Restatement of Prior Year Results: Finnish TEL System Note 1 Accounting Principles Note 2 Financial Risk Management Note 3 Segment Information Note 4 Acquisitions and Disposals Note 5 Other Operating Income & Expense Note 6 Staff Costs Note 7 Net Financial Items Note 8 Income Taxes Note 9 Valuation Provisions Note 10 Depreciation, Amortisation and Fixed Asset Impa Note 11 Fixed Assets Note 12 Biological Assets Note 13 Associated Companies Note 14 Available-for-Sale Investments Note 15 Other Non-Current Assets Note 16 Inventories Note 17 Receivables Note 18 Shareholders' Equity Note 19 Minority Interests Note 20 Post-Employment Benefits Note 21 Borrowings Note 22 Other Provisions Note 23 Operative Liabilities Note 24 Financial Instruments Note 25 Cumulative Translation Adjustment Note 26 Commitments and Contingencies Note 27 Principal Subsidiaries as at 31 December 2004 Note 28 Employee Bonus and Equity Incentive Schemes Note 29 Related Party Transactions Note 30 Earnings per Share and Equity per Share Note 31 Post-Balance Sheet Events Note 1 Accounting Principles Note 2 Other Operating Income Note 3 Materials and Services Note 4 Personnel Expenses Note 5 Other Operating Expenses Note 6 Net Financial Items Note 7 Depreciation According to Plan Note 8 Extraordinary Items Note 9 Fixed Assets Note 10 Depreciation Reserve Note 11 Receivables from Management Note 12 Long-term Investments and Loan Receivables Note 13 Inventories Note 14 Short-term Receivables Note 15 Interest-bearing Receivables Note 16 Shareholders' Equity Note 17 Long-term Liabilities Note 18 Short-term Borrowings Note 19 Other Current Liabilities Note 20 Commitments and Contingent Liabilities Note 21 Fair Value of Open Financial Instruments

Notes to the Consolidated Financial Statements

Fixed Asset Summary

	Year Ended 31 December 2004
EUR million	Property Plant & Equipment	Intangible Fixed Assets	Goodwill	Total Fixed Assets
Acquisition Cost
At 1 January	19 971.3	208.5	2 559.0	22 738.8
Translation difference	-188.4	-0.5	-97.0	-285.9
Reclassifications	-32.9	32.9	-	-
Companies acquired	290.0	22.8	6.9	319.7
Additions	956.0	19.1	-	975.1
Disposals	-288.2	-0.9	-2.9	-292.0
At 31 December	20 707.8	281.9	2 466.0	23 455.7
Accumulated Depreciation and Amortisation
At 1 January	10 006.8	128.1	1 656.4	11 791.3
Translation difference	-60.6	-0.2	-65.6	-126.4
Reclassifications	-24.0	24.0	-	-
Companies acquired	127.1	2.4	-	129.5
Disposals	-157.9	-0.7	-2.9	-161.5
Charge for the year	1 047.6	20.2	90.2	1 158.0
Impairment charges	14.0	-	-	14.0
At 31 December	10 953.0	173.8	1 678.1	12 804.9
Net Book Value at 31 December 2004	9 754.8	108.1	787.9	10 650.8
Net Book Value at 31 December 2003	9 964.5	80.4	902.6	10 947.5
Net Book Value at 31 December 2002	10 812.1	73.3	1 055.5	11 940.9

Property, Plant & Equipment

	Year Ended 31 December 2004
EUR million	Land and Water	Buildings and Structures	Plant and Equipment	Other Tangible Assets	Assets in Progress	Total
Acquisition Cost
At 1 January	351.2	2 901.5	15 680.7	569.1	468.8	19 971.3
Translation difference	-1.1	-12.5	-170.9	-0.2	-3.7	-188.4
Reclassifications	3.0	116.8	354.3	-0.7	-506.3	-32.9
Companies acquired	15.5	54.3	205.0	9.8	5.4	290.0
Additions	3.6	45.4	472.7	9.8	424.5	956.0
Disposals	-82.9	-17.2	-149.3	-37.8	-1.0	-288.2
At 31 December	289.3	3 088.3	16 392.5	550.0	387.7	20 707.8
Accumulated Depreciation and Amortisation
At 1 January	-	1 230.1	8 453.7	323.0	-	10 006.8
Translation difference	-	-1.0	-59.6	-	-	-60.6
Reclassifications	-	22.2	-41.9	-4.3	-	-24.0
Companies acquired	-	13.8	113.3	-	-	127.1
Disposals	-	-7.4	-132.1	-18.4	-	-157.9
Charge for the year	-	112.9	910.8	23.9	-	1 047.6
Impairment charges	-	-	14.0	-	-	14.0
At 31 December	-	1 370.6	9 258.2	324.2	-	10 953.0
Net Book Value at 31 December 2004	289.3	1 717.7	7 134.3	225.8	387.7	9 754.8
Net Book Value at 31 December 2003	351.2	1 671.4	7 227.0	246.1	468.8	9 964.5
Net Book Value at 31 December 2002	961.8	1 569.5	7 408.6	367.1	505.1	10 812.1

The new rules contained in IFRS 3 came into effect in 2004 whereby amortisation of goodwill ceased with effect from 1 April for new acquisitions and 31 December for all other existing goodwill. In future, the only value adjustments to the carrying value of goodwill will be as a result of the annual impairment testing. Based on the current carrying value of goodwill, this change is expected to have a beneficial effect of some EUR 90 million over each of the next five years, subject only to any impairments that may be found appropriate.

Stora Enso performs annual impairment tests for all fixed assets, including goodwill, though in the years 2003 and 2004 it was determined that no impairment existed in asset carrying values. In 2002, however, as disclosed in Note 10, weakened market conditions in North America resulted in the Group’s North American assets being subject to impairment in the sum of USD 1 081.0 (EUR 1 143.3) million. Over the past three years, the same external valuer has been used to prepare the projections in the cash generating units holding most of the Group goodwill.

Impairment tests are carried out on each separate cash generating unit and are based on the discounted cash flow valuation method; this incorporates future projections of cash flows and, among other estimates, projections of future product pricing, production levels, product costs, market supply and demand, projected maintenance, capital expenditures and an assumption of a pre-tax weighted average cost of capital.

In 2003 reclassifications of fixed assets amounted to EUR 698.3 million, mainly relating to biological assets, in the form of free standing trees which were reclassified, principally from land, to Biological Assets (see Note 12).

The Group’s Fixed Assets at 31 December 2004 include capitalised balances for unamortised computer software development costs, interest (at 6% to 11%) on the construction of qualifying assets and finance lease assets:

Capitalised Values

	As at 31 December
	2002	2003	2004		2002	2003	2004		2002	2003	2004
EUR million	Computer Software				Capitalised Interest				Finance Leases
At 1 January	18.4	36.3	46.7		81.4	79.4	77.1		818.7	614.4	142.3
Translation difference	-	-0.2	-0.6		-1.3	-1.3	-0.3		-125.5	-88.5	-5.1
Acquisitions and disposals	-	-	4.0		-1.2	-	-4.8		-24.9	-369.4	-
Capitalised in the year	23.0	18.5	32.8		9.0	5.2	2.5		-	21.5	-
Depreciation	-5.1	-7.9	-15.3		-8.5	-6.2	-7.4		-53.9	-35.7	-10.7
At 31 December	36.3	46.7	67.6		79.4	77.1	67.1		614.4	142.3	126.5

Computer software includes capitalised own software at the year end of EUR 16.4 (EUR 18.5) million; additions during the year were EUR 2.1 (EUR 2.9) million and depreciation was EUR 4.2 (EUR 2.3) million.

Fixed Asset Additions

There was one material acquisition in 2004, along with several smaller ones, total acquisitions of Group companies amounting to EUR 250.5 (EUR 241.3) million; the acquisition value of the operating fixed assets therein came to EUR 190.2 (EUR 206.4) million, of which EUR 6.9 (EUR 73.8) million related to Goodwill. Total acquisitions of Group companies in 2002 amounted to EUR 56.3 million, the acquisition value of the operating fixed assets therein being EUR 150.4 million of which EUR 26.7 million related to Goodwill.

Capital expenditure for the year in Stora Enso Oyj and its subsidiaries amounted to EUR 975.1 (EUR 1 248.2) million. However, a further major investment is being undertaken at the Veracel Pulp Mill in Brazil, where the Group will inject some EUR 500 million; fixed assets in this company amounted to some EUR 648 (EUR 230) million, but as the Group interest in this joint venture is only 50%, it is dealt with under equity accounting and is included on the Balance Sheet as an Investment in an Associate Company; see Note 13. No major new projects were commenced or announced in 2004, capital expenditure for 2004 largely relating to projects from 2003 and earlier.

Principal Capital Expenditure Projects in 2004

EUR million	Country	Project	Pre-2004 Costs	2004 Costs
Publication Paper
Biron	USA	Rebuild PM26	19.2	23.3
Corbehem	France	Upgrade PM5	6.0	25.7
Corbehem	France	New Energy plant	16.7	6.8
Hylte	Sweden	De-inking plant	1.2	14.3
Kvarnsveden	Sweden	PM12 construction	4.3	86.6
Kvarnsveden	Sweden	New boiler	28.0	20.0
Langerbrugge	Belgium	PM4 construction	474.9	-12.4
Maxau	Germany	Rebuild PM6	52.9	111.4
Port Hawkesbury	Canada	Thermo-mechanical pulp line	28.7	20.7
Summa	Finland	Upgrade PM 2	-	24.0
Varkaus	Finland	Thermo-mechanical pulp line	9.6	22.8
Veitsiluoto	Finland	Mechanical pulp bleaching	4.4	14.4
Fine Paper
Kimberly	USA	Upgrade PM97	4.6	12.8
Nymölla	Sweden	Upgrade PM1	10.7	12.1
Nymölla	Sweden	Office paper enhancements	37.4	13.9
Oulu	Finland	Graphic paper enhancements	8.0	11.3
Suzhou	China	Rebuild PM1	-	2.0
Veitsiluoto	Finland	Rebuild PM3	90.9	27.5
Veitsiluoto	Finland	Office paper enhancements	12.0	10.5
Wisconsin Rapids	USA	Rebuild PM16	10.5	23.6
Packaging Boards
Arzamas	Russia	Corrugated board mill construction	26.5	5.0
Baienfurt	Germany	Folding boxboard improvements	40.0	28.1
Skoghall	Sweden	Energy 2005 Project	21.4	54.7
Wood Products
Stora Enso Timber AS	Baltic States	Sawmill investments	38.7	13.1

• The main item of expenditure in the Group’s Asset Restructuring Programme in 2004 was an investment in the rebuild of the uncoated magazine paper machine (“PM”) 6 at Maxau Mill in Germany. In addition, in an effort to enhance the nearby Wolfsheck Mill, the Group entered into an agreement with the Norwegian Cham Paper Group for the transfer of know-how for wallpaper-based products.

• Publication Paper has also restructured its newsprint production in Langerbrugge, Belgium following the May 2003 inauguration of its new PM4. The gross cost of this machine was expected to be some EUR 490 million with an annual production capacity of 400 000 tonnes, however in 2004 an EU subsidy of EUR 23.5 million was received on account of its use of recycled fibre. A de-inking plant and a 75 MW bio-fuel power plant have also been built on site and the modernisation of Langerbrugge’s PM3, with an annual capacity of
165 000 tonnes, was completed in 2004.

• In Finland, a new thermo-mechanical pulp (“TMP”) line is being constructed at Varkaus Mill and PM2 at Summa Mill, making magazine paper and improved newsprint, is being upgraded. In 2004 two projects at Veitsiluoto Mill were completed, a peroxide bleaching plant to enhance the quality of magazine paper and the enlargement of the biological effluent treatment plant.

• In Sweden, Kvarnsveden Mill has a new boiler under construction, with an expected start-up in mid-2005, and a new EUR 467 million paper machine is being built. The annual production capacity of the machine will be some 420 000 tonnes of super-calendered (SC) paper, commissioning expected in late 2005. Kvarnsveden PM9, which has an annual capacity of 130 000 tonnes, will be shut down when the new machine starts up; at the same time, Langerbrugge PM3 will change from making mainly high-quality SC to exclusively
SC-B paper and PM5 at Wolfsheck Mill in Germany will cease its production of SC paper. A new de-inking plant is also under construction at Hylte Mill.

• In France, Corbehem Mill’s new energy plant was completed in 2004 and magazine PM5 is being rebuilt.

• In Canada, the Group finished installing a TMP line at Port Hawkesbury in a project designed to provide TMP for its PM1.

• In the USA, Stora Enso is rebuilding Biron Mill’s PM26 in a targeted investment expected to be completed early in 2005. A further investment that commenced in 2003 and finished during the year was the rebuild of Wisconsin Rapids PM16 designed to significantly increase production by enabling the transfer to higher basis weight products. Kimberly Mill’s PM97 was rebuild in early 2004, the investment being designed to increase operating speed resulting in additional production capacity. The Group has also finished a pulp conversion project at the mills of Wisconsin Rapids, Biron and Kimberly, which aims at converting Wisconsin Rapids pulp mill to all-hardwood pulp production and integrating the output to Wisconsin Rapids and Kimberly paper mills.

• Fine Paper completed the EUR 121 million upgrade of its PM3 at Veitsiluoto Mill in 2004. Other upgrade and modernisation investments were also undertaken at Veitsiluoto and Oulu mills in Finland and at Nymölla in Sweden. A EUR 39 million upgrade at Suzhou Mill in China also got under way in 2004, PM1 being rebuilt there and the sheeting plant being renovated.

• Packaging Boards completed an investment at Baienfurt Mill in Germany, intended to enhance folding boxboard production and in Russia, the new Arzamas corrugated board mill project was completed. In Sweden, Skoghall Mill’s new Energy 2005 investment project aims to secure the future base for board production there and strengthen the mill’s energy supply to enable production with low emissions. The project includes a new recovery boiler area, evaporation plant and conversion of an oil boiler into a biofuel boiler. Project implementation started in late 2003, the new evaporation plant and recovery boiler starting-up in autumn 2005 and the biofuel boiler in summer 2006. The project will reduce the mill’s oil consumption by some 60 000 cubic metres annually and increase electricity self-sufficiency from 15% to about 40%.

• In the Baltic States, a major investment programme is under way as part of Wood Products’s EUR 107 million expansion following its 2003 acquisition of the former AS Sylvester Group, now Stora Enso Timber AS. In Russia, following the completion in 2003 of the new Impilahti sawmill at Pitkäranta in Carelia, a second mill at Nebolchi in the Novgorod region commenced production in 2004; the two sawmills provide a total capacity of 200 000 cubic metres.

Capital expenditure in 2002 totalled EUR 877.6 million. The main investments were the new Langerbrugge PM4 in Belgium (EUR 254.1 million), the rebuild of Langer-brugge’s PM3 (EUR 28.6 million), the completion of PM6 in Oulu, Finland (EUR 16.5 million) and the new Balabanovo Packaging Board mill in Russia (EUR 11.4 million).

Fixed Asset Disposals

	Year Ended 31 December
EUR million	2002	2003	2004
Acquisition cost	1 071.2	341.7	292.0
Accumulated depreciation	508.6	306.6	161.5
Net book value of disposals	562.6	35.1	130.5
Net gains on disposals	37.2	12.4	113.0
Disposals Proceeds	599.8	47.5	243.5
Represented by
Cash sales proceeds	202.4	47.5	36.4
Non-cash sales proceeds	36.8	-	-
Group company disposals	360.6	-	207.1
Total Fixed Asset Disposals	599.8	47.5	243.5

The principal disposal in 2004 related to the divestment of the Swedish forests, the fixed asset element therein, exclusive of the forests themselves, being EUR 89.9 million along with a capital gain of EUR 107.3 million representing the goodwill realised. There were no fixed asset disposals in 2003 other than minor sales in the normal course of operations. In 2002, the principal fixed asset disposal consisted of the divestment of forest assets in Finland, EUR 360.6 million, and in the US, EUR 149.1; the Finnish transaction was partly in exchange for 41% of the shares in a new associate company, Tornator Timberland Oy.