479 493
Tero Ojanperä, EVP, Services and Developer Experience, until September 30, 2011 6	2011	May 13	30 000	6.02	30 329	15 000	60 000	23 000	212 480
Richard Green, EVP, Chief Technology Offi cer, until September 21, 2011 6	2011	May 13	45 000	6.02	45 494	22 500	90 000	35 000	320 942

Including all equity awards made during . Awards were made under the Nokia Stock Option Plan , the Nokia Performance Share Plan and the Nokia Restricted Share Plan . The table includes also the award made under the one-time special CEO incentive program.

The fair value of stock options equals the estimated fair value on the grant date, calculated using the Black-Scholes model. The stock option exercise price was EUR . on May , and EUR . on August , . NASDAQ OMX Helsinki closing market price was EUR . at grant date on May , and EUR . on August , .

• The fair value of performance shares and restricted shares equals the estimated fair value on grant date. The estimated fair value is based on the grant date market price of the Nokia share less the present value of dividends expected to be paid during the vesting period. The value of performance shares is presented on the basis of a number of shares, which is two times the number at threshold.
• Represents the threshold and maximum number of shares under the onetime special CEO incentive program granted on March , .
• The fair value of the one-time special CEO incentive program equals the estimated fair value on the grant date, calculated using the Black-Scholes model and taking into consideration the two performance criteria, Nokia's share price both on an absolute basis and relative to a peer group, as defined by the incentive program rules. NASDAQ OMX Helsinki closing market price at grant date on March , was EUR ..
• Mr. Green's and Mr. Ojanperä's equity grants were forfeited and cancelled upon their respective terminations of employment in accordance with plan rules.

For information with respect to the Nokia shares and equity awards held by the members of the Nokia Leadership Team as at December , , please see "Share ownership of the Nokia Leadership Team" on page .

EQUIT Y-BA SED INCENTIVE PROGR AMS

General

During the year ended December , , we administered three global stock option plans, four global performance share plans and four global restricted share plans. Both executives and employees participate in these plans. Our compensation programs promote long-term value creation and sustainability of the company and ensure that remuneration is based on performance. Performance shares have been the main

element of the company's broad-based equity compensation program to further emphasize the performance element in employees' long-term incentives. For managers and employees in higher job levels we employ a portfolio approach designed to build an optimal and balanced combination of long-term equity-based incentives, by granting both performance shares and stock options. We believe using both equity instruments help focus recipients on long term fi nancial performance as well as on share price appreciation, thus aligning recipients' interests with those of shareholders' and promoting the long-term fi nancial success of the company. The equity-based compensation programs are intended to align the potential value received by participants directly with the performance of Nokia. We have also granted restricted shares to a small selected number of key employees considered key talent whose retention or recruitment is vital to the future success of Nokia.

The equity-based incentive grants are generally conditioned upon continued employment with Nokia, as well as the fulfi llment of performance and other conditions, as determined in the relevant plan rules.

The equity program for , which was approved by the Board of Directors, followed the structure of the program in . The participant group for the equity-based incentive program continued to be broad, with a wide number of employees in many levels of the organization eligible to participate. As at December , , the aggregate number of participants in all of our active equity-based programs was approximately compared with approximately as at December , refl ecting changes in our grant guidelines and reduction in eligible population.

For a more detailed description of all of our equity-based incentive plans, see Note to Nokia's consolidated fi nancial statements on page .

Performance shares

During , we administered four global performance share plans, the Performance Share Plans of , , and , each of which, including its terms and conditions, has been approved by the Board of Directors.

The performance shares represent a commitment by Nokia Corporation to deliver Nokia shares to employees at a future point in time, subject to Nokia's fulfi llment of pre-defi ned performance criteria. No performance shares will vest unless the Group's performance reaches at least one of the threshold levels measured by two independent, pre-defi ned performance criteria: the Group's average annual net sales growth for the performance period of the plan and, in the Performance Share Plans of , and earnings per share ("EPS") at the end of the performance period and in the Performance Share Plan average annual EPS.

The , , and plans have a three-year performance period with no interim payout. The shares vest after the respective performance period. The shares will be delivered to the participants as soon as practicable after they vest. The below table summarizes the relevant periods and settlements under the plans.

Plan	Performance period	Settlement
2008 1	2008–2010	2011
2009 1	2009–2011	2012
2010	2010–2012	2013
2011	2011–2013	2014

No Nokia shares were delivered under Nokia Performance Share Plans and as Nokia's performance did not reach the threshold level of either performance criteria under both plans.

Until the Nokia shares are delivered, the participants will not have any shareholder rights, such as voting or dividend rights, associated with the performance shares. The performance share grants are generally forfeited if the employment relationship terminates with Nokia prior to vesting.

Performance share grants to the CEO are made upon recommendation by the Personnel Committee and approved by the Board of Directors and confi rmed by the independent directors of the Board. Performance share grants to the other Nokia Leadership Team members and other direct reports of the CEO are approved by the Personnel Committee. Performance share grants to eligible employees are approved

by the CEO on a quarterly basis, based on an authorization given by the Board of Directors.

Stock options

During we administered three global stock option plans, the Stock Option Plan , and , each of which, including its terms and conditions, has been approved by the Annual General Meeting in the year when the plan was launched.

Each stock option entitles the holder to subscribe for one new Nokia share. The stock options are non-transferable and may be exercised for shares only. All of the stock options granted under the Stock Option Plans and have a vesting schedule with % of the options vesting one year after grant and .% each quarter thereafter. The stock options granted under the and plans have a term of approximately fi ve years. The stock options granted under the Stock Option Plan have a vesting schedule with % of stock options vesting three years after grant date and the remaining % vesting four years from grant. The stock options granted under the plan have a term of approximately six years.

The exercise price of the stock options is determined at the time of grant, on a quarterly basis, in accordance with a pre-agreed schedule after the release of Nokia's periodic fi nancial results. The exercise prices are based on the trade volume weighted average price of a Nokia share on NASDAQ OMX Helsinki during the trading days of the fi rst whole week of the second month of the respective calendar quarter (i.e., February, May, August or November). With respect to the Stock Option Plan, should an ex-dividend date take place during that week, the exercise price shall be determined based on the following week's trade volume weighted average price of the Nokia share on NASDAQ OMX Helsinki. Exercise prices are determined on a one-week weighted average to mitigate any day-specifi c fl uctuations in Nokia's share price. The determination of exercise price is defi ned in the terms and conditions of the stock option plan, which are approved by the shareholders at the respective Annual General Meeting. The Board of Directors does not have the right to change how the exercise price is determined.

Shares will be eligible for dividend for the fi nancial year in which the share subscription takes place. Other shareholder rights will commence on the date on which the subscribed shares are entered in the Trade Register. The stock option

grants are generally forfeited if the employment relationship terminates with Nokia.

Stock option grants to the CEO are made upon recommendation by the Personnel Committee and are approved by the Board of Directors and confi rmed by the independent directors of the Board. Stock option grants to the other Nokia Leadership Team members and other direct reports of the CEO are approved by the Personnel Committee. Stock option grants to eligible employees are approved by the CEO on a quarterly basis, based on an authorization given by the Board of Directors.

Restricted shares

During , we administered four global restricted share plans, the Restricted Share Plan , , and , each of which, including its terms and conditions, has been approved by the Board of Directors.

Restricted shares are used to recruit, retain, and motivate selected high potential and critical talent who are vital to the future success of Nokia. Restricted shares are used only for key management positions and other critical talent.

All of our restricted share plans have a restriction period of three years after grant. Until the Nokia shares are delivered, the participants will not have any shareholder rights, such as voting or dividend rights, associated with the restricted shares. The restricted share grants are generally forfeited if the employment relationship terminates with Nokia prior to vesting.

Restricted share grants to the CEO are made upon recommendation by the Personnel Committee and approved by the Board of Directors and confi rmed by the independent directors of the Board. Restricted share grants to the other Nokia Leadership Team members and other direct reports of the CEO are approved by the Personnel Committee. Restricted share grants to eligible employees are approved by the CEO on a quarterly basis, based on an authorization given by the Board of Directors.

Nokia equity-based incentive program 2012

On January , , the Board of Directors approved the scope and design of the Nokia Equity Program . Similarly to the earlier broad-based equity incentive programs, it intends to align the potential value received by the participants directly with the long-term fi nancial performance of

the company and increases in the company's share price, thus aligning the participants' interests with Nokia shareholders' interests. Nokia's balanced approach toward the use of equity eff ectively contributes to long-term value creation and sustainability of the company and ensures compensation is based on performance.

The Equity Program consists of performance shares, stock options and restricted shares. The primary equity instruments for the executive employees are performance shares and stock options. Restricted shares are also used for executives in lesser amounts for retention purposes. For directors below the executive level the primary equity instruments are performance shares and restricted shares. Below the director level, performance shares and restricted shares are used on a selective basis to ensure retention and recruitment of functional mastery and other employees deemed critical to Nokia's future success. These equity-based incentive awards are generally forfeited if the employee leaves Nokia prior to vesting.

Performance shares

The Performance Share Plan approved by the Board of Directors has a performance period of two years (–) and a subsequent one-year restriction period. Therefore, the amount of shares based on the fi nancial performance during – will vest after . No performance shares will vest unless Nokia's performance reaches at least one of the threshold levels measured by two independent, pre-defi ned performance criteria:

• Average Annual Net Sales (non-IFRS): EUR million (threshold) and EUR million (maximum) during the performance period –, and
• Average Annual EPS (diluted, non-IFRS): EUR . (threshold) and EUR . (maximum) during the performance period –.

Average Annual Net Sales is calculated as an average of the non-IFRS net sales for Nokia Group (excluding Nokia Siemens Networks B.V. and its subsidiaries) for the years and . Average Annual EPS is calculated as an average of the diluted, non-IFRS earnings per share for the years and for Nokia Group. Both the Average Annual Net Sales and the Average Annual EPS criteria are equally weighted and performance under each of the two performance criteria is calculated independent of each other.

We believe the performance criteria set above are challenging. The awards at the threshold are signifi cantly reduced from grant level and achievement of maximum award would serve as an indication that Nokia's performance signifi cantly exceeded current market expectations of our long-term execution.

Achievement of the maximum performance for both criteria would result in the vesting of a maximum of million Nokia shares. Performance exceeding the maximum criteria does not increase the number of performance shares that will vest. Achievement of the threshold performance for both criteria will result in the vesting of approximately million shares. If only one of the threshold levels of performance is achieved, only approximately . million of the performance shares will vest. If none of the threshold levels is achieved, then none of the performance shares will vest. If the required performance level is achieved, the vesting will occur after . Until the Nokia shares are delivered, the participants will not have any shareholder rights, such as voting or dividend rights associated with these performance shares.

Stock options

The stock options to be granted in are out of the Stock Option Plan approved by the Annual General Meeting in . For more information about the Stock Option Plan see "Equity-Based Incentive Programs–Stock Options" above.

Restricted shares

Restricted shares under the Restricted Share Plan approved by the Board of Directors are used as described above to ensure retention and recruitment of functional mastery and other employees deemed critical to Nokia's future success. The restricted shares under the Restricted Share Plan have a three-year restriction period. The restricted shares will vest and the resulting Nokia shares be delivered in and early , subject to fulfi llment of the service period criteria. Until the Nokia shares are delivered, the participants will not have any shareholder rights, such as voting or dividend rights associated with these restricted shares.

Maximum planned grants under the Nokia equitybased incentive program 2012 in year 2012

The approximate maximum number of planned grants under the Nokia Equity Program (i.e. performance shares, stock options and restricted shares) in are set forth in the table below.

Plan type	Planned maximum number of shares available for grants under the equity based incentive program in 2012
Stock options	8.5 million
Restricted shares	14 million
Performance shares at maximum 1	36 million

The number of Nokia shares to be delivered at threshold performance is a quarter of maximum performance, i.e., a total of million Nokia shares.

As at December , , the total dilutive eff ect of all Nokia's stock options, performance shares and restricted shares outstanding, assuming full dilution, was approximately .% in the aggregate. The potential maximum eff ect of the proposed Equity Based Compensation Program for would be approximately another .%.

SHARE OWNERSHIP

General

The following section describes the ownership or potential ownership interest in the company of the members of our Board of Directors and the Nokia Leadership Team as at December , , either through share ownership or, with respect to the Nokia Leadership Team, through holding of equity-based incentives, which may lead to share ownership in the future.

With respect to the Board of Directors, approximately % of director compensation is paid in the form of Nokia shares that is purchased from the market. It is also Nokia's policy that the Board members retain all Nokia shares received as director compensation until the end of their board membership (except for those shares needed to off set any costs relating to the acquisition of the shares, including taxes). In addition, it is Nokia's policy that non-executive members of the Board do not participate in any of Nokia's equity programs and do not

receive stock options, performance shares, restricted shares or any other equity based or otherwise variable compensation for their duties as Board members.

For a description of our remuneration for our Board of Directors, see "Remuneration of the Board of Directors in " on page .

The Nokia Leadership Team members receive equity based compensation in the form of performance shares, stock options and restricted shares. For a description of our equitybased compensation programs for employees and executives, see "Equity-based incentive programs" on page .

Share ownership of the Board of Directors

At December , , the members of our Board of Directors held the aggregate of shares and ADSs in Nokia, which represented .% of our outstanding shares and total voting rights excluding shares held by Nokia Group at that date.

The following table sets forth the number of shares and ADSs held by the members of the Board of Directors as at December , .

Name 1	Shares 2	ADSs 2
Jorma Ollila 3	791 284	—
Marjorie Scardino	43 300	—
Stephen Elop	—	150 000
Bengt Holmström	41 981	—
Henning Kagermann	27 057	—
Per Karlsson 4	48 113	—
Jouko Karvinen	9 419	—
Helge Lund	8 746	—
Isabel Marey-Semper	21 280	—
Risto Siilasmaa	129 017	—
Kari Stadigh	208 746	—

Lalita D. Gupte did not stand for re-election in the Annual General Meeting held on May , and she held shares at that time. Keijo Suila did not stand for re-election in the Annual General Meeting held on May , and he held shares at that time.

The number of shares or ADSs includes not only shares or ADSs received as director compensation, but also shares or ADSs acquired by any other means. Stock options or other equity awards that are deemed as being beneficially owned under the applicable SEC rules are not included. For the number of shares or ADSs received as director compensation, see Note to our consolidated financial statements on page .

For Jorma Ollila, this table includes his share ownership only. Mr. Ollila was entitled to retain all vested and unvested stock options, performance shares and restricted shares granted to him in respect of his service as the CEO of Nokia prior to June , as approved by the Board of Directors. Therefore, in addition to the above-presented share ownership, Mr. Ollila held, as at December , , a total of stock options, which all expired without exercise on the same date. The information relating to stock options held by Mr. Ollila as at December , is presented in the table below.

				Number of stock options		Total intrinsic value of stock options, December 30, 2011 EUR
Stock option category	Expiration date	Exercise price per share EUR	Exer- cisable	Unexer- cisable	cisable	Exer- Unexer cisable
2006 2Q	December 31, 2011	18.02	0	0	0	0

The number of stock options in the above table equals the number of underlying shares represented by the option entitlement. The intrinsic value of the stock options in the above table is based on the difference between the exercise price of the options and the closing market price of Nokia shares on NASDAQ OMX Helsinki as at December , of EUR ..

Per Karlsson's holdings include both shares held personally and shares held through a company.

Share ownership of the Nokia Leadership Team

The following table sets forth the share ownership, as well as potential ownership interest through the holding of equitybased incentives, of the members of the Nokia Leadership Team as at December , .

	Shares	Shares receivable through stock options	Shares receivable through performance shares at threshold 4	Shares receivable through performance shares at maximum 5	Shares receivable through restricted shares
Number of equity instruments held by Nokia Leadership Team 1	925 509	4 970 949	993 250 6	3 723 000 6	1 983 500
% of the outstanding shares 2	0.020	0.134	0.027	0.100	0.053
% of the total outstanding equity incentives (per instrument) 3		21.42	13.10	12.27	11.96

Includes Nokia Leadership Team members at year end. Figures do not include those former Nokia Leadership Team members who left during .

• The percentage is calculated in relation to the outstanding number of shares and total voting rights of the company, excluding shares held by Nokia Group.
• The percentage is calculated in relation to the total outstanding equity incentives per instrument.
• No Nokia shares were delivered under Nokia Performance Share Plan which vested in as Nokia's performance did not reach the threshold level of either performance criteria. Therefore the shares deliverable at threshold equals zero for the Performance Share Plan .

which vested in as Nokia's performance did not reach the threshold level of either performance criteria. Therefore the shares deliverable at maximum equals zero for Nokia Performance Share Plan . At maximum performance under the Performance Share Plan and , the number of shares deliverable equals four times the number of performance shares at threshold.

No Nokia shares were delivered under Nokia Performance Share Plan

Includes also the shares receivable through the one-time special CEO incentive program. For the one-time special CEO incentive program, at maximum performance, the number of shares deliverable equals three times the number of shares at threshold.

The following table sets forth the number of shares and ADSs in Nokia held by members of the Nokia Leadership Team as of December , .

Name 1	Shares 2	ADSs 2	Became Nokia Leadership Team member (Year)
Stephen Elop	—	150 000	2010
Esko Aho	—	—	2009
Jerri DeVard	—	—	2011
Colin Giles	64 018	—	2011
Michael Halbherr	200 000	—	2011
Jo Harlow	9 913	15 000	2011
Timo Ihamuotila	62 894	—	2007
Mary T. McDowell	180 830	5 000	2004
Louise Pentland	25 283	—	2011
Niklas Savander	93 403	—	2006
Henry Tirri	6 032	—	2011
Juha Äkräs	17 904	—	2010
Kai Öistämö	95 232	—	2005

Alberto Torres left the Nokia Leadership Team on February , and held shares at that time. Richard Green left the Nokia Leadership Team on September , and did not hold any shares at that time. Tero Ojanperä left the Nokia Leadership Team on September , and held shares at that time.

Stock options or other equity awards that are deemed as being beneficially owned under applicable SEC rules are not included.

Stock option ownership of the Nokia Leadership Team

The following table provides certain information relating to stock options held by members of the Nokia Leadership Team as of December , . These stock options were issued pursuant to Nokia Stock Option Plans , and . For a description of our stock option plans, please see Note to Nokia's consolidated fi nancial statements on page .

					Number of stock options 1	Total intrinsic value of stock options, December 30, 2011	EUR 2
Name	Stock option category	Expiration date	Exercise price per share EUR	Exer- cisable	Unexer- cisable	Exer- cisable 3	Unexer cisable
Stephen Elop	2010 4Q	December 31, 2015	7.59	0	500 000	0	0
	2011 2Q	December 27, 2017	6.02	0	250 000	0	0
	2011 3Q	December 27, 2017	3.76	0	500 000	0	5 000
Esko Aho	2009 2Q	December 31, 2014	11.18	19 685	15 315	0	0
	2010 2Q	December 31, 2015	8.86	9 375	20 625	0	0
	2011 2Q	December 27, 2017	6.02	0	30 000	0	0
	2011 3Q	December 27, 2017	3.76	0	100 000	0	1 000
Jerri DeVard	2011 2Q	December 27, 2017	6.02	0	45 000	0	0
	2011 3Q	December 27, 2017	3.76	0	150 000	0	1 500
Colin Giles	2006 2Q	December 31, 2011	18.02	0	0	0	0
	2007 2Q	December 31, 2012	18.39	18 000	0	0	0
	2008 2Q	December 31, 2013	19.16	8 125	1 875	0	0
	2009 2Q	December 31, 2014	11.18	11 250	8 750	0	0
	2010 2Q	December 31, 2015	8.86	7 812	17 188	0	0
	2011 2Q	December 27, 2017	6.02	0	45 000	0	0
	2011 3Q	December 27, 2017	3.76	0	150 000	0	1 500
Michael Halbherr	2007 2Q	December 31, 2012	18.39	533	0	0	0
	2008 2Q	December 31, 2013	19.16	3 043	707	0	0
	2009 2Q	December 31, 2014	11.18	3 935	3 065	0	0
	2010 2Q	December 31, 2015	8.86	2 031	4 469	0	0
	2011 2Q	December 27, 2017	6.02	0	15 000	0	0
	2011 3Q	December 27, 2017	3.76	0	255 000	0	2 550
Jo Harlow	2006 2Q	December 31, 2011	18.02	0	0	0	0
	2007 2Q	December 31, 2012	18.39	10 000	0	0	0
	2008 2Q	December 31, 2013	19.16	2 837	663	0	0
	2009 2Q	December 31, 2014	11.18	3 090	2 410	0	0
	2010 2Q	December 31, 2015	8.86	7 812	17 188	0	0
	2011 2Q	December 27, 2017	6.02	0	70 000	0	0
	2011 3Q	December 27, 2017	3.76	0	200 000	0	2 000
Timo Ihamuotila	2006 2Q	December 31, 2011	18.02	0	0	0	0
	2007 2Q	December 31, 2012	18.39	32 000	0	0	0
	2008 2Q	December 31, 2013	19.16	16 250	3 750	0	0
	2009 2Q	December 31, 2014	11.18	19 685	15 315	0	0
	2009 4Q	December 31, 2014	8.76	8 750	11 250	0	0
	2010 2Q	December 31, 2015	8.86	21 875	48 125	0	0
	2011 2Q	December 27, 2017	6.02	0	70 000	0	0
	2011 3Q	December 27, 2017	3.76	0	200 000	0	2 000
Mary T. McDowell	2006 2Q	December 31, 2011	18.02	0	0	0	0
	2007 2Q	December 31, 2012	18.39	55 000	0	0	0
	2008 2Q	December 31, 2013	19.16	22 750	5 250	0	0
	2009 2Q	December 31, 2014	11.18	30 935	24 065	0	0
	2010 2Q	December 31, 2015	8.86	18 750	41 250	0	0
	2011 2Q	December 27, 2017	6.02	0	70 000	0	0
	2011 3Q	December 27, 2017	3.76	0	200 000	0	2 000

					Number of stock options 1	Total intrinsic value of stock options, December 30, 2011	EUR 2
	Stock		Exercise price
Name	option category	Expiration date	per share EUR	Exer- cisable	Unexer- cisable	Exer- cisable 3	Unexer cisable
Louise Pentland	2006 2Q	December 31, 2011	18.02	0	0	0	0
	2007 2Q	December 31, 2012	18.39	3 333	0	0	0
	2008 2Q	December 31, 2013	19.16	3 250	750	0	0
	2009 2Q	December 31, 2014	11.18	6 750	5 250	0	0
	2010 2Q	December 31, 2015	8.86	9 375	20 625	0	0
	2011 2Q	December 27, 2017	6.02	0	45 000	0	0
	2011 3Q	December 27, 2017	3.76	0	150 000	0	1 500
Niklas Savander	2006 2Q	December 31, 2011	18.02	0	0	0	0
	2007 2Q	December 31, 2012	18.39	32 000	0	0	0
	2008 2Q	December 31, 2013	19.16	22 750	5 250	0	0
	2009 2Q	December 31, 2014	11.18	30 935	24 065	0	0
	2010 2Q	December 31, 2015	8.86	18 750	41 250	0	0
	2011 2Q	December 27, 2017	6.02	0	70 000	0	0
Henry Tirri	2011 3Q	December 27, 2017	3.76	0	200 000	0	2 000
	2006 2Q	December 31, 2011	18.02	0	0	0	0
	2007 2Q	December 31, 2012	18.39	1 333	0	0	0
	2008 2Q	December 31, 2013	19.16	2 837	663	0	0
	2009 2Q	December 31, 2014	11.18	6 750	5 250	0	0
	2010 2Q	December 31, 2015	8.86	6 250	13 750	0	0
	2011 2Q	December 27, 2017	6.02	0	27 000	0	0
Juha Äkräs	2011 4Q	December 27, 2017	4.84	0	118 000	0	0
	2006 2Q	December 31, 2011	18.02	0	0	0	0
	2007 2Q	December 31, 2012	18.39	10 000	0	0	0
	2008 2Q	December 31, 2013	19.16	4 875	1 125	0	0
	2009 2Q	December 31, 2014	11.18	6 750	5 250	0	0
	2010 2Q	December 31, 2015	8.86	12 500	27 500	0	0
	2011 2Q	December 27, 2017	6.02	0	45 000	0	0
	2011 3Q	December 27, 2017	3.76	0	150 000	0	1 500
Kai Öistämö	2006 2Q	December 31, 2011	18.02	0	0	0	0
	2007 2Q	December 31, 2012	18.39	55 000	0	0	0
	2008 2Q	December 31, 2013	19.16	26 000	6 000	0	0
	2009 2Q	December 31, 2014	11.18	33 750	26 250	0	0
	2010 2Q	December 31, 2015	8.86	21 875	48 125	0	0
	2011 2Q	December 27, 2017	6.02	0	45 000	0	0
	2011 3Q	December 27, 2017	3.76	0	150 000	0	1 500
Stock options held by the members of the Nokia Leadership Team as at December 31, 2011,
Total 4				648 586	4 322 363		24 050
All outstanding stock option plans

(global plans), Total 6 767 629 16 435 699

Number of stock options equals the number of underlying shares represented by the option entitlement. Stock options granted under , and Stock Option Plans have different vesting schedules. The Group's global Stock Option Plans and have a vesting schedule with a % vesting one year after grant, and quarterly vesting thereafter, each of the quarterly lots representing .% of the total grant. The grants vest fully in four years. The Group's global Stock Option Plan has a vesting schedule with % of stock options vesting three years after grant date and the remaining % vesting four years from grant.

The intrinsic value of the stock options is based on the difference between the exercise price of the options and the closing market price of Nokia shares on NASDAQ OMX Helsinki as at December , of EUR ..

For gains realized upon exercise of stock options for the members of the Nokia Leadership Team, see the table in "Stock option exercises and settlement of shares" on page .

During , the following executives stepped down from the Nokia Leadership Team: Alberto Torres, Richard Green and Tero Ojanperä. The information related to stock options held for each former executive is as of the date of resignation from the Nokia Leadership Team and is presented in the table below.

					Number of stock options 1	Total intrinsic value of stock options,	EUR 7
Name	Stock option category	Expiration date	Exercise price per share EUR	Exer- cisable	Unexer- cisable	Exer- cisable 3	Unexer cisable
Alberto Torres 5 as per
February 10, 2011	2006 2Q	December 31, 2011	18.02	7 200	0	0	0
	2007 2Q	December 31, 2012	18.39	15 750	2 250	0	0
	2008 2Q	December 31, 2013	19.16	6 250	3 750	0	0
	2009 2Q	December 31, 2014	11.18	7 500	12 500	0	0
	2010 2Q	December 31, 2015	8.86	0	40 000	0	0
Richard Green 6 as per
September 21, 2011	2010 3Q	December 31, 2015	7.29	0	25 000	0	0
	2011 2Q	December 27, 2017	6.02	0	45 000	0	0
Tero Ojanperä 6 as per
September 30, 2011	2006 2Q	December 31, 2011	18.02	60 000	0	0	0
	2007 2Q	December 31, 2012	18.39	32 000	0	0	0
	2008 2Q	December 31, 2013	19.16	15 000	5 000	0	0
	2009 2Q	December 31, 2014	11.18	17 498	17 502	0	0
	2010 2Q	December 31, 2015	8.86	10 000	30 000	0	0
	2011 2Q	December 27, 2017	6.02	0	30 000	0	0

Mr. Torres' termination date under the employment agreement was March , . His equity was forfeited and cancelled upon termination of employment in accordance with the plan rules.

Mr. Green's and Mr. Ojanperä's stock option grants were forfeited and cancelled upon their respective terminations of employment in accordance with the plan rules.

The intrinsic value of the stock options is based on the difference between the exercise price of the options and the closing market price of Nokia shares on NASDAQ OMX Helsinki as at February , of EUR . in respect of Mr. Torres, as at September , of EUR . in respect of Mr. Green, and as at September , of EUR . in respect of Mr. Ojanperä.

Performance shares and restricted shares of the Nokia Leadership Team

The following table provides certain information relating to performance shares and restricted shares held by members of the Nokia Leadership Team as at December , . These entitlements were granted pursuant to our Performance Share Plans , and and Restricted Share Plans , , and . For Stephen Elop the table also includes the one-time special CEO incentive program. For a description of our performance share and restricted share plans, please see Note to Nokia's consolidated fi nancial statements on page .

			Performance shares	Restricted shares
Name	Plan name 1	Number of performance shares at threshold 2	Number of performance shares at maximum 3	Intrinsic value December 31, 2011 5 EUR	Plan name 7	Number of restricted shares	Intrinsic value December 30, 2011 8 EUR
Stephen Elop	2010 2011 2011	75 000 125 000 250 000 4	300 000 500 000 750 000 4	279 772 942 500 0 6	2010 2011	100 000 180 000	377 000 678 600
Esko Aho	2009 2010 2011	0 15 000 15 000	0 60 000 60 000	0 55 954 113 100	2008 2009 2010 2011	7 000 25 000 58 000 23 000	26 390 94 250 218 660 86 710
Jerri DeVard	2011	22 500	90 000	169 650	2011	100 000	377 000
Colin Giles	2009 2010 2011	0 12 500 22 500	0 50 000 90 000	0 46 629 169 650	2008 2009 2010 2011	10 000 20 000 55 000 35 000	37 700 75 400 207 350 131 950
Michael Halbherr	2009 2010 2011	0 3 250 35 000	0 13 000 140 000	0 12 123 263 900	2008 2009 2010 2011	9 000 10 500 17 000 50 000	33 930 39 585 64 090 188 500
Jo Harlow	2009 2010 2011	0 12 500 35 000	0 50 000 140 000	0 46 629 263 900	2008 2009 2010 2011	6 000 20 000 55 000 50 000	22 620 75 400 207 350 188 500
Timo Ihamuotila	2009 2010 2011	0 35 000 35 000	0 140 000 140 000	0 130 560 263 900	2009 2010 2011	35 000 120 000 50 000	131 950 452 400 188 500
Mary T. McDowell	2009 2010 2011	0 30 000 35 000	0 120 000 140 000	0 111 909 263 900	2009 2010 2011	38 000 115 000 50 000	143 260 433 550 188 500
Louise Pentland	2009 2010 2011	0 15 000 22 500	0 60 000 90 000	0 55 954 169 650	2009 2010 2011	6 000 78 000 35 000	22 620 294 060 131 950
Niklas Savander	2009 2010 2011	0 30 000 35 000	0 120 000 140 000	0 111 909 263 900	2009 2010 2011	38 000 115 000 50 000	143 260 433 550 188 500
Henry Tirri	2009 2010 2011	0 10 000 22 500	0 40 000 90 000	0 37 303 169 650	2008 2009 2010 2011	10 000 20 000 30 000 35 000	37 700 75 400 113 100 131 950
Juha Äkräs	2009 2010 2011	0 20 000 22 500	0 80 000 90 000	0 74 606 169 650	2008 2009 2010 2011	8 000 15 000 85 000 35 000	30 160 56 550 320 450 131 950
Kai Öistämö	2009 2010 2011	0 35 000 22 500	0 140 000 90 000	0 130 560 169 650	2009 2010 2011	50 000 100 000 35 000	188 500 377 000 131 950
Performance shares and restricted shares held by the Nokia Leadership Team, Total 9		993 250	3 723 000	4 486 907		1 983 500	7 477 795
All outstanding performance shares and restricted shares (global plans), Total		7 582 534	30 080 134 14	45 153 423		16 586 091	62 529 563

• The performance period for the plan is –, for the plan – and for the plan –, respectively.
• The threshold number will vest as Nokia shares should the pre-determined threshold performance levels be met of both performance criteria. No Nokia shares were delivered under the Performance Share Plan which would have vested in as Nokia's performance did not reach the threshold level of either performance criteria. Therefore the shares deliverable at threshold equals zero for the Performance Share Plan .
• The maximum number will vest as Nokia shares should the pre-determined maximum performance levels be met of both performance criteria. The maximum number of performance shares equals four times the number at threshold. No Nokia shares were delivered under the Performance Share Plan as Nokia's performance did not reach the threshold level of either performance criteria. Therefore the shares deliverable at maximum equals zero for the Performance Share Plan .
• Represents the threshold and maximum number of shares under the one-time special CEO incentive program. For the one-time special CEO incentive program, the maximum number equals three times the number at threshold.

• For Performance Share Plans and the value of performance shares is presented on the basis of Nokia's estimation of the number of shares expected to vest. The intrinsic value for the Performance Share Plans and is based on the closing market price of a Nokia share on NASDAQ OMX Helsinki as at December , of EUR .. For the Performance Share Plan no Nokia shares were delivered as Nokia's performance did not reach the threshold level of either performance criteria.

• The intrinsic value of the one-time special CEO incentive program is based on the assessment of the two performance criteria of Total Shareholder Return relative to a peer group and Nokia's absolute share price as of December , . Nokia share price is a -day trade volume weighted average on NASDAQ OMX Helsinki as at December , of EUR ..

• Under the Restricted Share Plans , , and , awards have been granted quarterly. For the major part of the awards made under these plans, the restriction period will end for the plan on January , ; for the plan on January , ; for the plan on January , ; and for the plan, on January , .
• The intrinsic value is based on the closing market price of a Nokia share on NASDAQ OMX Helsinki as at December , of EUR ..
• During , the following executives stepped down from the Nokia Leadership Team: Alberto Torres, Richard Green and Tero Ojanperä. The information related to performance shares and restricted shares held by each of the former executives is as of the date of resignation from the Nokia Leadership Team and is presented in the table below.

			Performance shares			Restricted shares
Name	Plan name 1	Number of performance shares at threshold 13	Number of performance shares at maximum 14	Intrinsic value 12 EUR	Plan name 5	Number of restricted shares	Intrinsic value 12 EUR
Alberto Torres 10
as per February 10, 2011	2009 2010	10 000 20 000	40 000 80 000	0 161 481	2008 2009 2010	10 000 25 000 30 000	81 600 204 000 244 800
Richard Green 11 as per
September 21, 2011	2010 2011	12 500 22 500	50 000 90 000	51 823 188 550	2010 2011	75 000 35 000	314 250 146 650
Tero Ojanperä 11 as per
September 30, 2011	2009 2010 2011	17 500 20 000 15 000	70 000 80 000 60 000	0 84 105 127 500	2008 2009 2010 2011	14 000 25 000 85 000 23 000	59 500 106 250 361 250 97 750

Mr. Torres' termination date under the employment agreement was March , . His equity was forfeited and cancelled upon termination of employment in accordance with the plan rules.

Mr. Green's and Mr. Ojanperä's performance and restricted share grants were forfeited and cancelled upon their respective terminations of employment in accordance with the plan rules.

• The intrinsic value is based on the closing market price of a Nokia share on NASDAQ OMX Helsinki as at February , of EUR . in respect of Mr. Torres, as at September , of EUR . in respect of Mr. Green, and as at September , of EUR . in respect of Mr. Ojanperä.
• The threshold number will vest as Nokia shares should the pre-determined threshold performance levels be met for both performance criteria. No Nokia shares were delivered under the Performance Share Plan as Nokia's performance did not reach the threshold level of either performance criteria.
• The maximum number will vest as Nokia shares should the pre-determined maximum performance levels be met. The maximum number of performance shares equals four times the number at threshold. No Nokia shares were delivered under the Performance Share Plan as Nokia's performance did not reach the threshold level of either performance criteria.

Stock option exercises and settlement of shares

The following table provides certain information relating to stock option exercises and share deliveries upon settlement during the year for our Nokia Leadership Team members.

	Stock options awards 1			Performance shares awards 2		Restricted shares awards 3,4
Name 5	Number of shares acquired on exercise	Value realized on exercise EUR	Number of shares delivered on vesting	Value realized on vesting EUR	Number of shares delivered on vesting	Value realized on vesting EUR
Stephen Elop	0	0	0	0	0	0
Esko Aho	0	0	0	0	0	0
Jerri DeVard	0	0	0	0	0	0
Colin Giles	0	0	0	0	13 000 3	82 550
Michael Halbherr	0	0	0	0	0	0
Jo Harlow	0	0	0	0	4 000 3	25 400
Timo Ihamuotila	0	0	0	0	14 000 4	68 600
Mary T. McDowell	0	0	0	0	20 000 4	98 000
Louise Pentland	0	0	0	0	3 000 3 8 500 4	19 050 41 650
Niklas Savander	0	0	0	0	20 000 4	98 000
Henry Tirri	0	0	0	0	5 000 3	31 750
Juha Äkräs	0	0	0	0	4 000 3	25 400
Kai Öistämö	0	0	0	0	22 000 4	107 800

Value realized on exercise is based on the difference between the Nokia share price and exercise price of options.

Represents the payout for the Restricted Share Plan. Value is based on the average market price of the Nokia share on NASDAQ OMX Helsinki on October , of EUR ..

No Nokia shares were delivered under the Performance Share Plan during as Nokia's performance did not reach the threshold level of either performance criteria.

Represents the payout for the Restricted Share Plan. Value is based on the average market price of the Nokia share on NASDAQ OMX Helsinki on February , of EUR ..

During , the following executives stepped down from the Nokia Leadership Team: Alberto Torres, Richard Green and Tero Ojanperä. The information regarding stock option exercises and settlement of shares regarding each of the former executives is as of the date of resignation from the Nokia Leadership Team and is represented in the table below.

	Stock options awards 1			Performance shares awards 2		Restricted shares awards 3,4
Name 5	Number of shares acquired on exercise	Value realized on exercise EUR	Number of shares delivered on vesting	Value realized on vesting EUR	Number of shares delivered on vesting	Value realized on vesting EUR
Alberto Torres as per February 10, 2011	0	0	0	0	13 000 3	82 550
Richard Green as per September 21, 2011	0	0	0	0	0	0
Tero Ojanperä as per September 30, 2011	0	0	0	0	0	0

Stock ownership guidelines for executive management

One of the goals of our long-term equity-based incentive program is to focus executives on promoting the long-term value sustainability of the company and on building value for shareholders on a long-term basis. In addition to granting stock options, performance shares and restricted shares, we also encourage stock ownership by our top executives and have stock ownership commitment guidelines with minimum recommendations tied to annual base salaries. For the President and CEO, the recommended minimum investment in Nokia shares corresponds to three times his annual base salary and for members of the Nokia Leadership Team two times the member's annual base salary, respectively. To meet this requirement, all members of the Nokia Leadership Team are expected to retain % of any after-tax gains from equity programs in shares until the minimum investment level is met. The Personnel Committee regularly monitors the compliance by the executives with the stock ownership guidelines.

Insider trading in securities

The Board of Directors has established a policy in respect of insiders' trading in Nokia securities. The members of the Board and the Nokia Leadership Team are considered as primary insiders. Under the policy, the holdings of Nokia securities by the primary insiders are public information, which is available from Euroclear Finland Ltd. and available on our website. Both primary insiders and secondary insiders (as defi ned in the policy) are subject to a number of trading restrictions and rules, including, among other things, prohibitions on trading in Nokia securities during the three-week "closed-window" period immediately preceding the release of our quarterly results including the day of the release and the four-week "closed-window" period immediately preceding the release of our annual results including the day of the release. In addition, Nokia may set trading restrictions based on participation in projects. We update our insider trading policy from time to time and provide training for compliance with the policy. Nokia's insider policy is in line with the NASDAQ OMX Helsinki Guidelines for Insiders and also sets requirements beyond those guidelines.

AUDITOR FEES AND SERVICES

PricewaterhouseCoopers Oy has served as our independent auditor for each of the fi scal years in the three-year period ended December , . The independent auditor is elected annually by our shareholders at the Annual General Meeting for the fi scal year in question. The Audit Committee of the Board of Directors makes a proposal to the shareholders in respect of the appointment of the auditor based upon its evaluation of the qualifi cations and independence of the auditor to be proposed for election or re-election on an annual basis.

The following table sets forth the aggregate fees for professional services and other services rendered by PricewaterhouseCoopers to Nokia in and in total, with a separate presentation of those fees related to Nokia and Nokia Siemens Networks.

		2011			2010
EURm		Nokia Siemens Nokia Networks Total		Nokia		Nokia Siemens Networks Total
Audit fees 1	7.2	10.9	18.1		6.8	9.8	16.4
Audit-related fees 2	1.3	2.3	3.6		1.3	1.2	2.5
Tax fees 3	2.8	2.1	4.9		4.4	1.2	5.6
All other fees 4	1.1	—	1.1		0.1	—	0.1
Total	12.4	15.3	27.7		12.6	12.0	24.6

Audit fees consist of fees billed for the annual audit of the company's consolidated financial statements and the statutory financial statements of the company's subsidiaries.

• Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the company's financial statements or that are traditionally performed by the independent auditor, and include consultations concerning financial accounting and reporting standards; advice on tax accounting matters; advice and assistance in connection with local statutory accounting requirements; due diligence related to acquisitions or divestitures; financial due diligence in connection with provision of funding to customers, reports in relation to covenants in loan agreements; employee benefit plan audits and reviews; and audit procedures in connection with investigations and compliance programs. They also include fees billed for other audit services, which are those services that only the independent auditor reasonably can provide, and include the provision of comfort letters and consents in connection with statutory and regulatory filings and the review of documents filed with the SEC and other capital markets or local financial reporting regulatory bodies.
• Tax fees include fees billed for (i) corporate and indirect compliance including preparation and/or review of tax returns, preparation, review and/ or filing of various certificates and forms and consultation regarding tax returns and assistance with revenue authority queries; (ii) transfer pricing advice and assistance with tax clearances; (iii) customs duties reviews and advice; (iv) consultations and tax audits (assistance with technical tax queries and tax audits and appeals and advise on mergers, acquisitions and restructurings); (v) personal compliance (preparation of individual tax returns and registrations for employees (non-executives), assistance with applying visa, residency, work permits and tax status for expatriates); and (vi) consultation and planning (advice on stock based remuneration, local employer tax laws, social security laws, employment laws and compensation programs, tax implications on short-term international transfers).
• All other fees include fees billed for company establishment, forensic accounting, data security, investigations and reviews of licensing arrangements with customers, other consulting services and occasional training or reference materials and services.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

The Audit Committee of our Board of Directors is responsible, among other matters, for the oversight of the external auditor subject to the requirements of Finnish law. The Audit Committee has adopted a policy regarding pre-approval of audit and permissible non-audit services provided by our independent auditors (the "Policy").

Under the Policy, proposed services either (i) may be preapproved by the Audit Committee without a specifi c case-bycase services approvals ("general pre-approval"); or (ii) require the specifi c pre-approval of the Audit Committee ("specifi c pre-approval"). The Audit Committee may delegate either type of pre-approval authority to one or more of its members. The appendices to the Policy set out the audit, audit-related, tax and other services that have received the general preapproval of the Audit Committee. All other audit, audit-related (including services related to internal controls and signifi cant M&A projects), tax and other services are subject to a specifi c pre-approval from the Audit Committee. All service requests concerning generally pre-approved services will be submitted to the Corporate Controller who will determine whether the services are within the services generally pre-approved. The Policy and its appendices are subject to annual review by the Audit Committee.

The Audit Committee establishes budgeted fee levels annually for each of the four categories of audit and non-audit services that are pre-approved under the Policy, namely, audit, audit-related, tax and other services. Requests or applications to provide services that require specifi c approval by the Audit Committee are submitted to the Audit Committee by both the independent auditor and the Corporate Controller. At each regular meeting of the Audit Committee, the independent auditor provides a report in order for the Audit Committee to review the services that the auditor is providing, as well as the status and cost of those services.

INVESTOR INFORMATION

INFORMATION ON THE INTERNET

www.nokia.com/global/about-nokia/investors

Available on the Internet: fi nancial reports, Nokia management's presentations, conference call and other investor related materials, press releases as well as environmental and social information.

INVESTOR RELATIONS CONTACTS

investor.relations@nokia.com

Nokia Investor Relations P.O. Box FI- NOKIA GROUP Finland Tel. + Fax +

Nokia Investor Relations Main Street, Suite White Plains, NY USA Tel. +

Annual General Meeting

Date: Thursday, May , at . pm Address: Helsinki Fair Centre, Amfi -hall, Messuaukio , Helsinki, Finland

Dividend

Dividend proposed by the Board of Directors for the fi scal year is EUR .. The dividend record date is proposed to be May , and the pay date on or about May , .

Financial reporting

Nokia's interim reports in are planned for April , July , and October . The results are planned to be published in January .

Information published in 2011

All Nokia's global press releases published in are available on the Internet at press.nokia.com.

Stock exchanges

The Nokia Corporation share is quoted on the following stock exchanges:

	Symbol	Trading currency
NASDAQ OMX Helsinki (since 1915)	NOK1V	EUR
New York Stock Exchange
(since 1994)	NOK	USD

List of indices

NOK1V	NOK
OMXN40 OMX Nordic 40	NYA NYSE Composite
HEX OMX Helsinki	CTN CSFB Technology
HEX25 OMX Helsinki 25	MLO Merrill Lynch 10
HXINFT Helsinki Information Technology
BE500 Bloomberg European 500
SX5E DJ Euro STOXX 50
E300 FTSE Eurofi rst 300

It should be noted that certain statements herein that are not historical facts are forward-looking statements, including, without limitation, those regarding: A) the expected plans and benefits of our partnership with Microsoft to bring together complementary assets and expertise to form a global mobile ecosystem for smartphones; B) the timing and expected benefits of our new strategies, including expected operational and financial benefits and targets as well as changes in leadership and operational structure; C) the timing of the deliveries of our products and services; D) our ability to innovate, develop, execute and commercialize new technologies, products and services; E) expectations regarding market developments and structural changes; F) expectations and targets regarding our industry volumes, market share, prices, net sales and margins of our products and services; G expectations and

targets regarding our operational priorities and results of operations; H) expectations and targets regarding collaboration and partnering arrangements; I) the outcome of pending and threatened litigation; J) expectations regarding the successful completion of acquisitions or restructurings on a timely basis and our ability to achieve the financial and operational targets set in connection with any such acquisition or restructuring; and K) statements preceded by "believe," "expect," "anticipate," "foresee," "target," "estimate," "designed," "aim", "plans," "will" or similar expressions. These statements are based on management's best assumptions and beliefs in light of the information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we

currently expect. Factors that could cause these differences

include, but are not limited to: ) our success in the smartphone market, including our ability to introduce and bring to market quantities of attractive, competitively priced Nokia products with Windows Phone that are positively differentiated from our competitors' products, both outside and within the Windows Phone ecosystem; ) our ability to make Nokia products with Windows Phone a competitive choice for consumers, and together with Microsoft, our success in encouraging and supporting a competitive and profitable global ecosystem for Windows Phone smartphones that achieves sufficient scale, value and attractiveness to all market participants; ) the difficulties we experience in having a competitive offering of Symbian devices and maintaining the economic viability of the Symbian smartphone platform during the transition to Windows Phone as our primary smartphone platform; ) our ability to realize a return on our investment in next generation devices, platforms and user experiences; ) our ability to produce attractive and competitive feature phones, including devices with more smartphone-like features, in a timely and cost efficient manner with differentiated hardware, software, localized services and applications; ) the intensity of competition in the various markets where we do business and our ability to maintain or improve our market position or respond successfully to changes in the competitive environment; ) our ability to retain, motivate, develop and recruit appropriately skilled employees; ) our ability to effectively and smoothly implement the new operational structure for our businesses, achieve targeted efficiencies and reductions in operating expenses; ) the success of our Location & Commerce strategy, including our ability to maintain current sources of revenue, provide support for our Devices & Services business and create new sources of revenue from our location-based services and commerce assets; ) our success in collaboration and partnering arrangements with third parties, including Microsoft; ) our ability to increase our speed of innovation, product development and execution to bring new innovative and competitive mobile products and location-based or other services to the market in a timely manner; ) our dependence on the development of the mobile and communications industry, including location-based and other services industries, in numerous diverse markets, as well as on general economic conditions globally and regionally; ) our ability to protect numerous patented standardized or proprietary technologies from third-party infringement or actions to invalidate the intellectual property rights of these technologies; ) our ability to maintain and leverage our traditional strengths in the mobile product market if we are unable to retain the loyalty of our mobile operator and distributor customers and consumers as a result of the implementation of our strategies or other factors; ) the success, financial condition and performance of our suppliers, collaboration partners and customers; ) our ability to manage efficiently our manufacturing and logistics, as well as to ensure the quality, safety, security and timely delivery of our products and services; ) our ability to source sufficient amounts of fully functional quality components, sub-assemblies, software and services on a timely basis without interruption and on favorable terms; ) our ability to manage our inventory and timely adapt our supply to meet changing demands for our products; ) any actual or even alleged defects or other quality, safety and security issues in our product; ) the impact of a cybersecurity breach or other factors leading to any actual or alleged loss, improper disclosure or leakage of any personal or consumer data collected by us or our partners or subcontractors, made available to us or stored in or through our products; ) our ability to successfully manage the pricing of our products and costs related to our products and operations; ) exchange rate fluctuations, including, in particular, fluctuations between the euro, which is our reporting currency, and the US dollar, the Japanese yen and the

Chinese yuan, as well as certain other currencies; ) our ability to protect the technologies, which we or others develop or that we license, from claims that we have infringed third parties' intellectual property rights, as well as our unrestricted use on commercially acceptable terms of certain technologies in our products and services; ) the impact of economic, political, regulatory or other developments on our sales, manufacturing facilities and assets located in emerging market countries; ) the impact of changes in government policies, trade policies, laws or regulations where our assets are located and where we do business; ) the potential complex tax issues and obligations we may incur to pay additional taxes in the various jurisdictions in which we do business; ) any disruption to information technology systems and networks that our operations rely on; ) unfavorable outcome of litigations; ) allegations of possible health risks from electromagnetic fields generated by base stations and mobile products and lawsuits related to them, regardless of merit; ) Nokia Siemens Networks ability to implement its new strategy and restructuring plan effectively and in a timely manner to improve its overall competitiveness and profitability; ) Nokia Siemens Networks' success in the telecommunications infrastructure services market and Nokia Siemens Networks' ability to effectively and profitably adapt its business and operations in a timely manner to the increasingly diverse service needs of its customers; ) Nokia Siemens Networks' ability to maintain or improve its market position or respond successfully to changes in the competitive environment; ) Nokia Siemens Networks' liquidity and its ability to meet its working capital requirements; ) Nokia Siemens Networks' ability to timely introduce new competitive products, services, upgrades and technologies; ) Nokia Siemens Networks' ability to execute successfully its strategy for the acquired Motorola Solutions wireless network infrastructure assets; ) developments under large, multi-year contracts or in relation to major customers in the networks infrastructure and related services business; ) the management of our customer financing exposure, particularly in the networks infrastructure and related services business; ) whether ongoing or any additional governmental investigations into alleged violations of law by some former employees of Siemens may involve and affect the carrier-related assets and employees transferred by Siemens to Nokia Siemens Networks; and ) any impairment of Nokia Siemens Networks customer relationships resulting from ongoing or any additional governmental investigations involving the Siemens carrier-related operations transferred to Nokia Siemens Networks, as well as the risk factors specified on pages – of Nokia's annual report Form -F for the year ended December , under Item D. "Risk Factors." Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Nokia does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

CONTACT INFORMATION

NOKIA HEAD OFFICE

Keilalahdentie – Espoo P.O.Box , FI- Nokia Group FINLAND Tel. + Fax +

NOKIA CALIFORNIA

South Matilda Avenue W. Washington Ave Sunnyvale, California USA Tel. +

NOKIA LATIN AMERICA

NW nd Av, Suite Miami FL, USA Tel. + Fax +

NOKIA BRAZIL

Av das Nacoes Unidas . Torre Norte o. Andar Cep - Sao Paulo - BRAZIL Tel. + Fax +

NOKIA GREATER CHINA & KOREA

Nokia China Campus Beijing Economic and Technological Development Area No. Donghuan Zhonglu Beijing, PRC Tel. +

NOKIA SOUTH EAST ASIA & PACIFIC

B Alexandra Road #– Alexandra Technopark SINGAPORE Tel. + Fax +

NOKIA INDIA

SP Infocity, Industrial Plot no. Udyog Vihar, Phase , Dundahera, Gurgaon, Haryana – INDIA Tel. + Fax +

NOKIA MIDDLE EAST & AFRICA

Al Thuraya Tower II, th fl oor, Dubai Internet City Dubai, UAE Tel. + Fax +

NOKIA EURASIA

Ul. Vozdvizhenka Moscow RUSSIA Tel. + Fax +

Paper: G-Print 115 g/m2 Cover: Invercote Creato 240 g/m2 Design: HardWorkingHouse Oy Cover: Page Design Finland Oy Lönnberg Painot Oy ISO 9001, 2012.

Copyright © 2012. Nokia Corporation. All rights reserved. Nokia and Nokia Connecting People are registered trademarks of Nokia Corporation.