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

At 1 January 2004, 95% of the Group’s biological assets were in Sweden, however these were divested in March when the Group’s recently created forest holding company, Bergvik Skog AB, was divested to institutional investors. Stora Enso retained a minority shareholding of 43.3% and has signed longterm supply agreements with its new Associate at market rates. The divestment value of Bergvik Skog’s free standing trees was EUR 1 524.6 (SEK 13 753) million, other disposed fixed assets of EUR 89.9 (SEK 811) million representing the land under the trees, the roads thereon and sundry forestry equipment. Prior to the divestment in March, the change in the value of the Swedish biological assets had generated income of EUR 6.2 million, however after March, the Group’s 43.3% share of this income is aggregated with the normal trading result of Bergvik Skog and reported as an Associated Company result (see Note 13).

In October 2004 Stora Enso divested its majority shareholding in PT Finnantara Intiga, its Borneo eucalyptus plantation company. The book value of the plantation at sale was EUR 21.8 million.

The accounting standard IAS 41, Agriculture, under which Stora Enso’s biological assets in the form of standing trees are fair market valued, came into effect on 1 January 2003. The value of Group forests thus increased from a previous book value of EUR 705.9 million to a fair value of EUR 1 561.7 million. The revaluation reserve amounted to EUR 855.8 million, which resulted in an increase in equity of EUR 615.4 million after the deduction of deferred tax; in accordance with IAS 8, this was credited directly to Retained Earnings as non-distributable equity, but has now been realised on the sale of the Swedish forests. The initial IAS 41 fair value adjustment on account of the Group’s forest associates added a further EUR 44.0 million to equity net of deferred tax.

Following the divestment of the Swedish forests in 2004, future biological income will not be material. Never-theless, periodic future changes resulting from growth, price and other factors will be entered in the Income Statement so that operating profit includes an adjustment for the change in value of the standing forest during the year. This change in value is made up of growth, harvesting and price fluctuations. The result for 2004 includes EUR 37.5 (EUR 116.2) million in respect of the change in fair value, being the growth and price effect, less EUR 30.4 (EUR 104.6) million for harvesting, resulting in the net gain of EUR 7.1 (EUR 11.6 million) shown in the Income Statement; all but EUR 0.9 million came from Bergvik Skog prior to its divestment.

At 31 December 2004 Stora Enso’s remaining biological assets had a fair value of EUR 64.6 (EUR 1 587.8) million and were located by value in Portugal (83%), Canada (3%) and China (14%). In addition, the Group now has three Associated Companies where IAS 41 is taken into account in computing their results:

• Bergvik Skog AB, the new 43.3% owned Swedish associate, had biological assets at a fair value of EUR 2 622.6 (SEK 23 657) million.

• Tornator Timberland Oy, a 41% owned associate which acquired the Group’s Finnish forest interests in 2002, had biological assets at a fair value of EUR 614.9 (EUR 628.9) million.

• Veracel, a 50% owned associate in Brazil, also has substantial forest plantations fair valued at EUR 70.0 (EUR 67.4) million, though with a growing cycle of only seven years.

Biological Assets

	As at 31 December
EUR million	2003		2004
Assets reclassified from Fixed Assets '(see Note 11)	705.9
Fair valuation surplus	855.8
Initial IAS 41 Valuation at 1 January 2003	1 561.7
Carrying value at 1 January	1 561.7		1 587.8
Translation difference	8.3		6.4
Additions	7.2		4.5
Disposals	-1.0		-1 541.2
Change in fair value	116.2		37.5
Decrease due to harvest	-104.6		-30.4
Carrying value at 31 December	1 587.8		64.6