1. Nokia Business System 2. Financial Metrics and Targets 3. Capital Structure and Capital Allocation

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2 1. Nokia Business System 2. Financial Metrics and Targets 3. Capital Structure and Capital Allocation

3 Nokia Business System Nokia s approach Focus areas: Shared operating practices for governing its business portfolio Objective: Ensure the most effective management processes and tools are in use throughout Nokia

4 Nokia Business System 3 focus areas 5 core processes

5 3 Focus areas and 5 Core processes Investment optimization Strategy and financial planning process End-to-end M&A process Performance management Business Performance Reviews KPI framework and Strategic scorecards Talent management Top Talent Management

6 Investment optimization Strategy and financial planning process Integrated planning process that results in capital allocation for portfolio strategy, business strategies, and annual financial plans End-to-end M&A process Agile M&A process that covers M&A target funnel management, M&A execution and target business case follow-up

7 Performance management Business Performance Reviews KPI framework and Strategic scorecards Rigorous monthly follow-up of the annual plan and strategy milestone realization, and launching of possible corrective actions KPI framework and scorecards that enforce the alignment of efforts towards long-term shareholder value creation throughout the organization

8 Talent management Top talent management Group-wide HR practices that support both identification of the best internal talent, succession planning and people development

9 Nokia Business System N B S

10 Agenda 1. Nokia Business System 2. Financial Metrics and Targets 3. Capital Structure and Capital Allocation

11 Financial Metrics and Targets Nokia Group Long-term P&L effective tax rate ~25% 2015 capex ~EUR 200 million

12 Financial Metrics and Targets Group Common functions 2015 Group Common functions operating expenses: ~EUR 120 million Support the three businesses Satisfy governance requirements Enable efficient business delivery by leveraging best practise and centralizing key expertise to group level

13 Financial Metrics and Targets Financial income and expenses 2015 financial income and expenses: ~EUR 160 million Financial income and expenses, EUR million Q Q Q Q Q FIE total Interest expense Interest income FX on balance sheet and others

14 Financial Metrics and Targets Hedging and currency exposures Material net exposures in each currency, typically 6-12 month horizon Protect profitability and provide time to react Main exposures in USD, JPY and CNY Positive effects when EUR depreciates Rigorous hedge accounting reduced P&L volatility

15 Financial Metrics and Targets Nokia Networks Long-term targets Grow net sales slightly faster than the market Non-IFRS operating margin of 8-11% 2015 targets Grow net sales year-on-year for full year 2015 Non-IFRS operating margin in line with the 8-11% long-term range

16 Financial Metrics and Targets HERE 2015 targets Net sales growth Non-IFRS operating margin of 5-10%

17 Financial Metrics and Targets Nokia Technologies 2015 targets Net sales growth excluding potential amounts related to the expected resolution of the arbitration with Samsung Opex to increase meaningfully higher investments in licensing activities, development of licensable technologies, and business enablers including go-to-market capabilities

18 Agenda 1. Nokia Business System 2. Financial Metrics and Targets 3. Capital Structure and Capital Allocation

19 Capital Structure Commitment to maintain an efficient capital structure 10,000 8,000 6,000 4,000 2, ,000-4,000-6,000 Cash position, EUR million Q Q Q Q Q ,000 Net cash Gross cash Debt

20 Capital Structure Optimization Program 5 billion euro two years

21 Capital Structure Optimization Program April 29, 2014 A comprehensive and balanced program An ordinary dividend for 2013 of EUR 0.11 per share (approximately EUR 400 million); A planned ordinary dividend for 2014 of at least EUR 0.11 per share (at least approximately EUR 400 million), subject to shareholder approval in 2015; A special dividend paid in 2014 of EUR 0.26 per share (approximately EUR 1 billion); A EUR 1.25 billion share repurchase program; and Debt reduction of approximately EUR 2 billion by the end of the second quarter 2016.

22 Capital Structure Optimization Program Approximately in EUR million 5,000 Update as of 4,500 1,000 4,000 3, Q ,000 2,500 1,250 ~2.5 billion euro completed 2,000 1,500 1,000 2,000 1,000 1, Total Program April 29, Q Q Cumulative through Q Debt reduction Share buy back Ordinary dividends Special dividend

23 Capital Structure Optimization Program Lowering our debt related cost Annualized interest expense approximately EUR 225 million, in Q Targeting over EUR 100 million in annualized interest expense savings by the end of Q Redemption of EUR 800 million Nokia Networks bonds in May 2014 reduced run rate by approximately EUR 55 million annually

24 Capital Allocation Deploying our capital effectively to drive future value creation Annual process, in conjunction with portfolio strategy decisions Prudent and pragmatic approach, with deep analysis from multiple perspectives Measuring shareholder value creation

25 Prudent and pragmatic capital allocation approach Market-based perspective Market attractiveness Nokia s ability to win Value-based perspective Financial attractiveness Risks Ownership-based perspective Synergies between businesses Synergies within a business

26 Measuring shareholder value creation Growth, profitability, financial strength, capital efficiency Our main KPIs Net sales growth for each of the businesses Operating margin for each of the businesses EPS Free cash flow Net cash ROIC, ROE

27 Summary Well positioned to create value Nokia Business System to enable sustained long-term value creation Well positioned to create value in each business and sustain EPS growth over the long-term Commitment to maintain an efficient capital structure and to deploy capital effectively

28 Disclaimer It should be noted that Nokia and its business are exposed to various risks and uncertainties and certain statements herein that are not historical facts are forward-looking statements, including, without limitation, those regarding future business and financial performance of Nokia and its industry and statements preceded by "believe, "expect, "anticipate, "foresee, "sees, "target, "estimate, "designed, "aim", "plans, "intends, "focus, continue, "will" or similar expressions. These statements are based on management's best assumptions and beliefs in light of the information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors, including risks and uncertainties that could cause these differences can be both external, such as general, economic and industry conditions, as well as internal operating factors. We have identified these in more detail on pages of Nokia's annual report on Form 20-F for the year ended December 31, 2013 under Item 3D. "Risk Factors." and in our Interim Reports issued on July 24, 2014 and October 23, Other unknown or unpredictable factors or underlying assumptions subsequently proven to be incorrect could cause actual results to differ materially from those in the forwardlooking statements. Nokia does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. In addition to information on our reported IFRS results, we provide certain information on a non-ifrs, or underlying business performance, basis. Non-IFRS results exclude all material special items for all periods. In addition, non-ifrs results exclude intangible asset amortization and other purchase price accounting related items arising from business acquisitions. Nokia believes that our non-ifrs financial measures provide meaningful supplemental information to both management and investors regarding Nokia s underlying business performance by excluding the above-described items that may not be indicative of Nokia s business operating results. These non-ifrs financial measures should not be viewed in isolation or as substitutes to the equivalent IFRS measure(s), but should be used in conjunction with the most directly comparable IFRS measure(s) in the reported results. A detailed explanation of the content of the non-ifrs information and a reconciliation between the non-ifrs and the reported information for historical periods can be found in Nokia s respective results reports. Please see our issued Interim Reports for more information on our results and financial performance for the indicated periods as well as our operating and reporting structure. Nokia is a registered trademark of Nokia Corporation. Other product and company names mentioned herein may be trademarks or trade names of their respective owners. Nokia 2014

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