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FILED BY NOKIA CORPORATION

PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933

SUBJECT COMPANY: ALCATEL-LUCENT

FILE NO. 001-11130

February 12, 2016

 

LOGO

SUPPLEMENT TO LISTING PROSPECTUS

This document is a supplement to the listing prospectus (the “Listing Prospectus”) of Nokia Oyj (“Nokia” or the “Company”), approved by the Finnish Financial Supervisory Authority on October 23, 2015. The journal number of the Finnish Financial Supervisory Authority’s decision of approval for the Listing Prospectus is FIVA 85/02.05.04/2015, for the supplement dated November 16, 2015 FIVA 101/02.05.04/2015 and for the supplement dated February 2, 2016 FIVA 1/02.05.04/2016. The Finnish Financial Supervisory Authority has on February 12, 2016 approved this supplement with the journal number FIVA 9/02.05.04/2016. A certificate of approval of this supplement, with a copy of this supplement and a French language translation of the summary of the Listing Prospectus as amended through this supplement, will be, in accordance with the Prospectus Directive (2003/71/EC), notified to the French stock market authority (Autorité des marchés financiers, or “AMF”).

The definitions used in this supplement have the same meaning as in the Listing Prospectus, unless otherwise stated. This supplement constitutes a part of the Listing Prospectus and should be read together therewith.

This supplement is prepared due to the announcements and developments that have taken place after the approval of the Listing Prospectus on October 23, 2015, most important of which are listed hereunder, and that have not at the date of this supplement been supplemented to the Listing Prospectus.

 

   

On February 10, 2016, Nokia announced the results of the reopened offer period in the Exchange Offer.

 

   

On February 10, 2016, Nokia announced that USD 1.85 billion senior notes issued by Alcatel Lucent USA Inc. had been redeemed as part of Nokia’s capital structure optimization program.

 

   

On February 11, 2016, Nokia and Alcatel Lucent published their respective unaudited results for the year ended December 31, 2015. In conjunction with its release, Nokia announced that, as of the first quarter 2016, Nokia expects to align its financial reporting under two areas: the Networks business and Nokia Technologies.

 

   

On February 11, 2016, Nokia announced that the Nokia Board of Directors had approved the Nokia Equity Program for 2016 (as defined below) and the issuance of shares held by Nokia.

Consequently, the information contained in the Listing Prospectus is updated in the manner set out in this supplement.

The unaudited interim report of Nokia for the year ended December 31, 2015, as well as Alcatel Lucent’s unaudited consolidated financial statements at December 31, 2015 and related press release concerning Alcatel Lucent’s results for the year ended December 31, 2015 (“Alcatel Lucent Q4 Results Release”) are hereby incorporated by reference into the Listing Prospectus. The section “Documents Incorporated by Reference” on pages 361–362 of the Listing Prospectus is updated accordingly.


Table of Contents

TABLE OF CONTENTS

 

SUPPLEMENTS TO THE LISTING PROSPECTUS

     3   

SUPPLEMENTS TO THE CAUTIONARY STATEMENTS

     3   

SUPPLEMENTS TO THE SECTION “SUMMARY

     3   

SUPPLEMENTS TO THE SECTION “DIVIDENDS AND DIVIDEND POLICY — NOKIA

     14   

SUPPLEMENTS TO THE SECTION “OPERATING AND FINANCIAL REVIEW AND PROSPECTS — NOKIA — RECENT DEVELOPMENTS

     14   

SUPPLEMENTS TO THE SECTION “OPERATING AND FINANCIAL REVIEW AND PROSPECTS — NOKIA — PROSPECTS

     15   

SUPPLEMENTS RELATING TO THE SECTION “CAPITALIZATION AND INDEBTEDNESS OF NOKIA

     17   

SUPPLEMENTS RELATING TO THE SECTION “SELECTED FINANCIAL INFORMATION

     20   

SUPPLEMENTS RELATING TO THE APPROVAL BY THE NOKIA BOARD OF DIRECTORS OF THE EQUITY PROGRAM FOR 2016 AND THE ISSUANCE OF SHARES HELD BY NOKIA

     28   

THE AVAILABILITY OF THE SUPPLEMENT

     30   

 

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SUPPLEMENTS TO THE LISTING PROSPECTUS

Supplements to the cautionary statements

The Listing Prospectus, as supplemented from time to time, and in particular the section “Cautionary Statement Regarding Forward-Looking Statements”, contain forward-looking statements which should be read in conjunction with the other cautionary statements that are included elsewhere, including the section “Risk Factors” of the Listing Prospectus, Nokia Annual Report, Alcatel Lucent Annual Report, Nokia Interim Report, the unaudited interim report of Nokia for the nine months ended September 30, 2015, the unaudited interim report of Nokia for the year ended December 31, 2015, Alcatel Lucent Interim Report, Alcatel Lucent Q3 Interim Report, Alcatel Lucent Q4 Results Release and any other documents that Nokia or Alcatel Lucent have released through their respective stock exchanges. Any forward-looking statements made in this communication are qualified in their entirety by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Nokia will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Nokia or Nokia’s business or operations. Except as required by law, Nokia undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Shareholders and potential investors should note that all of the information concerning Alcatel Lucent presented in the Listing Prospectus, as supplemented from time to time, and in particular in Annex A, is solely based on publicly available information of Alcatel Lucent included in Alcatel Lucent Annual Report and the Alcatel Lucent Interim Report Alcatel Lucent has filed with the SEC, as well as Alcatel Lucent Q3 Interim Report and Alcatel Lucent Q4 Results Release. Nokia confirms that this information has been accurately reproduced and that as far as Nokia is aware and is able to ascertain from information published by Alcatel Lucent, no facts have been omitted which would render the reproduced information inaccurate or misleading.

Supplements to the section “Summary

Elements B.7 and B.9 of the summary is replaced in their entirety with the following information to reflect the respective financial information of Nokia and Alcatel Lucent for the year ended December 31, 2015. Element C.7 is also supplemented with new information. The amended information in the summary has been marked with an asterisk (*).

 

B.7

  Selected historical key financial information  

Nokia

 

The following tables set forth selected consolidated financial information for Nokia. This information is qualified by reference to, and should be read in conjunction with, Nokia’s consolidated financial statements and the notes thereto for the years ended December 31, 2014, 2013 and 2012 and the unaudited interim report of Nokia for the year ended December 31, 2015, all of which are incorporated by reference into this Listing Prospectus. The selected consolidated historical income statement and statement of cash flow data for the years ended December 31, 2014, 2013 and 2012 and the consolidated statement of financial position data as of December 31, 2014, 2013 and 2012 have been derived from Nokia’s audited consolidated financial statements for the respective years, prepared in accordance with the International Financial Reporting Standards (“IFRS”). The selected consolidated historical income statement and statement of cash flow data for the year ended December 31, 2015 and the consolidated statement of financial position as of December 31, 2015 have been derived from the unaudited interim report of Nokia for the year ended December 31, 2015, prepared in accordance with IFRS.*

 

In September 2013, Nokia announced the sale of substantially all of its Devices & Services Business to Microsoft. Subsequent to the approval for the sale received in the Extraordinary General Meeting in November 2013, Nokia Group has presented Devices & Services Business as discontinued operations. The sale was completed on April 25, 2014. In the consolidated income statement for the year 2013, the financial

 

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results of the Devices & Services Business were reported as discontinued operations separately from the continuing operations. The income statement information for the year 2012 were restated accordingly. As of January 1, 2013, Nokia adopted new revised IAS 19 Employee Benefits standard. As a result, the net pension liabilities and other comprehensive income were impacted mainly by the retrospectively applied elimination of the ’corridor’ approach and financial information for the year 2012 were adjusted accordingly. Thus, the restated information for the year 2012 presented in the following tables is unaudited.

 

On August 3, 2015, Nokia announced an agreement to sell its HERE digital mapping and location services business to a consortium of leading automotive companies, comprising AUDI AG, BMW Group and Daimler AG. The sale of HERE was completed on December 4, 2015. In the unaudited consolidated income statement for the financial year ended December 31, 2015, HERE has been reported as discontinued operations separately from the continuing operations. The income statement information for the year 2014 were restated accordingly. Thus, the restated consolidated income statement information for the year 2014 presented in the following table is unaudited. HERE has been reported as part of Nokia’s continuing operations in the consolidated financial information for the financial years ended December 31, 2013 and 2012.*

 

     Year ended
December 31,
2015
(unaudited)*
   

 

Year ended December 31,

 
       2014
(unaudited)
    2013
(audited)
    2012
(unaudited)
 
CONSOLIDATED INCOME STATEMENT    (in EUR
million,
except for
shares
outstanding
and earnings
per share)
    (in EUR million, except for shares
outstanding and earnings per share)
 

Net sales

     12 499        11 763        12 709        15 400   

Cost of sales

     (7 045     (6 855     (7 364     (9 841
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     5 453        4 907        5 345        5 559   

Research and development expenses

     (2 126     (1 948     (2 619     (3 081

Selling, general and administrative expenses

     (1 651     (1 453     (1 671     (2 062

Other income and expenses

     12        (95     (536 )1      (1 237 )2 
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit/(loss)

     1 688        1 412        519        (821

Share of results of associated companies and joint ventures

     29        (12     4        (1

Financial income and expenses

     (177     (401     (280     (357
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit/(loss) before tax

     1 540        999        243        (1 179

Income tax (expense)/benefit

     (346     1 718        (202     (304
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit/(loss) from continuing operations

     1 194        2 718     41        (1 483
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

        

Equity holders of the parent

     1 192        2 710     186        (771

Non-controlling interests

     2        8        (145     (712
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit/(loss) from discontinued operations

     1 274        758     (780     (2 303
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

        

Equity holders of the parent

     1 274        752        (801     (2 334

Non-controlling interests

     0        6        21        31   

Profit/(loss)

     2 468        3 476        (739     (3 786
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

        

Equity holders of the parent

     2 466        3 462        (615     (3 105

Non-controlling interests

     2        14        (124     (681

Earnings per share (for profit/(loss) attributable to the equity holders of the parent)

        

Basic earnings per share (in EUR)

        

Continuing operations

     0.32        0.73        0.05        (0.21

Discontinued operations

     0.35        0.20        (0.22     (0.63

Nokia Group

     0.67        0.94        (0.17     (0.84

Diluted earnings per share (in EUR)

        

Continuing operations

     0.31        0.67        0.05        (0.21

Discontinued operations

     0.32        0.18        (0.22     (0.63

Nokia Group

     0.63        0.85        (0.17     (0.84

Average number of shares (’ 000 shares)

        

Basic

        

Continuing operations

     3 670 934        3 698 723        3 712 079        3 710 845   

Discontinued operations

     3 670 934        3 698 723        3 712 079        3 710 845   

Nokia Group

     3 670 934        3 698 723        3 712 079        3 710 845   

Diluted

        

Continuing operations

     3 949 312        4 131 602        3 733 364        3 710 845   

Discontinued operations

     3 949 312        4 131 602        3 712 079        3 710 845   

Nokia Group

     3 949 312        4 131 602        3 712 079        3 710 845   

 

1    Consist of “Other income” of EUR 272 million and “Other expenses” of EUR (808) million.

2    Consist of “Other income” of EUR 276 million and “Other expenses” of EUR (1 513) million.

       

       

 

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Year ended
December 31,

2015

   

 

Year ended December 31,

 
       2014     2013     2012  
     (unaudited)*     (unaudited)     (audited)     (unaudited)  
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME    (in EUR
million)
    (in EUR million)  

Profit/(loss)

     2 468        3 476        (739     (3 786
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income/(expense)

        

Items that will not be reclassified to profit or loss:

        

Remeasurements on defined benefit pensions

     112        (275     83        (228

Income tax related to items that will not be reclassified to profit or loss

     (28     96        (3     22   

Items that may be reclassified subsequently to profit or loss:

        

Translation differences

     (1 054     820        (496     41   

Net investment hedges

     323        (167     114        (58

Cash flow hedges

     (5     (30     3        (41

Available-for-sale investments

     57        106        49        35   

Other increase/(decrease), net

     1        40     5        10   

Income tax related to items that may be reclassified subsequently to profit or loss

     (88     16        1        12   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income/(expense), net of tax

     (682     606        (244     (207
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     1 786        4 082        (983     (3 993
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

        

Equity holders of the parent

     1 781        4 061        (863     (3 281

Non-controlling interests

     5        21        (120     (712
     1 786        4 082        (983     (3 993

Attributable to equity holders of the parent:

        

Continuing operations

     1 457        2 350     34        (831

Discontinued operations

     324        1 711     (897     (2 450
     1 781        4 061        (863     (3 281

Attributable to non-controlling interest:

        

Continuing operations

     5        16        (139     (740

Discontinued operations

     0        5        19        28   
  

 

 

   

 

 

   

 

 

   

 

 

 
     5        21        (120     (712

 

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     As of
December 31,
    As of December 31,  
     2015     2014     2013     2012  
     (unaudited)*     (audited)     (audited)     (unaudited)  
CONSOLIDATED STATEMENT OF FINANCIAL POSITION    (in EUR
million)
    (in EUR million)  

ASSETS

        

Goodwill

     237        2 563        3 295        4 876   

Other intangible assets

     323        350        296        647   

Property, plant and equipment

     695        716        566        1 431   

Investments in associated companies and joint ventures

     84        51        65        58   

Available-for-sale investments

     948        828        741        689   

Deferred tax assets

     2 634        2 720        890        1 279   

Long-term loans receivable

     49        34        96        125   

Prepaid pension costs1

     25        31        38        152   

Other non-current assets1

     51        47        61        66   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-current assets

     5 046        7 339        6 048        9 323   

Inventories

     1 014        1 275        804        1 538   

Accounts receivable, net of allowances for doubtful accounts

     3 913        3 429     2 901        5 551   

Prepaid expenses and accrued income

     749        913        660        2 682   

Current income tax assets

     171        124        146        495   

Current portion of long-term loans receivable

     21        1        29        35   

Other financial assets

     107        266        285        451   

Investments at fair value through profit and loss, liquid assets

     687        418        382        415   

Available-for-sale investments, liquid assets

     2 167        2 127        956        542   

Cash and cash equivalents2

     6 995        5 170        7 633        8 952   
  

 

 

   

 

 

   

 

 

   

 

 

 

Current assets

     15 824        13 724        13 796        20 661   

Assets held for sale

     —          —          89        —     

Assets of disposal groups classified as held for sale

     —          —          5 258        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

     20 870        21 063        25 191        29 984   

SHAREHOLDERS’ EQUITY AND LIABILITIES

        

Share capital

     246        246        246        246   

Share issue premium

     380        439        615        446   

Treasury shares at cost

     (718     (988     (603     (629

Translation differences

     292        1 099        434        746   

Fair value and other reserves

     148        22        80        (5

Reserve for invested non-restricted equity

     3 820        3 083        3 115        3 136   

Retained earnings

     6 279        4 710        2 581        3 997   
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital and reserves attributable to equity holders of the parent

     10 446        8 611        6 468        7 937   

Non-controlling interests

     21        58        192        1 302   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     10 468        8 669        6 660        9 239   
  

 

 

   

 

 

   

 

 

   

 

 

 

Long-term interest-bearing liabilities

     2 023        2 576        3 286        5 087   

Deferred tax liabilities

     62        32        195        701   

Deferred revenue and other long-term liabilities

     1 677        2 197        630        997   

Provisions

     250        301        242        304   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-current liabilities

     4 011        5 107     4 353        7 089   

Current portion of interest-bearing liabilities

     1        1        3 192        201   

Short-term borrowing

     50        115        184        261   

Other financial liabilities

     113        174        35        90   

Current income tax liabilities

     446        481        484        499   

Accounts payable

     1 910        2 313        1 842        4 394   

Accrued expenses, deferred revenue and other liabilities

     3 395        3 632        3 033        6 223   

Provisions

     476        572        680        1 988   
  

 

 

   

 

 

   

 

 

   

 

 

 

Current liabilities

     6 391        7 288        9 450        13 656   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities of disposal groups classified as held for sale

     —          —          4 728        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity and liabilities

     20 870        21 063        25 191        29 984   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1 

Prepaid pension costs previously reported under “Other non-current assets” have been reported separately since June 30, 2015. The information for prior periods presented has been adjusted accordingly.

2 

Since June 30, 2015, “Bank and cash” and “Available for sale investments, cash equivalents” have been reported as a single line item “Cash and cash equivalents”. The information for prior periods presented has been adjusted accordingly.

 

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     Year ended
December 31,
    Year ended December 31,  
     2015     2014     2013     2012  
     (unaudited)*     (audited)  

CONSOLIDATED STATEMENT OF CASH FLOWS

   (in EUR
million)
    (in EUR million)  

Net cash from/(used in) operating activities

     507        1 275        72        (354

Net cash from/(used in) investing activities

     1 896        886        (691     562   

Net cash used in financing activities

     (584     (4 576     (477     (465

Foreign exchange adjustment

     6        (48     (223     (27

Net increase/(decrease) in cash and equivalents

     1 825        (2 463     (1 319     (284

Cash and cash equivalents at beginning of period

     5 170        7 633        8 952        9 236   

Cash and cash equivalents at end of period

     6 995        5 170        7 633        8 952   

 

   

Consolidated statement of cash flows combines cash flows from both the continuing and the discontinued operations.

 

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Key Ratios

 

     Year ended
December 31,
    Year ended December 31,  
     2015     2014     2013     2012  
     (unaudited)*     (unaudited)  

Key ratios at the reporting date, continuing operations

        

Earnings per share for profit attributable to equity holders of parent

        

Earnings per share, basic, EUR

     0.32        0.73        0.05 1      (0.21

Earnings per share, diluted, EUR

     0.31        0.67        0.05 1      (0.21

P/E ratio, basic

     20.61        8.99        116.40        neg.   

Ordinary dividend per share, EUR*

     0.16 4      0.14        0.11        0   

Special dividend per share, EUR*

     0.10 4      0        0.26        0   

Total dividends paid, EURm

     1 500        511        1 374        0   

Payout ratio, basic2

     0.50        0.19     2.20     0   

Dividend yield, %3

     2.43        2.13        1.89     0   

Shareholders’ equity per share, EUR*

     2.65        2.36        1.74        2.14   

Market capitalization, EURm

     25 979        23 932        21 606        10 873   

 

1 

Earnings per share (basic and diluted) for the year ended December 31, 2013 are audited.

2 

Payout ratio, basic is calculated based on the Ordinary dividend per share, EUR. The payout ratio including the Special dividend per share is 0.81 for the year ended December 31, 2015, 0.19 for the year ended December 31, 2014 and 7.40 for the year ended December 31, 2013.*

3 

Dividend yield, % is calculated based on the Ordinary dividend per share, EUR. The dividend yield, % including the Special dividend per share is 3.94 for the year ended December 31, 2015, 2.13 for the year ended December 31, 2014 and 6.36 for the year ended December 31, 2013.*

4 

The ordinary and special dividend for 2015 will be proposed by the Nokia Board of Directors. The resolution on the dividend will be made by the Annual General Meeting in 2016.*

 

   

In November 2011, Nokia Networks announced its strategy to focus on mobile broadband and services. It also announced an extensive global restructuring program that ultimately resulted in the reduction of its annualized operating expenses and production overhead by over EUR 1.5 billion when the program was completed at the end of 2013. As part of its strategy of focusing on mobile broadband, Nokia Networks also divested a number of non-core businesses.

   

Beginning in 2013, Nokia undertook a series of transactions to transform its business portfolio. On July 1, 2013, Nokia announced the agreement to acquire Siemens’ 50% stake in the companies’ joint venture Nokia Siemens Networks. The purchase price was EUR 1.7 billion and the transaction closed on August 7, 2013. On September 3, 2013, Nokia announced that it had signed an agreement to sell its Devices & Services Business to Microsoft for a total purchase price of EUR 5.44 billion, of which EUR 3.79 billion related to the Sale of the Devices & Services Business and EUR 1.65 billion related to a mutual patent license agreement. In conjunction with the transaction, Nokia established the Nokia Technologies business to focus on technology development and intellectual property rights activities. The transaction significantly strengthened the Company’s financial position and subsequent to the transaction, in 2014, Nokia started the optimization of its capital structure and recommenced dividend payments, distributed excess capital to shareholders and reduced its interest-bearing debt.

   

On April 15, 2015, Nokia continued its transformation with the announcement that it had signed an agreement to acquire Alcatel Lucent through the Exchange Offer on the basis of 0.5500 Nokia Shares for each Alcatel Lucent Share. In conjunction with this announcement, Nokia announced that it has suspended its capital structure optimization program effective immediately. On August 3, 2015, Nokia announced an agreement to sell HERE to an automotive industry consortium and estimates that

 

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it will receive net proceeds of slightly above EUR 2.5 billion. The transaction was completed on December 4, 2015.* On October 29, 2015, Nokia announced a planned EUR 7 billion program to optimize Nokia’s capital structure and return excess capital to shareholders, subject to the closing of the Alcatel Lucent and HERE transactions, as well as the conversion of all Nokia and Alcatel Lucent convertible bonds.

   

Nokia obtained control of Alcatel Lucent on January 4, 2016 when the interim results of the successful initial Exchange Offer were announced by the AMF with a shareholding of 76.31% of the share capital and at least 76.01% of the voting rights. On January 14, 2016, the combined operations of Nokia and Alcatel Lucent commenced. On the same day, Nokia reopened the Exchange Offer. The results of the reopened offer period in the Exchange Offer were published on February 10, 2016 and as a result, Nokia holds 91.25% of the share capital and at least 91.17% of the voting rights of Alcatel Lucent.*

   

 

Alcatel Lucent

   

The following tables set out selected consolidated financial information for Alcatel Lucent. This information is qualified by reference to, and should be read in conjunction with, Alcatel Lucent’s consolidated financial statements and the notes thereto for the year ended December 31, 2014, which are included in Annex A, Alcatel Lucent’s consolidated financial statements and the notes thereto for the years ended December 31, 2013 and 2012, which are incorporated by reference into this Listing Prospectus, and Alcatel Lucent’s unaudited consolidated financial statements at December 31, 2015, which are incorporated by reference into this Listing Prospectus. The selected consolidated historical income statement and statement of cash flow data for the years ended December 31, 2014, 2013 and 2012 and the consolidated statement of financial position data as of December 31, 2014, 2013 and 2012 have been derived from Alcatel Lucent’s audited consolidated financial statements for the respective years, prepared in accordance with IFRS. The selected consolidated historical income statement and statement of cash flow data for the year ended December 31, 2015 and the consolidated statement of financial position as of December 31, 2015 have been derived from Alcatel Lucent’s unaudited consolidated financial statements at December 31, 2015, prepared in accordance with IFRS.*

   

On September 30, 2014, Alcatel Lucent completed the disposal of 85% of its Enterprise business to China Huaxin, for cash proceeds of EUR 205 million, following the binding offer Alcatel Lucent received early February 2014. As a result of this transaction, the results pertaining to the Enterprise business for the year ended December 31, 2014 were treated as discontinued operations and years ended December 31, 2013 and 2012 were re-presented accordingly.

 

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     For the year
ended as of
December 31,
    For the year ended as of December 31,  
     2015     2014     20131     20121  
     (unaudited)*     (audited)  
CONSOLIDATED INCOME STATEMENTS    (in EUR
million, except
per share data)
    (in EUR million, except per share data)  

Revenues

     14 275        13 178        13 813        13 764   

Cost of sales

     (9 132     (8 770     (9 491     (9 753

Gross profit

     5 143        4 408        4 322        4 011   

Administrative and selling expenses

     (1 761     (1 621     (1 862     (2 161

Research and development costs

     (2 378     (2 215     (2 268     (2 330

Income (loss) from operating activities before restructuring costs, litigations, gain/(loss) on disposal of consolidated entities, impairment of assets and post-retirement benefit plan amendments

     1 004        572        192        (480

Restructuring costs

     (401     (574     (518     (479

Litigations

     (20     7        (2     2   

Gain/(loss) on disposal of consolidated entities

     (1     20        2        11   

Transaction-related costs

     (104     —          —          —     

Impairment of assets

     (193     —          (548     (894

Post-retirement benefit plan amendments

     404        112        135        204   

Income (loss) from operating activities

     689        137        (739     (1 636

Finance cost

     (269     (291     (392     (279

Other financial income (loss)

     (136     (211     (318     (394

Share in net income (losses) of associates & joint ventures

     2        15        7        5   

Income (loss) before income tax and discontinued operations

     286        (350     (1 442     (2 304

Income tax (expense) benefit

     16        316        173        (423

Income (loss) from continuing operations

     302        (34     (1 269     (2 727

Income (loss) from discontinued operations

     (16     (49     (25     639   

NET INCOME (LOSS)

     286        (83     (1 294     (2 088

Attributable to:

        

Equity owners of the parent

     257        (118     (1 304     (2 011

Non-controlling interests

     29        35        10        (77

Earnings (loss) per share (in euros)2

        

Basic earnings (loss) per share:

        

From continuing operations

     0.10        (0.02     (0.53     (1.11

From discontinued operations

     (0.01     (0.02     (0.01     0.27   

Attributable to the equity owners of the parent

     0.09        (0.04     (0.54     (0.84

Diluted earnings (loss) per share:

        

From continuing operations

     0.10        (0.02     (0.53     (1.11

From discontinued operations

     (0.01     (0.02     (0.01     0.22   

Attributable to the equity owners of the parent

     0.09        (0.04     (0.54     (0.84

 

1

2013 and 2012 amounts are re-presented to reflect the impacts of discontinued operations.

2 

As a result of the 2013 capital increase made by Alcatel Lucent through an offering of preferential subscription rights to existing shareholders, the calculation of basic and diluted earnings per share has been adjusted retrospectively. Number of outstanding ordinary shares has been adjusted to reflect the proportionate change in the number of shares.

 

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     For the year
ended as of
December 31,
    For the year ended as of December 31,  
     2015     2014     2013     2012  
     (unaudited)*     (audited)  
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME    (in EUR
million)
    (in EUR million)  

Net income (loss) for the year / period

     286        (83     (1 294     (2 088

Items to be subsequently reclassified to Income Statement

     386        510        (221     (4

Financial assets available for sale

     2        8        11        16   

Cumulative translation adjustments

     384        503        (232     (34

Cash flow hedging

     —          (1     —          14   

Tax on items recognized directly in equity

     —          —          —          —     

Items that will not be subsequently reclassified to Income Statement

     878        (1 568     1 411        71   

Actuarial gains (losses) and adjustments arising from asset ceiling limitation and IFRIC 14

     933        (1 822     1 667        172   

Tax on items recognized directly in equity

     (55     254        (256     (101

Other comprehensive income (loss) for the year

     1 264        (1 058     1 190        67   

TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR

     1 550        (1 141     (104     (2 021

Attributable to:

        

Equity owners of the parent

     1 467        (1 256     (99     (1 933

Non-controlling interests

     83        115        (5     (88

 

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     As of
December 31,
    As of December 31,  
     2015     2014     2013     2012  
     (unaudited)*     (audited)  
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION    (in EUR
million)
    (in EUR million)  

ASSETS

        

Non-current assets:

        

Goodwill

     3 215        3 181        3 156        3 820   

Intangible assets, net

     1 435        1 011        1 001        1 175   
  

 

 

   

 

 

   

 

 

   

 

 

 

Goodwill and intangible assets, net

     4 650        4 192        4 157        4 995   

Property, plant and equipment, net

     1 382        1 132        1 075        1 133   

Investments in associates & joint ventures

     20        51        35        29   

Other non-current financial assets, net

     361        406        322        341   

Deferred tax assets

     1 740        1 516        1 000        985   

Prepaid pension costs

     2 935        2 636        3 150        2 797   

Other non-current assets

     509        429        413        428   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current assets

     11 597        10 362        10 152        10 708   

Current assets:

        

Inventories and work in progress, net

     1 600        1 971        1 935        1 940   

Trade receivables and other receivables, net

     2 535        2 528        2 482        2 860   

Advances and progress payments

     45        43        46        53   

Other current assets

     778        877        751        726   

Current income taxes

     64        64        33        118   

Marketable securities, net

     1 626        1 672        2 259        1 528   

Cash and cash equivalents

     4 905        3 878        4 096        3 401   

Current assets before assets held for sale

     11 553        11 033        11 602        10 626   

Assets held for sale and assets included in disposal groups held for sale

     39        65        142        20   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     11 592        11 098        11 744        10 646   
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

     23 189        21 460        21 896        21 354   

EQUITY AND LIABILITIES

        

Equity:

        

Capital stock

     152        141        140        4 653   

Additional paid-in capital

     21 232        20 869        20 855        16 593   

Less treasury stock at cost

     (1 084     (1 084     (1 428     (1 567

Accumulated deficit, fair value and other reserves

     (16 882     (17 633     (14 588     (15 159

Other items recognized directly in equity

     54        52        45        —     

Cumulative translation adjustments

     (36     (366     (787     (571

Net income (loss) - attributable to the equity owners of the parent

     257        (118     (1 304     (2 011

Equity attributable to equity owners of the parent

     3 693        1 861        2 933        1 938   

Non-controlling interests

     904        833        730        745   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     4 597        2 694        3 663        2 683   

Non-current liabilities:

        

Pensions, retirement indemnities and other post-retirement benefits

     4 506        5 163        3 854        5 338   

Convertible bonds and other bonds, long-term

     4 394        4 696        4 711        3 727   

Other long-term debt

     238        179        211        227   

Deferred tax liabilities

     946        872        990        889   

Other non-current liabilities

     561        175        188        177   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current liabilities

     10 645        11 085        9 954        10 358   

Current liabilities:

        

Provisions

     1 128        1 364        1 416        1 649   

Current portion of long-term debt and short-term debt

     579        402        1 240        851   

Customers’ deposits and advances

     794        810        681        718   

Trade payables and other payables

     3 578        3 571        3 518        3 726   

Current income tax liabilities

     65        73        93        145   

Other current liabilities

     1 789        1 429        1 237        1 204   

Current liabilities before liabilities related to disposal groups held for sale

     7 933        7 649        8 185        8 293   

Liabilities related to disposal groups held for sale

     14        32        94        20   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     7 947        7 681        8 279        8 313   
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL EQUITY AND LIABILITIES

     23 189        21 460        21 896        21 354   

 

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     For the year
ended
December 31,
    For the year ended December 31,  
     2015     2014     20131     20121  
     (unaudited)*     (audited)  
CONSOLIDATED STATEMENTS OF CASH FLOWS   

(in EUR

million)

    (in EUR million)  

Net cash provided (used) by operating activities

     1 177        127        (221     (144

Net cash provided (used) by investing activities

     (485     235        (1 128     (1 039

Net cash provided (used) by financing activities

     (211     (1 383     2 350        (12

Cash provided (used) by operating activities of discontinued operations

     11        34        65        (71

Cash provided (used) by investing activities of discontinued operations

     30        71        (64     1 066   

Cash provided (used) by financing activities of discontinued operations

     —          65        (15     36   

Net effect of exchange rate changes

     505        633        (292     23   

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     1 027        (218     695        (141

Cash and cash equivalents at beginning of period / year

     3 878        4 096        3 401        3 533   

Cash and cash equivalents at beginning of period / year classified as assets held for sale

     —          —          —          9   

Cash and cash equivalents at end of period / year 2

     4 905        3 878        4 096        3 400   

Cash and cash equivalents at end of period / year classified as assets held for sale

     —          —          —          1   

Cash and cash equivalents including cash and cash equivalents classified as held for sale at the end of period

     4 905        3 878        4 096        3 401   

 

1 

2013 and 2012 amounts are re-presented to reflect the impacts of discontinued operations.

2 

Includes EUR 1 505 million of cash and cash equivalents held in countries subject to exchange control restrictions as of December 31, 2015 (EUR 1 019 million as of December 31, 2014, EUR 756 million as of December 31, 2013 and EUR 949 million as of December 31, 2012). Such restrictions can limit the use of such cash and cash equivalents by other Alcatel Lucent Group subsidiaries and Alcatel Lucent.

 

   

On June 19, 2013, Alcatel Lucent announced the Shift Plan, a detailed three-year plan to transform itself into a specialist provider of IP and Cloud Networking and Ultra-Broadband Access. As part of this process, effective from July 1, 2013, Alcatel Lucent implemented a new organization composed of three reportable segments: Core Networking, Access and Other.

   

The Shift Plan has targeted investments in Core Networking businesses (including IP Routing, IP Transport, IP Platforms and associates services), increasing segment operating cash flow from the Access segment, and technological partnerships. The Shift Plan has also focused on market diversification and rightsizing Alcatel Lucent’s cost structure. In particular, the Shift Plan aims to reduce Alcatel Lucent’s fixed-cost base by EUR 950 million in 2015 compared to its 2012 cost base. Alcatel

 

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Lucent has stated that it expects that the cumulative amount of restructuring cash outlays pursuant to the Shift Plan should be approximately EUR 1.8 billion, of which approximately EUR 1.4 billion will be incurred between 2013 and 2015, with the remainder in 2016.

 

In addition, Alcatel Lucent has completed multiple dispositions as part of the Shift Plan and re-profiled and reduced the financial debt of the company.

 

Nokia obtained control of Alcatel Lucent on January 4, 2016 when the interim results of the successful initial Exchange Offer were announced by the AMF with a shareholding of 76.31% of the share capital and at least 76.01% of the voting rights. On January 14, 2016, the combined operations of Nokia and Alcatel Lucent commenced. On the same day, Nokia reopened the Exchange Offer. The results of the reopened offer period in the Exchange Offer were published on February 10, 2016 and as a result, Nokia holds 91.25% of the share capital and at least 91.17% of the voting rights of Alcatel Lucent.*

B.9

  Profit forecast and estimates  

Not applicable.*

C.7

  Dividend policy  

On February 11, 2016, Nokia announced that the Board of Directors of Nokia will propose to the Annual General Meeting in 2016 a dividend of EUR 0.16 per share for 2015 and a special dividend of EUR 0.10 per share. The resolution on the dividend will be made by the Annual General Meeting in 2016.*

Supplements to the section “Dividends and Dividend Policy — Nokia

The information under the section “Dividends and Dividend Policy — Nokia” on page 189 of the Listing Prospectus is supplemented with the following information:

On February 11, 2016, Nokia announced that the Board of Directors of Nokia will propose to the Annual General Meeting in 2016 a dividend of EUR 0.16 per share for 2015 and a special dividend of EUR 0.10 per share. The resolution on the dividend will be made by the Annual General Meeting in 2016.

Supplements to the section “Operating and Financial Review and Prospects — Nokia — Recent Developments”

The information under the section “Operating and Financial Review and Prospects — Nokia — Recent Developments” on pages 252–253 of the Listing Prospectus is supplemented with the following information:

On February 10, 2016, Nokia announced the results of its successful reopened Exchange Offer for Alcatel Lucent Securities. Nokia will hold 91.25% of the share capital of Alcatel Lucent, following the settlement of the Alcatel Lucent Securities tendered into the reopened offer, which is expected to occur on February 12, 2016. This equates to Nokia holding 88.07% of the share capital of Alcatel Lucent on a fully diluted basis.

Nokia confirmed that it will issue approximately 321 million new Nokia Shares as consideration for the Alcatel Lucent Securities that have been tendered into the reopened Exchange Offer. Nokia expects to register these new Nokia Shares with the Finnish Trade Register on February 12, 2016. After the registration, the total number of Nokia Shares will equal approximately 5 769 million shares. The trading in the new Nokia Shares is expected to commence on February 15, 2016.

Assuming the conversion of all remaining outstanding Alcatel Lucent Securities into Nokia Shares at the exchange ratio offered in the Exchange Offer, the total number of Nokia Shares would equal approximately 6 billion shares.

On February 10, 2016, Nokia announced that the USD 1.85 billion aggregate principal amount of senior notes issued by Alcatel Lucent USA Inc., comprising the USD 650 million 4.625% notes due July 2017, USD 500 million 8.875% notes due January 2020 and USD 700 million 6.750% notes due November 2020, had been redeemed in accordance with terms and conditions of the notes. Alcatel Lucent USA Inc. is a subsidiary of Alcatel Lucent S.A.

 

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The redemption was part of Nokia’s EUR 7 billion capital structure optimization program announced on October 29, 2015, which focuses on, among other things, reducing interest-bearing liabilities of the combined Nokia and Alcatel Lucent by approximately EUR 2 billion.

Alcatel Lucent S.A. had also on February 9, 2016 terminated its EUR 504 million revolving credit facility. Following these transactions all debt items in the Combined Company capital structure are based on investment grade documentation and have no financial covenants.

On February 11, 2016, Nokia announced that, as of the first quarter 2016, Nokia expects to align its financial reporting under two areas: the Networks business and Nokia Technologies. The Networks business will be comprised of four business groups: Mobile Networks, Fixed Networks, Applications & Analytics and IP/Optical Networks. Nokia Technologies will continue to operate as a separate business group, with a clear focus on licensing and the incubation of new technologies, and will include the licensing and portfolio management operations from Alcatel Lucent. In addition, Nokia expects to operate the undersea cables business, Alcatel Lucent Submarine Networks (ASN), and the antenna systems business, Radio Frequency Systems (RFS), as separate entities and plans to report ASN and RFS as part of Group Common Functions.

Supplements to the section “Operating and Financial Review and Prospects — Nokia — Prospects”

The information under the section “Operating and Financial Review and Prospects — Nokia — Prospects” on pages 253–254 of the Listing Prospectus is replaced with the following information:

This section “Prospects” includes forward-looking statements. Forward-looking statements are no guarantees of future developments, and Nokia’s actual results may differ materially from the results described in or implied by forward-looking statements contained herein due to various factors, some of them described in the sections “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors”. Nokia cautions investors not to place undue reliance on these forward-looking statements, which speak only as at the date of the Listing Prospectus, as supplemented from time to time.

The following table sets forth Nokia’s outlook as disclosed in conjunction with the unaudited interim report of Nokia for the year ended December 31, 2015.

This outlook does not constitute a profit forecast, and no auditor’s statement has been issued thereon.

 

    

Metric1

  

Guidance

 

Commentary

Nokia

  

Annual operating cost synergies

  

Approximately EUR 900 million of net operating cost synergies to be achieved in full year 2018

 

Compared to the combined non-IFRS operating costs of Nokia and Alcatel Lucent for full year 2015. Expected to be derived from a wide range of initiatives related to operating expenses and cost of sales, including:

       

    •  

  

Streamlining of overlapping products and services, particularly within the Mobile Networks business group;

       

    •  

  

Rationalization of regional and sales organizations;

       

    •  

  

Rationalization of overhead, particularly within manufacturing, supply-chain, real estate and information technology;

       

    •  

  

Reduction of central function and public company costs; and

       

    •  

  

Procurement efficiencies, given the Combined Company’s expanded purchasing power.

 

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Annual interest expense reduction

  

Approximately EUR 200 million of reductions in interest expenses to be achieved on a full year basis in 2016 (update)

 

Compared to the cost of debt run rate for the combined entity at year end 2014. This is an update to the earlier annual interest expense reduction target of approximately EUR 200 million of reductions in interest expenses to be achieved on a full year basis in 2017.

Networks

  

Full year 2016 net sales

Full year 2016 non-IFRS operating margin

  

Not provided

 

Due to the very recent acquisition of Alcatel Lucent, Nokia believes it is not appropriate to provide an annual outlook for the new combined Networks business at the present time, and intends to provide its full year outlook in conjunction with its Q1 results announcement. Q1 2016 net sales and non-IFRS operating margin are expected to be influenced by factors including:

       

    •  

  

A flattish capex environment in 2016 for Nokia’s overall addressable market;

       

    •  

  

A declining wireless infrastructure market in 2016, with a greater than normal seasonal decline in Q1 2016;

       

    •  

  

Competitive industry dynamics;

       

    •  

  

Product and regional mix;

       

    •  

  

The timing of major network deployments; and

       

    •  

  

Execution of integration and synergy plans.

Nokia Technologies

  

Full year 2016 net sales

  

Not provided

 

Due to risks and uncertainties in determining the timing and value of significant licensing agreements, Nokia believes it is not appropriate to provide an annual outlook.

Factors that are outside Nokia’s influence affecting the outlook relate mainly to a flattish capex environment in 2016 for Nokia’s overall addressable market, a declining wireless infrastructure market in 2016, with greater than normal seasonal decline in Q1 2016, competitive industry dynamics, product and regional mix, and the timing of major network deployments. Additional risk factors can be found in the section “Risk Factors—Risks Relating to the Operating Environment, Business and Financing of Nokia”.

 

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Supplements relating to the section “Capitalization and Indebtedness of Nokia

The section “Capitalization and Indebtedness of Nokia” on pages 187–188 of the Listing Prospectus is replaced with the information presented herein.

The following table sets forth Nokia Group’s capitalization and indebtedness as at December 31, 2015 derived from the unaudited interim report of Nokia for the year ended December 31, 2015. This table should be read together with the unaudited interim report of Nokia for the year ended December 31, 2015, which is incorporated by reference into this Listing Prospectus, as well as the following section “Operating and Financial Review and Prospects—Nokia”, including “—Liquidity and Capital Resources”.

 

EUR million

   As of December 31,
2015
Actual
(unaudited)
 

Capitalization

  

Short-term interest-bearing liabilities

     51   

Unguaranteed/Unsecured

     51   

Guaranteed/Secured

     —     

Long-term interest-bearing liabilities

     2 023   

Unguaranteed/Unsecured

     2 023   

Guaranteed/Secured

     —     
  

 

 

 

Total interest-bearing liabilities

     2 074   

Shareholders’ equity

  

Share capital

     246   

Share issue premium

     380   

Treasury shares at cost

     (718

Translation differences

     292   

Fair value and other reserves

     148   

Reserve for invested non-restricted equity

     3 820   

Retained earnings

     6 279   
  

 

 

 

Capital and reserves attributable to equity holders of the parent

     10 446   

Non-controlling interest

     21   

Total equity

     10 468   
  

 

 

 

Total shareholders’ equity and interest-bearing liabilities

     12 542   

Net indebtedness

  

Cash and cash equivalents

     6 995   

Available-for-sale investments, liquid assets

     2 167   

Investments at fair value through profit and loss, liquid assets

     687   
  

 

 

 

Liquidity

     9 849   

Current portion of long-term interest bearing liabilities

     1   

Short-term borrowings

     50   
  

 

 

 

Total short-term interest bearing liabilities

     51   

Net current financial indebtedness (net cash)

     9 798   

Long-term interest-bearing liabilities

     2 023   
  

 

 

 

Net financial indebtedness (net cash)

     7 775   

 

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Nokia obtained control of Alcatel Lucent on January 4, 2016. Following the initial and reopened Exchange Offer, Nokia holds 91.25% of the share capital and 91.17% of the voting rights of Alcatel Lucent. Based on the results of the initial and reopened Exchange Offer, a total of 1.8 billion new Nokia Shares are issued to the holders of Alcatel Lucent Securities tendered in the Exchange Offer. The closing price of the Nokia Share on Nasdaq Helsinki as at the date of acquisition (i.e. January 4, 2016) was EUR 6.58.

The following table sets forth Alcatel Lucent’s indebtedness as at December 31, 2015. The information presented below has been derived from Alcatel Lucent’s unaudited consolidated financial statements at December 31, 2015, which are incorporated by reference into this Listing Prospectus, and should be read together therewith.

 

Net indebtedness

  

Marketable securities – short-term, net

     1 626   

Cash and cash equivalents

     4 905   
  

 

 

 

Liquidity

     6 531   

Current portion of long term debt – bonds and credit facilities 1) 2)

     190   

Current portion of other long-term debt and short-term debt

     389   
  

 

 

 

Total short-term interest bearing liabilities

     579   

Net current financial indebtedness (net cash)

     5 952   

Convertible bonds and other bonds, long-term 1) 2)

     4 394   

Other long-term debt

     238   
  

 

 

 

Net financial indebtedness (net cash) before derivative instrument adjustments

     1 320   

Derivative instruments on financial debt

     88   
  

 

 

 

Net financial indebtedness (net cash)

     1 409   

 

1)

The carrying value of the 2018 OCEANEs, 2019 OCEANEs and 2020 OCEANEs that were outstanding was EUR 1 302 million as of December 31, 2015. As a result of the Exchange Offer, Nokia holds 99.62%, 37.18% and 68.17% of the 2018 OCEANEs, 2019 OCEANEs and 2020 OCEANEs, respectively. After consideration of the tendered OCEANEs, the remaining OCEANEs carrying amount outstanding as of December 31, 2015 was EUR 473 million.

2)

The total amount of outstanding Alcatel Lucent senior notes as of December 31, 2015 was EUR 3 282 million (carrying value) that will be assumed by Nokia through the acquisition. Nokia announced on February 10, 2016 that the USD 1 850 million (EUR 1 699 million) aggregate principal amount of senior notes issued by Alcatel Lucent USA Inc., comprising the USD 650 million 4.625% notes due July 2017, USD 500 million 8.875% notes due January 2020 and USD 700 million 6.750% notes due November 2020, had been redeemed on February 10, 2016 in accordance with the terms and conditions of the notes. The carrying value for the redeemed bonds as of December 31, 2015 was EUR 1 682 million. The redemption is part of Nokia’s planned EUR 7 billion capital structure optimization program announced on October 29, 2015, which focuses on, among other things, reducing interest-bearing liabilities of the combined Nokia and Alcatel Lucent by approximately EUR 2 billion.

Alcatel Lucent S.A. has also on February 9, 2016 terminated its EUR 504 million revolving credit facility. Following these transactions, all debt items in the Combined Company capital structure are based on investment grade documentation and have no financial covenants. Alcatel Lucent had not utilized the revolving credit facility as of December 31, 2015.

Nokia’s Board of Directors will propose to the Annual General Meeting of Nokia in 2016 a dividend of EUR 0.16 per share for 2015 and a special dividend of EUR 0.10 per share. The distributable funds on the balance sheet of the parent company as at December 31, 2015 amounted to EUR 9 456 million. Proposed dividend is estimated to result

 

18


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in a payout of approximately EUR 1 500 million in total dividend. The proposed dividend is calculated based on a total number of Nokia Shares of approximately 5.8 billion shares. The resolution on the dividend will be made by the Annual General Meeting in 2016.

For information on Nokia’s contractual, contingent and off-balance sheet liabilities, refer to Note 11. Commitments and contingencies, Nokia Group, continuing operations, reported (unaudited) on page 47 of the unaudited interim report of Nokia for the year ended December 31, 2015, incorporated by reference into this Listing Prospectus.

For information Alcatel Lucent’s contractual, contingent and off-balance sheet liabilities, refer to Note 28 Contractual obligations and off balance sheet commitments on pages 79–84 of the Alcatel Lucent Q4 Results Release, incorporated by reference into this Listing Prospectus.

 

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Supplements relating to the section “Selected Financial Information

The section “Selected Financial Information” on pages 190–197 of the Listing Prospectus is replaced with the information presented herein.

Readers should note that the amended paragraphs or information, as applicable, have been marked with an asterisk (*).

Nokia

The following tables set forth selected consolidated financial information for Nokia. This information is qualified by reference to, and should be read in conjunction with, Nokia’s consolidated financial statements and the notes thereto for the years ended December 31, 2014, 2013 and 2012 and the unaudited interim report of Nokia for the year ended December 31, 2015, all of which are incorporated by reference into this Listing Prospectus. The selected consolidated historical income statement and statement of cash flow data for the years ended December 31, 2014, 2013 and 2012 and the consolidated statement of financial position data as of December 31, 2014, 2013 and 2012 have been derived from Nokia’s audited consolidated financial statements for the respective years, prepared in accordance with the International Financial Reporting Standards (“IFRS”). The selected consolidated historical income statement and statement of cash flow data for the year ended December 31, 2015 and the consolidated statement of financial position as of  December 31, 2015 have been derived from the unaudited interim report of Nokia for the year ended December 31, 2015, prepared in accordance with IFRS.*

In September 2013, Nokia announced the sale of substantially all of its Devices & Services Business to Microsoft. Subsequent to the approval for the sale received in the Extraordinary General Meeting in November 2013, Nokia Group has presented Devices & Services Business as discontinued operations. The sale was completed on April 25, 2014. In the consolidated income statement for the year 2013 the financial results of the Devices & Services Business were reported as discontinued operations separately from the continuing operations. The income statement information for the year 2012 were restated accordingly. As of January 1, 2013 Nokia adopted new revised IAS 19 Employee Benefits standard. As a result, the net pension liabilities and other comprehensive income were impacted mainly by the retrospectively applied elimination of the ’corridor’ approach and financial information for the year 2012 were adjusted accordingly. Thus, the restated information for the year 2012 presented in the following tables is unaudited.

On August 3, 2015, Nokia announced an agreement to sell its HERE digital mapping and location services business to a consortium of leading automotive companies, comprising AUDI AG, BMW Group and Daimler AG. The sale of HERE was completed on December 4, 2015. In the unaudited consolidated income statement for the year ended December 31, 2015, HERE has been reported as discontinued operations separately from the continuing operations. The income statement information for the year 2014 was restated accordingly. Thus, the restated consolidated income statement information for the year 2014 presented in the following table is unaudited. HERE has been reported as part of Nokia’s continuing operations in the consolidated financial information for the financial years ended December 31, 2013 and 2012.*

 

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Selected Historical Consolidated Financial Information for Nokia

 

     Year ended
December 31,
    Year ended December 31,  
     2015     2014     2013     2012  
     (unaudited)*     (unaudited)     (audited)     (unaudited)  
CONSOLIDATED INCOME STATEMENT    (in EUR million,
except for
shares
outstanding and
earnings per
share)
    (in EUR million, except for shares
outstanding and earnings per share)
 

Net sales

     12 499        11 763        12 709        15 400   

Cost of sales

     (7 045     (6 855     (7 364     (9 841
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     5 453        4 907        5 345        5 559   

Research and development expenses

     (2 126     (1 948     (2 619     (3 081

Selling, general and administrative expenses

     (1 651     (1 453     (1 671     (2 062

Other income and expenses

     12        (95     (536 )1      (1 237 )2 
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit/(loss)

     1 688        1 412        519        (821

Share of results of associated companies and joint ventures

     29        (12     4        (1

Financial income and expenses

     (177     (401     (280     (357
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit/(loss) before tax

     1 540        999        243        (1 179

Income tax (expense)/benefit

     (346     1 718        (202     (304
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit/(loss) from continuing operations

     1 194        2 718     41        (1 483
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

        

Equity holders of the parent

     1 192        2 710     186        (771

Non-controlling interests

     2        8        (145     (712
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit/(loss) from discontinued operations

     1 274        758     (780     (2 303
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

        

Equity holders of the parent

     1 274        752        (801     (2 334

Non-controlling interests

     0        6        21        31   

Profit/(loss)

     2 468        3 476        (739     (3 786
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

        

Equity holders of the parent

     2 466        3 462        (615     (3 105

Non-controlling interests

     2        14        (124     (681

Earnings per share (for profit/(loss) attributable to the equity holders of the parent)

        

Basic earnings per share (in EUR)

        

Continuing operations

     0.32        0.73        0.05        (0.21

Discontinued operations

     0.35        0.20        (0.22     (0.63

Nokia Group

     0.67        0.94        (0.17     (0.84

Diluted earnings per share (in EUR)

        

Continuing operations

     0.31        0.67        0.05        (0.21

Discontinued operations

     0.32        0.18        (0.22     (0.63

Nokia Group

     0.63        0.85        (0.17     (0.84

Average number of shares (’ 000 shares)

        

Basic

        

Continuing operations

     3 670 934        3 698 723        3 712 079        3 710 845   

Discontinued operations

     3 670 934        3 698 723        3 712 079        3 710 845   

Nokia Group

     3 670 934        3 698 723        3 712 079        3 710 845   

Diluted

        

Continuing operations

     3 949 312        4 131 602        3 733 364        3 710 845   

Discontinued operations

     3 949 312        4 131 602        3 712 079        3 710 845   

Nokia Group

     3 949 312        4 131 602        3 712 079        3 710 845   

 

1 

Consist of “Other income” of EUR 272 million and “Other expenses” of EUR (808) million.

2 

Consist of “Other income” of EUR 276 million and “Other expenses” of EUR (1 513) million.

 

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     Year ended
December 31,
   

Year ended December 31,

 
     2015     2014     2013     2012  
     (unaudited)*     (unaudited)     (audited)     (unaudited)  
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME    (in EUR
million)
    (in EUR million)  

Profit/(loss)

     2 468        3 476        (739     (3 786
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income/(expense)

        

Items that will not be reclassified to profit or loss:

        

Remeasurements on defined benefit pensions

     112        (275     83        (228

Income tax related to items that will not be reclassified to profit or loss

     (28     96        (3     22   

Items that may be reclassified subsequently to profit or loss:

        

Translation differences

     (1 054     820        (496     41   

Net investment hedges

     323        (167     114        (58

Cash flow hedges

     (5     (30     3        (41

Available-for-sale investments

     57        106        49        35   

Other increase/(decrease), net

     1        40     5        10   

Income tax related to items that may be reclassified subsequently to profit or loss

     (88     16        1        12   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income/(expense), net of tax

     (682     606        (244     (207
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     1 786        4 082        (983     (3 993
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

        

Equity holders of the parent

     1 781        4 061        (863     (3 281

Non-controlling interests

     5        21        (120     (712
     1 786        4 082        (983     (3 993

Attributable to equity holders of the parent:

        

Continuing operations

     1 457        2 350     34        (831

Discontinued operations

     324        1 711     (897     (2 450
     1 781        4 061        (863     (3 281

Attributable to non-controlling interests:

        

Continuing operations

     5        16        (139     (740

Discontinued operations

     0        5        19        28   
  

 

 

   

 

 

   

 

 

   

 

 

 
     5        21        (120     (712

 

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Table of Contents
     As of
December 31,
    As of December 31,  
     2015     2014     2013     2012  
     (unaudited)*     (audited)     (audited)     (unaudited)  
CONSOLIDATED STATEMENT OF FINANCIAL POSITION    (in EUR
million)
    (in EUR million)  

ASSETS

        

Goodwill

     237        2 563        3 295        4 876   

Other intangible assets

     323        350        296        647   

Property, plant and equipment

     695        716        566        1 431   

Investments in associated companies and joint ventures

     84        51        65        58   

Available-for-sale investments

     948        828        741        689   

Deferred tax assets

     2 634        2 720        890        1 279   

Long-term loans receivable

     49        34        96        125   

Prepaid pension costs1

     25        31        38        152   

Other non-current assets1

     51        47        61        66   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-current assets

     5 046        7 339        6 048        9 323   

Inventories

     1 014        1 275        804        1 538   

Accounts receivable, net of allowances for doubtful accounts

     3 913        3 429     2 901        5 551   

Prepaid expenses and accrued income

     749        913        660        2 682   

Current income tax assets

     171        124        146        495   

Current portion of long-term loans receivable

     21        1        29        35   

Other financial assets

     107        266        285        451   

Investments at fair value through profit and loss, liquid assets

     687        418        382        415   

Available-for-sale investments, liquid assets

     2 167        2 127        956        542   

Cash and cash equivalents2

     6 995        5 170        7 633        8 952   
  

 

 

   

 

 

   

 

 

   

 

 

 

Current assets

     15 824        13 724        13 796        20 661   

Assets held for sale

     —          —          89        —     

Assets of disposal groups classified as held for sale

     —          —          5 258        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

     20 870        21 063        25 191        29 984   

SHAREHOLDERS’ EQUITY AND LIABILITIES

        

Capital and reserves attributable to equity holders of the parent

        

Share capital

     246        246        246        246   

Share issue premium

     380        439        615        446   

Treasury shares at cost

     (718     (988     (603     (629

Translation differences

     292        1 099        434        746   

Fair value and other reserves

     148        22        80        (5

Reserve for invested non-restricted equity

     3 820        3 083        3 115        3 136   

Retained earnings

     6 279        4 710        2 581        3 997   
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital and reserves attributable to equity holders of the parent

     10 446        8 611        6 468        7 937   

Non-controlling interests

     21        58        192        1 302   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     10 468        8 669        6 660        9 239   

Long-term interest-bearing liabilities

     2 023        2 576        3 286        5 087   

Deferred tax liabilities

     62        32        195        701   

Deferred revenue and other long-term liabilities

     1 677        2 197        630        997   

Provisions

     250        301        242        304   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-current liabilities

     4 011        5 107     4 353        7 089   

Current portion of interest-bearing liabilities

     1        1        3 192        201   

Short-term borrowing

     50        115        184        261   

Other financial liabilities

     113        174        35        90   

Current income tax liabilities

     446        481        484        499   

Accounts payable

     1 910        2 313        1 842        4 394   

Accrued expenses, deferred revenue and other liabilities

     3 395        3 632        3 033        6 223   

Provisions

     476        572        680        1 988   
  

 

 

   

 

 

   

 

 

   

 

 

 

Current liabilities

     6 391        7 288        9 450        13 656   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities of disposal groups classified as held for sale

     —          —          4 728        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity and liabilities

     20 870        21 063        25 191        29 984   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1 

Prepaid pension costs previously reported under “Other non-current assets” have been reported separately since June 30, 2015. The information for prior periods presented has been adjusted accordingly.

2 

Since June 30, 2015, “Bank and cash” and “Available for sale investments, cash equivalents” have been reported as a single line item “Cash and cash equivalents”. The information for prior periods presented has been adjusted accordingly.

 

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Table of Contents
     Year ended
December 31,
   

Year ended December 31,

 
     2015     2014     2013     2012  
     (unaudited)*     (audited)  

CONSOLIDATED STATEMENT OF CASH FLOWS

   (in EUR
million)
    (in EUR million)  

Net cash from/(used in) operating activities

     507        1 275        72        (354

Net cash from/(used in) investing activities

     1 896        886        (691     562   

Net cash used in financing activities

     (584     (4 576     (477     (465

Foreign exchange adjustment

     6        (48     (223     (27

Net increase/(decrease) in cash and equivalents

     1 825        (2 463     (1 319     (284

Cash and cash equivalents at beginning of period

     5 170        7 633        8 952        9 236   

Cash and cash equivalents at end of period

     6 995        5 170        7 633        8 952   

Consolidated statement of cash flows combines cash flows from both the continuing and the discontinued operations. The figures in the consolidated statement of cash flows cannot be directly traced from the statement of financial position without additional information as a result of acquisitions and disposals of subsidiaries and net foreign exchange differences arising on consolidation.

 

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Key Ratios

 

     Year ended
December 31,
    Year ended December 31,  
     2015     2014     2013     2012  
     (unaudited)*     (unaudited)  

Key ratios at the reporting date, continuing operations

        

Earnings per share for profit attributable to equity holders of parent

        

Earnings per share, basic, EUR

     0.32        0.73        0.05 1      (0.21

Earnings per share, diluted, EUR

     0.31        0.67        0.05 1      (0.21

P/E ratio, basic

     20.61        8.99        116.40        neg.   

Ordinary dividend per share, EUR*

     0.16 4      0.14        0.11        0   

Special dividend per share, EUR*

     0.10 4      0        0.26        0   

Total dividends paid, EURm

     1 500        511        1 374        0   

Payout ratio, basic2

     0.50        0.19     2.20     0   

Dividend yield, %3

     2.43        2.13        1.89     0   

Shareholders’ equity per share, EURm

     2.65        2.36        1.74        2.14   

Market capitalization, EURm

     25 979        23 932        21 606        10 873   

 

1 

Earnings per share (basic and diluted) for the year ended December 31, 2013 are audited.

2 

Payout ratio, basic is calculated based on the Ordinary dividend per share, EUR. The payout ratio including the Special dividend per share is 0.81 for the year ended December 31, 2015, 0.19 for the year ended December 31, 2014 and 7.40 for the year ended December 31, 2013.*

3 

Dividend yield, % is calculated based on the Ordinary dividend per share, EUR. The dividend yield, % including the Special dividend per share is 3.94 for the year ended December 31, 2015, 2.13 for the year ended December 31, 2014 and 6.36 for the year ended December 31, 2013.*

4 

The ordinary and special dividend for 2015 will be proposed by the Nokia Board of Directors.*

Earnings per share, basic, EUR

Profit attributable to equity holders of the parent

 

Average adjusted number of shares during the year

P/E ratio, basic

Closing share price at the reporting date

 

Earnings per share (basic) for Continuing operations

Payout ratio

Dividend per share

 

Earnings per share (basic) for Continuing operations

Dividend yield

Dividend per share

 

Closing share price at December 31

Shareholders’ equity per share

Capital and reserves attributable to equity holders of the parent

 

Number of shares at the reporting date—number of treasury shares at the reporting date

Market capitalization

(Number of shares at the reporting date—number of treasury shares at the reporting date) x closing share price at the reporting date

 

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Significant Change in Financial Condition or Operating Results

In November 2011, Nokia Networks announced its strategy to focus on mobile broadband and services. It also announced an extensive global restructuring program that ultimately resulted in the reduction of its annualized operating expenses and production overhead by over EUR 1.5 billion when the program was completed at the end of 2013. As part of its strategy of focusing on mobile broadband, Nokia Networks also divested a number of non-core businesses.

Beginning in 2013, Nokia undertook a series of transactions to transform its business portfolio. On July 1, 2013, Nokia announced the agreement to acquire Siemens’ 50% stake in the companies’ joint venture Nokia Siemens Networks. The purchase price was EUR 1.7 billion and the transaction closed on August 7, 2013. On September 3, 2013, Nokia announced that it had signed an agreement to sell its Devices & Services Business to Microsoft for a total purchase price of EUR 5.44 billion, of which EUR 3.79 billion related to the Sale of the Devices & Services Business and EUR 1.65 billion related to a mutual patent license agreement. In conjunction with the transaction, Nokia established the Nokia Technologies business to focus on technology development and intellectual property rights activities. The transaction significantly strengthened the Company’s financial position and subsequent to the transaction, in 2014, Nokia started the optimization of its capital structure and recommenced dividend payments, distributed excess capital to shareholders and reduced its interest-bearing debt.

On April 15, 2015, Nokia continued its transformation with the announcement that it had signed an agreement to acquire Alcatel Lucent through the Exchange Offer on the basis of 0.5500 Nokia Shares for each Alcatel Lucent Share. In conjunction with this announcement, Nokia announced that it has suspended its capital structure optimization program effective immediately. On August 3, 2015, Nokia announced an agreement to sell HERE to an automotive industry consortium and estimates that it will receive net proceeds of slightly above EUR 2.5 billion. The sale of HERE was completed on December 4, 2015.* On October 29, 2015, Nokia announced a planned EUR 7 billion program to optimize Nokia’s capital structure and return excess capital to shareholders, subject to the closing of the Alcatel Lucent and HERE transactions, as well as the conversion of all Nokia and Alcatel Lucent convertible bonds.

Nokia obtained control of Alcatel Lucent on January 4, 2016 when the interim results of the successful initial Exchange Offer were announced by the AMF with a shareholding of 76.31% of the share capital and at least 76.01% of the voting rights. On January 14, 2016, the combined operations of Nokia and Alcatel Lucent commenced. On the same day, Nokia reopened the Exchange Offer. The results of the reopened offer period in the Exchange Offer were published on February 10, 2016 and as a result, Nokia holds 91.25% of the share capital and at least 91.17% of the voting rights of Alcatel Lucent.*

Sufficiency of Working Capital

In the opinion of Nokia’s management, the working capital available to Nokia is sufficient to cover its present needs for the next 12 months following the date of this Listing Prospectus.

In order to evaluate Nokia’s working capital needs after the Acquisition, Nokia has prepared financial projections assuming the combination of Nokia and Alcatel Lucent and excluding the HERE business. Based on these financial projections, Nokia anticipates that the combination of Nokia and Alcatel Lucent will not adversely impact the sufficiency of working capital for the Combined Company.

 

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Alcatel Lucent

Shareholders and potential investors should note that all of the information concerning Alcatel Lucent presented in the Listing Prospectus, as supplemented from time to time, and in particular in Annex A, is solely based on publicly available information of  Alcatel Lucent included in Alcatel Lucent Annual Report and the Alcatel Lucent Interim Report Alcatel Lucent has filed with the SEC, as well as Alcatel Lucent Q3 Interim Report and Alcatel Lucent Q4 Results Release. Nokia confirms that this information has been accurately reproduced and that as far as Nokia is aware and is able to ascertain from information published by Alcatel Lucent, no facts have been omitted which would render the reproduced information inaccurate or misleading.*

Selected Historical Consolidated Financial Information for Alcatel Lucent

For information about Alcatel Lucent’s selected historical consolidated financial information, refer to sections “Alcatel Lucent consolidated financial statements at December 31, 2014” of the Alcatel Lucent Annual Report on pages A-197 to A-201 of Annex A and pages 2 to 5 of the Alcatel Lucent Q4 Results Release.*

Significant Change in the Financial Condition or Operating Results

On June 19, 2013, Alcatel Lucent announced the Shift Plan, a detailed three-year plan to transform itself into a specialist provider of IP and Cloud Networking and Ultra-Broadband Access. As part of this process, effective from July 1, 2013, Alcatel Lucent implemented a new organization composed of three reportable segments: Core Networking, Access and Other.

The Shift Plan has targeted investments in Core Networking businesses (including IP Routing, IP Transport, IP Platforms and associates services), increasing segment operating cash flow from the Access segment, and technological partnerships. The Shift Plan has also focused on market diversification and rightsizing Alcatel Lucent’s cost structure. In particular, the Shift Plan aims to reduce Alcatel Lucent’s fixed-cost base by EUR 950 million in 2015 compared to its 2012 cost base. Alcatel Lucent has stated that it expects that the cumulative amount of restructuring cash outlays pursuant to the Shift Plan should be approximately EUR 1.8 billion, of which approximately EUR 1.4 billion will be incurred between 2013 and 2015, with the remainder in 2016.

In addition, Alcatel Lucent has completed multiple dispositions as part of the Shift Plan and re-profiled and reduced the financial debt of the company.

On January 5, 2016, the final results of the initial offer period in the Exchange Offer were published, and Nokia gained control of Alcatel Lucent with a shareholding of approximately 70.52% on a fully diluted basis. On January 14, 2016, the combined operations of Nokia and Alcatel Lucent commenced. On the same day Nokia reopened the Exchange Offer. The results of the reopened offer period in the Exchange Offer were published on February 10, 2016, and according to them Nokia will hold approximately 88.07% of the share capital of Alcatel Lucent on a fully diluted basis.*

 

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Supplements relating to the approval by the Nokia Board of Directors of the Equity Program for 2016 and the issuance of shares held by Nokia

The below supplement updates, in particular, the sections “Operating and Financial Review and Prospects — Nokia — Recent Developments” on pages 252–253 of the Listing Prospectus and “Shares and Share Capital — Nokia — Stock Options, Equity Compensation and Other Special Rights Entitling to Shares on pages 318–323 of the Listing Prospectus.

On February 11, 2016, Nokia announced that its Board of Directors has approved Nokia’s equity program for 2016 (the “Equity Program 2016”). In line with previous years, the Equity Program 2016 includes the following equity instruments:

An employee share purchase plan for Nokia employees in selected jurisdictions (the “Employee Share Purchase Plan”), entitling the eligible employees to contribute a part of their salary to purchase Nokia Shares. After a 12-month holding period, Nokia will offer the employees one matching share for every two purchased shares held by the employee at the end of the holding period;

Performance shares, which are dependent on the achievement of independent performance criteria (“Performance Shares”); and

Restricted shares, which are used on a limited basis or in exceptional retention and recruitment circumstances (“Restricted Shares”).

Equity Program 2016

The Equity Program 2016 is designed to support and align the participants’ focus with Nokia’s strategy and long-term success. Employees of Alcatel Lucent, who have transferred to Nokia as part of the acquisition of Alcatel Lucent, are also eligible to participate in the Equity Program 2016.

Nokia uses Performance Shares as the main long-term incentive vehicle with the intention of effectively contributing to the long-term value creation and sustainability of the Nokia and to align interests of the employees with those of Nokia’s shareholders. Performance Shares are also designed to ensure that the overall equity-based compensation is based on performance, while also supporting the recruitment and ensuring retention of vital talent for the future success of Nokia.

Restricted Shares are granted on a limited basis for exceptional purposes related to retention and recruitment, primarily in the United States, to ensure Nokia is able to retain and recruit vital talent for the future success of Nokia.

Since 2014, stock options have no longer been part of Nokia’s equity programs.

Employee Share Purchase Plan

Under the Employee Share Purchase Plan, the eligible Nokia employees may elect to make monthly contributions from their net salary to purchase Nokia Shares. Participation in the plan is voluntary.

The annual minimum and maximum contribution limit to the Employee Share Purchase Plan is EUR 180 and EUR 1 200, respectively. Generally, the share purchases will be made at market value on pre-determined dates on a monthly basis during a 12-month period. In October 2017, Nokia intends to deliver one matching share for every two purchased shares that the participant still holds on July 31, 2017, which marks the end of the Employee Share Purchase Plan cycle for 2016. The aggregate maximum amount of contributions that employees can make during the enrolment window for the plan cycle commencing in 2016 will be approximately EUR 60 million, which equals approximately 11 494 253 Nokia Shares using the February 8, 2016 Nokia closing price of EUR 5.22 on Nasdaq Helsinki. Based on the matching ratio of one matching share for every two purchased shares, the number of matching shares would be approximately 5 747 126. In addition, to welcome employees of Alcatel Lucent who have transferred to Nokia as part of the acquisition of Alcatel Lucent and to mark the beginning of the new Nokia Group, Nokia intends to offer 20 free shares for every participant making the first three consecutive share purchases in 2016.

 

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The Employee Share Purchase Plan is planned to be offered to Nokia employees in up to 54 countries for the plan cycle commencing in 2016. The savings period is intended to start in July 2016 and the first monthly purchases are planned to be made in August 2016.

Performance Shares

Under the Performance Share plan, target pay-out will depend on whether independent performance criteria have been met by the end of the performance period. The performance criteria are Nokia’s continuing operations average annual non-IFRS net sales and average annual non-IFRS earnings per share (diluted).

The Performance Share plan of 2016 has a two-year performance period (2016–2017) and a subsequent one-year restriction period. The number of Performance Shares to be settled after the restriction period will start at 25% of the grant amount and any pay-out beyond this will be determined with reference to the financial performance during the two-year performance period. The grant under the Performance Share plan could result in an aggregate maximum pay-out of 51 million Nokia Shares, in the event that maximum performance against all the performance criteria is achieved.

Restricted Shares

The Restricted Shares under the 2016 Restricted Share plan are divided into three tranches, each tranche consisting of one third of the Restricted Shares granted. The first tranche has a one-year restriction period, the second tranche a two-year restriction period, and the third tranche a three-year restriction period. The grant of Restricted Shares in 2016 could result in an aggregate maximum payout of 1 350 000 Nokia Shares.

Employees covered by the Equity Program 2016

In accordance with the previous year’s practice, the primary equity instruments granted to executive employees and directors below the executive level are Performance Shares.

Nokia limits the use of Restricted Shares as means of compensation. However, to support the specific needs, practices and competitive market environment in the United States, restricted shares may be used, in conjunction with the use of performance shares, on a limited basis in the United States.

In addition, shares under the Restricted Share plan can be granted for exceptional retention or recruitment purposes, aimed primarily at US markets, to ensure Nokia is able to retain and recruit vital talent for the future success of Nokia.

Nokia employees in up to 54 countries are planned to be offered the possibility to participate in the Employee Share Purchase Plan for the cycle commencing in 2016, provided that there are no local regulatory or administrative restraints in relation to such plan.

Employees of Alcatel Lucent who have transferred to Nokia as part of the acquisition of Alcatel Lucent are included in equity plans under the Equity Program 2016.

Dilution effect

On February 10, 2016, Nokia announced the final results of its subsequent offer period for outstanding Alcatel Lucent Securities. As of February 12, 2016, subject to and following the registration of new Nokia Shares issued as consideration for the Alcatel Lucent Securities tendered into the subsequent French and/or U.S. offers, and consequently, included in the aggregate amount of Nokia Shares, the aggregate maximum dilution effect of Nokia’s currently outstanding equity programs, assuming that the Performance Shares would be delivered at maximum level,

 

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is approximately 0.86%. The potential maximum dilution effect of the Equity Program 2016 would approximately be an additional 1.04%, assuming delivery at maximum level for Performance Shares and the delivery of matching shares against the maximum amount of contributions of approximately EUR 60 million under the Employee Share Purchase Plan. Employees of Alcatel Lucent that have transferred as part of the acquisition of Alcatel Lucent are only included in equity plans under the Equity Program 2016.

Issuance of Nokia Shares for settlement of various Nokia equity plans

The performance period for the 2014 Performance Share Plan ended on December 31, 2015, and Nokia’s performance over 2014 and 2015, assessed against the independent performance criteria set out in the plan rules, was above the threshold performance level for the plan. The settlement to the participants under the plan is planned to take place after the restriction period ends on January 1, 2017.

To fulfill Nokia’s obligations under the 2012, 2013 and 2015 Restricted Share Plans as well as the 2013 Performance Share Plan in respect of shares to be settled in 2016, Nokia’s Board of Directors has resolved to issue, without consideration, a total of 1 657 000 Nokia Shares held by Nokia to settle its commitments to plan participants, who are all employees of the Nokia Group.

Issuance of Nokia Shares to beneficiaries of Alcatel-Lucent employee equity compensation arrangements

In accordance with the Memorandum of Understanding dated April 15, 2015 between Nokia and Alcatel Lucent, as amended, Nokia has entered into liquidity agreements with beneficiaries of Alcatel Lucent employee equity compensation arrangements who accepted to subscribe for the liquidity program for the exchange of their Alcatel Lucent Shares resulting from Alcatel Lucent equity instruments that they hold for Nokia Shares in certain circumstances.

To fulfill Nokia’s obligations under the aforementioned agreements, Nokia’s Board of Directors has resolved, pursuant to the share issue authorization granted by the Extraordinary General Meeting of Nokia on December 2, 2015, to issue a maximum amount of 400 000 Nokia Shares held by Nokia in the course of 2016 against contribution in kind in the form of the Alcatel Lucent Shares being exchanged for the Nokia Shares. The exchange ratio applied in such exchanges is the same as the exchange ratio applied in the Exchange Offer, subject to certain adjustments in the event of certain financial transactions by Nokia or Alcatel Lucent.

The Availability of the Supplement

The supplement is available as of February 12, 2016 on the Company’s website at http://company.nokia.com/en/investors/financial-reports/filings-related-to-the-alcatel-lucent-transaction, and as of February 15, 2016 at the office of Nokia at Karaportti 3, FI-02610 Espoo, Finland, and the reception of Nasdaq Helsinki at Fabianinkatu 14, FI-00100 Helsinki, Finland.

 

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