Financial assets and liabilities

12 Months Ended

Dec. 31, 2023

Disclosure of detailed information about financial instruments [abstract]

Financial assets and liabilities

5.2. Financial assets and liabilities

Accounting policies

Fair value

Fair value is the price that would be received to sell an

asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date.

Financial assets and liabilities measured at fair value are

categorized based on the availability of observable inputs

used to measure their fair value. Three hierarchical levels

are based on an increasing amount of judgment associated

with the inputs used to derive fair valuation for these assets

and liabilities, Level 1 being market values for exchange

traded products, Level 2 being primarily based on publicly

available market information and Level 3 requiring most

management judgment.

The fair value of an asset or a liability is measured using

the assumptions that market participants would use

when pricing the asset or liability, assuming that market

participants act in their economic best interest, by using

quoted market rates, discounted cash flow analyses and

other appropriate valuation models. Nokia uses valuation

techniques that are appropriate in the circumstances and

for which sufficient data is available to measure fair value,

maximizing the use of relevant observable inputs and

minimizing the use of unobservable inputs. At the end of

each reporting period, all financial assets and liabilities, that

are either measured at fair value on a recurring basis or for

which fair values are disclosed in the financial statements,

are categorized within the fair value hierarchy based on

the lowest level input that is significant to the fair value

measurement as a whole.

Classification and measurement

Financial assets

Nokia classifies its financial assets that are debt instruments

in the following three categories: financial assets measured

at amortized cost, financial assets measured at fair value

through other comprehensive income, and financial assets

measured at fair value through profit and loss. The selection

of the appropriate category is made based on both Nokia’s

business model for managing the financial asset and on the

contractual cash flow characteristics of the asset. Equity

instruments and derivative financial assets are measured

at fair value through profit and loss.

Nokia’s business model for managing financial assets is defined

on a portfolio level. The business model must be observable on

a practical level by the way the business is managed. The cash

flows of financial assets measured at amortized cost are solely

payments of principal and interest. These assets are held within

a business model that has an objective to hold assets to collect

contractual cash flows. Financial assets measured at fair value

through other comprehensive income have cash flows that are

solely payments of principal and interest, and these assets are

held within a business model that has an objective that is

achieved both by holding financial assets to collect contractual

cash flows and selling financial assets. For these categories,

a loss allowance is calculated on a quarterly basis based on a

review of collectability (probability of default) and available

collateral (loss given default) for the asset, recorded as an

adjustment to the carrying amount of the asset and recognized

in other financial expenses in the income statement.

Financial assets measured at fair value through profit and loss

are assets that do not fall in either of the categories in the

paragraph above. Additionally, the accounting for financial

assets depends on whether the financial asset is part of a

hedging relationship (refer to Note 5.3. Derivative and firm

commitment assets and liabilities).

All purchases and sales of financial assets are recorded on

the trade date, i.e. when Nokia commits to purchase or sell

the asset. All financial assets are initially measured at fair

value and subsequently remeasured according to their

classification. Subsequently, instruments classified as fair

value through profit or loss and instruments classified as fair

value through other comprehensive income are remeasured

at fair value, while instruments classified as amortized cost

are remeasured using the effective interest rate method.

For instruments classified as fair value through profit or

loss, the fair value adjustments and foreign exchange gains

and losses are recognized in the income statement either in

other operating income and expenses or financial income

and expenses as determined by the purpose of the

instruments. For instruments classified as fair value through

other comprehensive income, changes in fair value are

recognized in the fair value reserve through other

comprehensive income (refer to Note 5.1. Equity).

For instruments classified as amortized cost, interest

calculated using the effective interest method, as well as

foreign exchange gains and losses, are recognized in

financial income and expenses in the income statement.

A financial asset is derecognized when substantially all the

risks and rewards related to the financial asset have been

transferred to a third party that assumes control of the

asset. On derecognition of a financial asset, the difference

between the carrying amount and the consideration

received is recognized in the income statement either in

other operating income and expenses or financial income

and expenses as determined by the purpose of the

instrument. The FIFO method is used to determine the

cost basis of financial assets at amortized cost that are

disposed of.

Financial liabilities

Nokia classifies its financial liabilities as financial liabilities

measured at amortized cost except for derivative liabilities

and the conditional obligation related to Nokia Shanghai

Bell, which are classified as financial liabilities at fair value

through profit and loss.

All financial liabilities are initially recognized at fair value and,

in the case of borrowings and payables, net of transaction

costs. Financial liabilities are subsequently remeasured

according to their classification.

For financial liabilities measured at amortized cost, interest

calculated using the effective interest method, as well as

foreign exchange gains and losses, are recognized in

financial income and expenses in the income statement.

Financial liabilities are derecognized when the related

obligation is discharged, canceled or expired. Additionally, a

substantial modification of the terms of an existing financial

liability is accounted for as a derecognition of the original

financial liability and the recognition of a new financial

liability. On derecognition of a financial liability, the

difference between the carrying amount extinguished and

the consideration paid is recognized in financial income or

expenses in the income statement.

Fair value of financial instruments

	2023							2022
	Carrying amounts						Fair value(1)	Carrying amounts						Fair value(1)
		Fair value through profit or loss			Fair value through other comprehensive income(2)				Fair value through profit or loss			Fair value through other comprehensive income(2)
EURm	Amortized cost	Level 1	Level 2	Level 3	Level 2	Total	Total	Amortized cost	Level 1	Level 2	Level 3	Level 2	Total	Total
Non-current interest-bearing financial investments	715	—	—	—	—	715	717	697	—	—	—	—	697	659
Investments in venture funds	—	5	—	779	—	784	784	—	5	—	823	—	828	828
Other non-current financial assets(3)	161	—	96	—	59	316	316	183	—	91	—	27	301	301
Other current financial assets(3)	263	—	—	—	22	285	285	296	—	—	—	36	332	332
Derivative assets(4)	—	—	134	—	—	134	134	—	—	239	—	—	239	239
Trade receivables(3)	—	—	—	—	4 921	4 921	4 921	—	—	—	—	5 549	5 549	5 549
Current interest-bearing financial investments	874	—	691	—	—	1 565	1 565	1 447	—	1 633	—	—	3 080	3 080
Cash and cash equivalents	4 791	—	1 443	—	—	6 234	6 234	4 176	—	1 291	—	—	5 467	5 467
Total financial assets	6 804	5	2 364	779	5 002	14 954	14 956	6 799	5	3 254	823	5 612	16 493	16 455
Long-term interest-bearing liabilities	3 637	—	—	—	—	3 637	3 614	4 249	—	—	—	—	4 249	4 230
Other long-term financial liabilities	33	—	—	28	—	61	61	—	—	—	48	—	48	48
Short-term interest-bearing liabilities	554	—	—	—	—	554	555	228	—	—	—	—	228	228
Other short-term financial liabilities	65	—	—	471	—	536	536	75	—	—	502	—	577	577
Derivative liabilities(4)	—	—	286	—	—	286	286	—	—	496	—	—	496	496
Discounts without performance obligations(3)	404	—	—	—	—	404	404	539	—	—	—	—	539	539
Trade payables	3 423	—	—	—	—	3 423	3 423	4 730	—	—	—	—	4 730	4 730
Total financial liabilities	8 116	—	286	499	—	8 901	8 879	9 821	—	496	550	—	10 867	10 848

(1)The following fair value measurement methods are used for items not carried at fair value: The fair values of long-term interest-bearing liabilities, including current portion, are primarily based on publicly available market information (level 2). The fair values of other

assets and liabilities, including loan receivables and loans payable, are primarily based on discounted cash flow analysis (level 2). The fair value is estimated to equal the carrying amount for short-term financial assets and financial liabilities due to limited credit risk and

short time to maturity.

(2)No financial instruments measured at fair value through other comprehensive income are categorized in fair value hierarchy level 1 or level 3.

(3)For further information on trade receivables, customer loans and discounts without performance obligation, refer to Note 4.5. Trade receivables and other customer-related balances.

(4)For further information on derivative assets and liabilities, refer to Note 5.3. Derivative and firm commitment assets and liabilities.

Financial assets

Interest-bearing financial investments

Nokia invests a portion of the corporate cash needed to cover

the projected cash outflows of its ongoing business operations

in highly liquid, interest-bearing investments. Interest-bearing

financial investments may include investments measured at

amortized cost and investments measured at fair value

through profit and loss.

Non-current interest-bearing financial investments are

investments in highly liquid corporate bonds that are long-term

in nature based on their initial maturity and are measured at

amortized cost using the effective interest method.

Current interest-bearing financial investments in bank

deposits, as well as fixed income and money market securities

with an initial maturity or put feature longer than three

months, that have characteristics of solely payments of

principal and interest and are not part of structured

investments, are managed in a portfolio with a business model

of holding investments to collect principal and interest and

are measured at amortized cost using the effective interest

method. These investments are executed with the main

purpose of collecting contractual cash flows and principal

repayments. However, investments are sold from time to time

for liquidity management and market risk mitigation purposes.

Current interest-bearing financial investments may also include

money market funds that do not qualify as cash equivalents,

investments acquired for trading purposes, investment

structures consisting of securities traded in combination with

derivatives with complementing and typically offsetting risk

factors and other investments that have cash flows not being

solely payments of principal and interest. These investments

are executed for capital appreciation and other investment

returns and can be sold at any time. These investments are

classified as fair value through profit or loss, with fair value

adjustments, foreign exchange gains and losses and realized

gains and losses recognized in financial income and expenses

in the income statement. The fair values of these investments

are based on publicly available market information.

Corporate cash investments in bank deposits used as collateral

for derivative transactions are measured at amortized cost

using the effective interest method.

Other financial assets

Other non-current financial assets include unlisted private

equity and unlisted venture fund investments, including

investments managed by NGP Capital which specializes in

growth-stage investing. These investments do not fulfill the

criteria of being solely payments of principal and interest

and they are classified as investments at fair value through

profit and loss. The fair value of these level 3 investments is

determined using one or more valuation techniques where

the use of the market approach generally consists of using

comparable market transactions, while the use of the income

approach generally consists of calculating the net present

value of expected future cash flows.

For unlisted funds, the selection of appropriate valuation

techniques by the fund managing partner may depend on the

availability and reliability of relevant inputs. In some cases,

one valuation technique may provide the best indication

of fair value while in other circumstances multiple valuation

techniques may be appropriate.

Inputs generally considered include the original transaction

price, recent transactions in the same or similar instruments,

completed or pending third-party transactions in the

underlying investment or comparable issuers, subsequent

rounds of financing, recapitalizations or other transactions

undertaken by the issuer, offerings in the equity or debt capital

markets, and changes in financial ratios or cash flows, adjusted

as appropriate for liquidity, credit, market and/or other risk

factors. The fair value may be adjusted to reflect illiquidity 

and/or non-transferability, with the amount of such discount

estimated by the managing partner in the absence of

market information.

Level 3 investments are remeasured at each reporting date

taking into consideration any changes in estimates, projections

and assumptions, as well as any changes in economic and other

relevant conditions. These investments include approximately

50 separate venture funds investing in hundreds of individual

companies in various sectors and geographies, focusing on 5G,

digital health, software and enterprise sectors.

Hence, specific estimates and assumptions used by managing

partners in the absence of observable inputs do impact the

fair value of individual investments, but no individual input

has a significant impact on the aggregated fair value of

level 3 investments.

Fair value adjustments, foreign exchange gains and losses,

and realized gains and losses from the disposal of these

investments are recognized in other operating income and

expenses in the income statement.

From time to time Nokia may have investments in listed equity

shares classified as level 1 investments. These are exchange

traded products with quoted prices readily and regularly

available from an exchange representing actual and regularly

occurring market transactions on an arm’s-length basis.

Other non-current financial assets also include restricted

assets and other receivables, customer financing-related loan

receivables (refer to note 4.5. Trade receivables and other

customer-related balances) and certain other financial assets

of a long-term nature.

Restricted assets and other receivables include restricted bank

deposits primarily related to employee benefits as well as other

loan receivables measured at amortized cost using the

effective interest method.

The cash flows of certain other financial assets of a long-term

nature do not fulfill the criteria of being solely payments of

principal and interest. These investments are measured at fair

value using quoted market rates, discounted cash flow models

or other appropriate valuation methods as of the reporting

date. Fair value adjustments, foreign exchange gains and

losses, and realized gains and losses from the disposal of

these investments are mainly recognized in financial income

and expenses in the income statement.

Other current financial assets include the current part of

other non-current financial assets as well as short-term loan

receivables measured at amortized cost using the effective

interest method.

Cash and cash equivalents

Cash and cash equivalents include cash at bank and in hand

as well as highly liquid, fixed income and money market

investments that are readily convertible to known amounts of

cash with maturities at acquisition of three months or less, as

well as bank deposits with maturities or contractual call periods

at acquisition of three months or less. Due to the high credit

quality and short-term nature of these investments, there is

an insignificant risk of change in value. Investments in money

market funds that have a risk profile consistent with the

aforementioned criteria are also classified as cash equivalents.

Investments that have cash flows that are solely payments of

principal and interest are measured at amortized cost using the

effective interest method whereas all other investments are

classified as fair value through profit and loss, with fair value

adjustments and foreign exchange gains and losses recognized

in financial income and expenses in the income statement.

The fair values of these investments are based on publicly

available market information.

Financial liabilities

Interest-bearing liabilities

Long-term and short-term interest-bearing liabilities are

measured at amortized cost using the effective interest

method. Long-term and short-term interest-bearing liabilities

include issued bonds and other borrowings. Short-term

interest-bearing liabilities also include the current portion

of long-term interest-bearing liabilities and collaterals for

derivative transactions.

Other financial liabilities

Other financial liabilities mainly include a conditional obligation

to China Huaxin as part of the Nokia Shanghai Bell (NSB)

definitive agreements where China Huaxin obtained the right

to fully transfer its ownership interest in NSB to Nokia in

exchange for a future cash settlement. The financial liability

related to the conditional obligation is measured based on the

expected future cash settlement with any changes recorded

in financial income and expenses in the income statement.

The measurement of this level 3 financial liability involves

estimation of the option exercise price and the distribution of

excess cash balances upon exercise. Unobservable valuation

inputs include certain financial performance metrics of NSB. No

individual input has a significant impact on the total fair value.

Trade payables

Trade payables are carried at invoiced amount in the statement

of financial position. Trade payables includes balances payable

to suppliers under reverse factoring arrangements with

financial institutions. These balances are classified as trade

payables and the related payments as cash flows from

operating activities, since the payments are made to the banks

on very similar terms as to suppliers. Possible extensions to

payment terms beyond the due dates agreed with suppliers

are insignificant and there are no special guarantees securing

the payments to be made.

Interest-bearing loans and other borrowings All borrowings presented in the table below are senior unsecured and have no financial covenants.
					Carrying amount EURm(1)
Issuer/borrower	Instrument	Currency	Nominal (million)	Final maturity	2023	2022
Nokia Corporation	2.00% Senior Notes(2)	EUR	378	3/2024	375	736
Nokia Corporation	EIB R&D Loan	EUR	500	2/2025	500	500
Nokia Corporation	NIB R&D Loan(3)	EUR	167	5/2025	167	250
Nokia Corporation	2.375% Senior Notes(2)	EUR	292	5/2025	289	478
Nokia Corporation	2.00%  Senior Notes(2)	EUR	630	3/2026	614	716
Nokia Corporation	4.375% Senior Notes	USD	500	6/2027	430	436
Nokia of America Corporation	6.50% Senior Notes	USD	74	1/2028	67	70
Nokia Corporation	3.125% Senior Notes	EUR	500	5/2028	479	457
Nokia of America Corporation	6.45% Senior Notes	USD	206	3/2029	187	194
Nokia Corporation	4.375% Sustainability- linked Senior Notes(4)	EUR	500	8/2031	510	—
Nokia Corporation	6.625% Senior Notes	USD	500	5/2039	463	478
Nokia Corporation and various subsidiaries	Other borrowings				110	162
Total					4 191	4 477
(1)Carrying amount includes EUR 31 million of fair value losses (EUR 120 million in 2022) related to fair value hedge accounting relationships, including EUR 156 million of fair value gains (EUR 180 million in 2022) related to discontinued fair value hedge accounting relationships that are amortized over the life of the respective senior notes. (2)In February 2023 Nokia purchased in a tender offer EUR 372 million (49.66% of the nominal amount) of the notes due 15 March 2024, EUR 208 million (41.57% of the nominal amount) of the notes due 15 May 2025 and EUR 120 million (15.96% of the nominal amount) of the notes due 11 March 2026. (3)The remaining loan from the Nordic Investment Bank (NIB) is repayable in two equal annual installments in 2024 and 2025. (4)The bond has a one-time redemption premium at maturity of EUR 4 million in case Nokia does not meet its commitment to reduce its greenhouse gas emissions (in tCO2e) across its value chain (Scope 1, 2, and 3) by 50% between 2019 and 2030. This target is one of Nokia’s key sustainability targets and has been selected to be the Sustainability Performance Target in Nokia’s Sustainable Finance Framework that enables the issuance of sustainability-linked financing instruments.

Changes in level 3 financial assets and liabilities measured at fair value
	2023		2022
EURm	Financial assets	Financial liabilities	Financial assets	Financial liabilities
1 January	823	(550)	750	(590)
Net (losses)/gains in income statement	(76)	31	13	24
Additions(1)	56	—	101	—
Deductions(1)	(24)	19	(39)	20
Transfers out of level 3	—	—	(4)	—
Other movements	—	1	2	(4)
31 December	779	(499)	823	(550)
(1)For level 3 financial assets, additions mainly include capital contributions to venture funds and deductions mainly include distributions from venture funds.
A net loss of EUR 42 million (net gain of EUR 23 million in 2022) related to level 3 financial instruments held at 31 December was included in the profit and loss during 2023.