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Financial risk management (Tables)
 12 Months Ended
Dec. 31, 2018
Financial risk management  
Schedule of hedging instruments

 

 

 

 

 

 

 

 

 

EURm 

    

USD

    

GBP

    

CNY

    

INR

2018

 

  

 

  

 

  

 

  

Foreign exchange derivatives used as cash flow hedges, net(1)

 

(952)

 

(374)

 

 –

 

 –

Foreign exchange exposure designated as hedged item for cash flow hedging, net(1)

 

952

 

374

 

 

 

 

Foreign exchange derivatives used as fair value hedges for FX risk, net(2)

 

(314)

 

93

 

 –

 

 –

Foreign exchange exposure designated as hedged item for fair value hedging for FX risk, net(2)

 

314

 

(93)

 

 

 

 

Foreign exchange derivatives used as net investment hedges, net(3)

 

(2 486)

 

(61)

 

(944)

 

(544)

Foreign exchange exposure designated as hedged item for net investment hedging, net(3)

 

2 486

 

61

 

944

 

544

Foreign exchange derivatives used as hedges for interest bearing-liabilities, net

 

1 804

 

 –

 

 –

 

 –

Foreign exchange exposure from interest-bearing liabilities, net

 

(1 800)

 

 –

 

 –

 

 –

Other foreign exchange derivatives, carried at fair value through profit and loss, net(4)

 

1 690

 

102

 

886

 

596

Foreign exchange exposure from items on the statement of financial position, excluding interest-bearing liabilities, net

 

(2 446)

 

(63)

 

(978)

 

(299)

2017

 

  

 

  

 

  

 

  

Foreign exchange derivatives used as cash flow hedges, net(1)

 

(803)

 

(106)

 

 –

 

 –

Foreign exchange derivatives used as fair value hedges, net(2)

 

(84)

 

(1)

 

 –

 

 –

Foreign exchange derivatives used as net investment hedges, net(3)

 

(2 839)

 

(10)

 

(728)

 

(403)

Foreign exchange exposure from statement of financial position items, net

 

(3 365)

 

(31)

 

(765)

 

(352)

Foreign exchange derivatives not designated in a hedge relationship, carried at fair value through profit and loss, net(4)

 

1 777

 

(25)

 

577

 

446

Cross-currency/interest rate hedges

 

1 377

 

 –

 

 –

 

 –

(1)

Used to hedge the foreign exchange risk from forecasted highly probable cash flows related to sales, purchases and business acquisition activities. In some currencies, especially the U.S. dollar, the Group has substantial foreign exchange risks in both estimated cash inflows and outflows. In 2018 the underlying exposures for which these hedges are entered into are included to the table due to the adoption of IFRS 9. In 2017 the underlying exposures were not presented in the table as they are not financial instruments.

(2)

Used to hedge foreign exchange risk from contractual firm commitments. In 2018 the underlying exposures for which these hedges are entered into are included in the table due to the adoption of IFRS 9. In 2017 the underlying exposures were not presented in the table as they are not financial instruments.

(3)

Used to hedge net investment exposure. In 2018 the underlying exposures for which these hedges are entered into are included in the table due to the adoption of IFRS 9. In 2017 the underlying exposures were not presented in the table as they are not financial instruments.

(4)

Items on the statement of financial position and some probable forecasted cash flows denominated in foreign currencies are hedged by a portion of foreign exchange derivatives not designated in a hedge relationship and carried at fair value through profit and loss.

 

Schedule of VaR from financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

2017

 

 

Total

Impact

Impact

Impact

 

Total

Impact

Impact

Impact

EURm

    

VaR

on profit

on OCI

on CTA

    

VaR

on profit

on OCI

on CTA

As of December 31

 

16

21

33

 6

 

22

13

30

 –

Average for the year

 

14

18

38

 5

 

14

26

46

 –

Range for the year

 

5-24

7-27

25-58

0-8

 

5-24

12-64

30-55

0-5

 

Schedule of Interest rate profile of interest-bearing assets and liabilities

 

 

 

 

 

 

 

 

 

 

 

2018

 

2017

EURm

    

Fixed rate

    

Floating rate(1)

    

Fixed rate

    

Floating rate(1)

Other financial assets(2)

 

143

 

68

 

117

 

73

Current financial investments

 

145

 

466

 

196

 

715

Cash and cash equivalents

 

497

 

5 765

 

576

 

6 793

Interest-bearing liabilities

 

(3 614)

 

(208)

 

(3 637)

 

(57)

Financial assets and liabilities before derivatives

 

(2 829)

 

6 091

 

(2 748)

 

7 524

Interest rate derivatives

 

2 332

 

(2 332)

 

1 371

 

(1 371)

Financial assets and liabilities after derivatives

 

(497)

 

3 759

 

(1 377)

 

6 153

(1)

All cash equivalents and credit support-related liabilities with initial maturity of three months or less are considered floating rate for the purposes of interest rate risk management.

(2)

Other financial assets include interest-bearing customer and vendor financing related loan receivables as well as certain other long-term interest-bearing loan receivables that have been presented in other non-current financial assets and other financial assets in the consolidated statement of financial position.
Schedule of sensitivity to interest rate exposure in the investment and debt portfolios.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

2017

 

    

Impact on

    

Impact

    

Impact

    

Impact on

    

Impact

    

Impact

EURm

 

fair value

 

on profit

 

on OCI

 

fair value

 

on profit

 

on OCI

Interest rates – increase by 100 basis points

 

34

 

 3

 

 4

 

126

 

 2

 

(1)

Interest rates – decrease by 50 basis points

 

(17)

 

(1)

 

(2)

 

(67)

 

(1)

 

 –

 

Schedule of effects of hedge accounting on the financial position and performance

 

 

 

 

 

 

 

 

 

EURm

    

Cash flow hedges (FX forwards and options)(1)

    

Net investment hedges (FX forwards and options)(1)

    

Fair value hedges (FX forwards)(1)

    

Fair value and cash flow hedges (IR swaps and cross currency swaps)(1)

Carrying amount of hedges

 

(13)

 

(11)

 

(4)

 

(46)

Notional amount of hedges

 

(1 451)

 

(4 129)

 

(226)

 

2 330

Notional amount of hedged items

 

1 451

 

4 129

 

231

 

(2 330)

Change in intrinsic value of hedging instruments since 1 January

 

(44)

 

(83)

 

(13)

 

 9

Change in value of hedged items used to determine hedge effectiveness

 

45

 

83

 

17

 

(7)

(1)

No significant ineffectiveness has been recorded during 2018 and economic relationships have been fully effective

The most significant foreign exchange hedging instruments under cash flow, net investment and fair value hedge accounting as of December 31 are outlined in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity breakdown of net notional amounts (EURm)(1)

 

 

Currency

 

Instrument

 

Fair value (EURm)

 

Weighted average hedged rate

 

Total

 

Within 3 months

 

Between 3 and 12 months

 

Beyond 1 year

Cash flow hedge accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GBP

 

FX Forwards

 

 3

 
0.8866

 

(184)

 

(38)

 

(93)

 

(53)

 

 

GBP

 

FX Options

 

 7

 
0.9064

 

(191)

 

(48)

 

(90)

 

(53)

 

 

JPY

 

FX Forwards

 

(4)

 
130.0618

 

(150)

 

(51)

 

(99)

 

 –

 

 

PLN

 

FX Forwards

 

 1

 
4.2966

 

149

 

46

 

102

 

 –

 

 

USD

 

FX Forwards

 

(19)

 
1.1653

 

(655)

 

(140)

 

(515)

 

 –

 

 

USD

 

FX Options

 

 2

 
1.2029

 

(297)

 

(87)

 

(210)

 

 –

Net investment hedge accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CNY

 

FX Forwards

 

 4

 
7.8333

 

(944)

 

(944)

 

 –

 

 –

 

 

INR

 

FX Forwards

 

(15)

 
81.5362

 

(544)

 

(544)

 

 –

 

 –

 

 

USD

 

FX Forwards

 

(2)

 
1.1414

 

(2 246)

 

(2 246)

 

 –

 

 –

 

 

USD

 

FX Options

 

 1

 
1.1703

 

(240)

 

(240)

 

 –

 

 –

Fair value hedge accounting for FX risk

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USD

 

FX Forwards

 

(3)

 
1.1478

 

(314)

 

(378)

 

64

 

 –

(1)   Negative notional amounts indicate that hedges sell currency and positive notional amounts indicate that hedges buy currency.

 

Schedule for allowance of doubtful accounts

The aging of trade receivables, contract assets and customer finance loans is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due

 

Past due

 

Past due

 

 

EURm

 

Current

    

1-30 days

    

31-180 days

    

More than 180 days

    

Total

As of December 31, 2018

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

4 224

 

243

 

300

 

284

 

5 051

Contract assets(1)

 

1 875

 

 –

 

 –

 

 –

 

1 875

Customer finance loans

 

186

 

 –

 

 –

 

 –

 

186

Total

 

6 285

 

243

 

300

 

284

 

7 112

As of December 31, 2017

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

6 179

 

158

 

277

 

458

 

7 072

Customer finance loans

 

158

 

 2

 

 –

 

 –

 

160

Total

 

6 337

 

160

 

277

 

458

 

7 232

(1)   The Group adopted IFRS 15 on January 1, 2018, by applying the modified retrospective method, hence no comparatives for December 31, 2017.

Movements in loss allowances, all of which relate to trade receivables, for the years ended December 31:

 

 

 

 

 

 

 

EURm

    
2018

    
2017

    
2016

As of January 1

 

192

 

168

 

62

Charged to income statement

 

86

 

61

 

126

Deductions(1)

 

(83)

 

(37)

 

(20)

As of December 31

 

195

 

192

 

168

(1)   Deductions include utilization and releases of allowances

Schedule of loans and loan allowances

 

 

 

 

 

EURm

    
2018

    
2017

Loan commitments given undrawn

 

313

 

495

Outstanding customer finance loans

 

186

 

160

Total 

 

499

 

655

 

For customer and vendor finance related loans, the credit loss estimate is typically based on a 12 month expected credit loss for outstanding loans and estimated additional draw-downs during this period. The loss allowance is calculated on a quarterly basis based on a review of collectability and available collateral, derecognized from other comprehensive income and recognized in other financial expenses in the consolidated income statement.

The changes in loss allowance for customer and vendor finance related loan receivables is presented below:

 

 

 

EURm

 

Loss allowance

As of December 31, 2017

 

 –

Adoption of IFRS 9(1)

 

 9

As of January 1, 2018

 

 9

(Decrease)/increase during the year

 

(2)

As of December 31, 2018

 

 7

(1)

Initial adjustment following the adoption of IFRS 9 as a result of applying the expected credit loss model
Schedule of outstanding fixed income and money market investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EURm

 

Rating(1)

 

Cash

 

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

 

Total(2)(3)(4)

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banks

 

Aaa

 

 –

 

317

 

 –

 

 –

 

 –

 

 –

 

317

 

 

Aa1-Aa3

 

1 210

 

209

 

 3

 

20

 

 –

 

 –

 

1 442

 

 

A1-A3

 

1 609

 

1 851

 

452

 

120

 

207

 

 –

 

4 239

 

 

Baa1-Baa3

 

58

 

228

 

47

 

 –

 

 –

 

 –

 

333

 

 

Ba1-Ba3

 

57

 

 –

 

 –

 

 –

 

 –

 

 –

 

57

 

 

B1-B3

 

25

 

18

 

 –

 

 –

 

 –

 

 –

 

43

 

 

Caa1-Caa3

 

12

 

 –

 

 –

 

 –

 

 –

 

 –

 

12

 

 

Non-rated

 

172

 

10

 

 3

 

 –

 

 –

 

 –

 

185

Other

 

A1-A3

 

 –

 

245

 

 –

 

 –

 

 –

 

 –

 

245

Total

 

 

 

3 143

 

2 878

 

505

 

140

 

207

 

 –

 

6 873

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banks

 

Aaa

 

 –

 

607

 

 –

 

 –

 

 –

 

 –

 

607

 

 

Aa1-Aa3

 

1 224

 

398

 

74

 

69

 

 –

 

 –

 

1 765

 

 

A1-A3

 

1 628

 

1 808

 

247

 

240

 

191

 

45

 

4 159

 

 

Baa1-Baa3

 

483

 

455

 

232

 

125

 

 –

 

 –

 

1 295

 

 

Ba1-Ba3

 

25

 

35

 

 –

 

 2

 

 –

 

 –

 

62

 

 

Non-rated

 

126

 

38

 

 –

 

 –

 

 –

 

 –

 

164

Governments

 

A1-A3

 

11

 

 1

 

 2

 

 –

 

 –

 

 –

 

14

Other

 

Aa1-Aa3

 

 –

 

24

 

10

 

39

 

 –

 

 –

 

73

 

 

A1-A3

 

 –

 

10

 

53

 

78

 

 –

 

 –

 

141

Total

 

 

 

3 497

 

3 376

 

618

 

553

 

191

 

45

 

8 280

(1)

Bank Parent Company ratings are used here for bank groups. In some emerging markets countries, actual bank subsidiary ratings may differ from the Parent Company rating.

(2)

Fixed income and money-market investments include bank deposits, structured deposits, investments in liquidity funds and investments in fixed income instruments. Liquidity funds that invested mainly in bank securities are included under Banks and other liquidity funds are included under Other. Additionally, in 2017, liquidity funds that invested solely in government securities are included under Governments.

(3)

Instruments that include a call feature have been presented at their final maturities, if any. Instruments that are contractually due beyond 3 months include EUR 472 million (EUR 701 million in 2017) of instruments that have a call period of less than 3 months.

(4)

The Group has assessed credit quality of restricted financial assets of EUR 158 million (EUR 142 million in 2017) and has concluded that expected credit losses are not significant. These assets have been excluded from the table.
Schedule of financial assets and liabilities subject to offsetting under enforceable master netting agreements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Related amounts not set off in the
statement of financial position

 

 

EURm

 

Gross amounts of

financial assets/

(liabilities)

 

Gross amounts of

financial liabilities/

(assets) set off in the statement of financial position

 

Net amounts of financial

assets/ (liabilities) presented in the

statement of financial position

 

Financial instruments

assets/(liabilities)

 

Cash collateral
received/(pledged)

 

Net amount

2018

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets

 

131

 

 –

 

131

 

104

 

15

 

12

Derivative liabilities

 

(178)

 

 –

 

(178)

 

(103)

 

(72)

 

(3)

Total

 

(47)

 

 –

 

(47)

 

 1

 

(57)

 

 9

2017

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets

 

197

 

 –

 

197

 

135

 

38

 

24

Derivative liabilities

 

(268)

 

 –

 

(268)

 

(145)

 

(100)

 

(23)

Total

 

(71)

 

 –

 

(71)

 

(10)

 

(62)

 

 1

 

Schedule of current long-term funding programs

 

 

 

 

 

Issuer:

 

Program:

 

Issued

Nokia Corporation

 

Euro Medium-Term Note Program, totaling EUR 5 000 million

 

1,250

 

Significant current long-term funding programs as of December 31, 2018:

 

 

 

 

 

Issuer:

 

Program:

 

Issued

Nokia Corporation

 

Local commercial paper program in Finland, totaling EUR 750 million

 

 –

 

Schedule of undiscounted cash flow analysis for financial liabilities and financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

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

2018

 

 

 

 

 

 

 

 

 

 

 

 

Non-current financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Other non-current financial assets(1)

 

146

 

23

 

 –

 

48

 

25

 

50

Current financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Current financial investments

 

612

 

231

 

381

 

 –

 

 –

 

 –

Other current financial assets excluding derivatives(2)

 

97

 

35

 

62

 

 –

 

 –

 

 –

Cash and cash equivalents(3)

 

6 271

 

5 796

 

125

 

142

 

208

 

 –

Cash flows related to derivative financial assets net settled:

 

 

 

 

 

 

 

 

 

 

 

 

Derivative contracts - receipts

 

22

 

 3

 

(6)

 

 8

 

 8

 

 9

Cash flows related to derivative financial assets gross settled:

 

 

 

 

 

 

 

 

 

 

 

 

Derivative contracts – receipts

 

11 428

 

9 506

 

1 017

 

151

 

46

 

708

Derivative contracts – payments

 

(11 093)

 

(9 463)

 

(1 008)

 

(124)

 

(17)

 

(481)

Trade receivables

 

4 851

 

3 998

 

774

 

79

 

 –

 

 –

Non-current financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Long-term interest-bearing liabilities

 

(3 918)

 

(28)

 

(72)

 

(730)

 

(604)

 

(2 484)

Current financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Short-term interest-bearing liabilities

 

(1 024)

 

(470)

 

(554)

 

 –

 

 –

 

 –

Other financial liabilities excluding derivatives

 

(731)

 

 –

 

(731)

 

 –

 

 –

 

 –

Cash flows related to derivative financial liabilities gross settled:

 

 

 

 

 

 

 

 

 

 

 

 

Derivative contracts – receipts

 

12 251

 

9 863

 

1 335

 

68

 

482

 

503

Derivative contracts – payments

 

(12 236)

 

(9 944)

 

(1 347)

 

(20)

 

(459)

 

(466)

Trade payables

 

(4 773)

 

(4 645)

 

(104)

 

(23)

 

 –

 

(1)

Contingent financial assets and liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Loan commitments given undrawn(4)

 

(313)

 

(14)

 

(30)

 

(153)

 

(77)

 

(39)

Loan commitments obtained undrawn(5)

 

2 323

 

249

 

(3)

 

2 077

 

 –

 

 –

(1)

Other non-current financial assets include long-term customer and vendor financing related loan receivables as well as certain other long-term loan receivables that have been presented in other non-current financial assets in the consolidated statement of financial position.

(2)

Other current financial assets excluding derivatives include short-term customer and vendor financing related loan receivables that have been presented in other financial assets in the consolidated statement of financial position.

(3)

Instruments that include a call feature have been presented at their final maturities, if any. Instruments that are contractually due beyond 3 months include EUR 472 million of instruments that have a call period of less than 3 months.

(4)

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

(5)

Loan commitments obtained undrawn have been included based on the period in which they expire. These amounts include related commitment fees.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

2017

 

  

 

  

 

  

 

  

 

  

 

  

Non-current financial assets

 

  

 

  

 

  

 

  

 

  

 

  

Long-term loan receivables

 

112

 

21

 

 –

 

77

 

 4

 

10

Current financial assets

 

  

 

  

 

  

 

  

 

  

 

  

Short-term loan receivables

 

92

 

 6

 

86

 

 –

 

 –

 

 –

Current financial investments and cash equivalents(1)

 

4 797

 

3 381

 

621

 

558

 

192

 

45

Bank and cash

 

3 497

 

3 497

 

 –

 

 –

 

 –

 

 –

Cash flows related to derivative financial assets gross settled:

 

 

 

 

 

 

 

 

 

 

 

 

Derivative contracts - receipts

 

11 484

 

10 249

 

1 235

 

 –

 

 –

 

 –

Derivative contracts - payments

 

(11 330)

 

(10 108)

 

(1 222)

 

 –

 

 –

 

 –

Trade receivables(2)

 

5 633

 

4 297

 

1 208

 

107

 

21

 

 –

Non-current financial liabilities

 

  

 

  

 

  

 

  

 

  

 

  

Long-term interest-bearing liabilities

 

(4 657)

 

(44)

 

(95)

 

(938)

 

(1 098)

 

(2 482)

Other long-term liabilities

 

(754)

 

 –

 

 –

 

(748)

 

 –

 

(6)

Current financial liabilities

 

  

 

  

 

  

 

  

 

  

 

  

Short-term interest-bearing liabilities

 

(313)

 

(215)

 

(98)

 

 –

 

 –

 

 –

Cash flows related to derivative financial liabilities gross settled:

 

  

 

  

 

  

 

  

 

  

 

  

Derivative contracts - receipts

 

10 278

 

8 265

 

280

 

573

 

486

 

674

Derivative contracts - payments

 

(10 245)

 

(8 366)

 

(243)

 

(568)

 

(467)

 

(601)

Trade payables

 

(3 996)

 

(3 731)

 

(251)

 

(9)

 

(3)

 

(2)

Contingent financial assets and liabilities

 

  

 

  

 

  

 

  

 

  

 

  

Loan commitments given undrawn(3)

 

(495)

 

(71)

 

(172)

 

(174)

 

(78)

 

 –

Loan commitments obtained undrawn(4)

 

1 566

 

(1)

 

(3)

 

1 570

 

 –

 

 –

(1)

Instruments that include a call feature have been presented at their final maturities, if any. Instruments that are contractually due beyond 3 months included EUR 701 million of instruments that have a call period of less than 3 months in 2017.

(2)

Trade receivables maturity analysis did not include accrued receivables of EUR 1 247 million.

(3)

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

Loan commitments obtained undrawn have been included based on the period in which they expire. These amounts include related commitment fees.