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

Stora Enso is exposed to a number of financial market risks that the Group is responsible for managing under policies approved by the Financial and Audit Committee of the Board of Directors. The overall objective is to have cost-effective funding in Group companies as well as to manage financial risks in order to decrease earnings volatility with the use of financial instruments. The main exposures for the Group are funding risk, interest rate risk, currency risk and commodity risk.

Funding Risk

Funding risk arises from the difficulty of obtaining finance for operations at a given point in time. In order to minimise the cost of refinancing the Group loan portfolio and to ensure that funding is obtainable, the Group Treasury must have committed credit facilities to cover planned funding needs, the current portion of long-term debt, commercial paper borrowings and other short-term loans. The average maturity of outstanding loans and committed credit facilities should be at least four years and not more than seven.

Interest Rate Risk

Fluctuations in interest rates affect the interest expense of the Group. As a result of the cyclical nature of the economy, the Group has an interest rate risk policy to synchronise interest costs with earnings over the business cycle by swapping long-term fixed interest rates to short-term floating interest rates. The Groups’s duration benchmark is 12 months and the Treasury has a deviation mandate of between 3 and 24 months.

Currency Risk

The Group operates internationally and is thus exposed to currency risk arising from exchange rate fluctuations. Transaction risk, being foreign currency-denominated sales and purchases together with foreign currency Balance Sheet items, as well as translation risk, being net investments in foreign subsidiaries, in aggregate comprise the foreign currency exchange risk of Stora Enso. The Group policy for transaction risk is to hedge a maximum 75% of the next 12 months net exposure in a specific currency. The policy relating to translation risk exposure is to minimise this risk by funding investments in the same currency as the net assets whenever this is possible and economically viable.

Commodity Risk

Group earnings are exposed to commodity price volatility. The Group has implemented a commodity risk management framework in the areas of fibre and energy procurement whereby subsidiaries are responsible for measuring their open commodity price risks and hedging these through the Group Treasury.

Credit Risk

Credit insurance has been obtained for customers in the main market areas of Western Europe, Canada and the United States. In other market areas, measures to reduce credit risks include letters of credit, prepayments and bank guarantees. The Group has also obtained export guarantees, covering both political and commercial risks, which are used in connection with individual customers outside the OECD area. Management considers that no significant concentration of credit risk with any individual customer, counterparty or geographical region exists for Stora Enso.

Supply Risk

Group manufacturing operations depend on obtaining adequate and timely supplies of raw materials, principally of wood, energy and chemicals. The result of operations could be adversely affected if the Group were unable to obtain adequate supplies of raw materials in a timely manner or if there were significant increases in the costs of raw materials.

Group companies may at times be substantially dependent on a limited number of key resource suppliers due to availability, locality, price, quality and other constraints; additionally, suppliers may sometimes extend lead times, limit supplies or increase prices due to capacity constraints or other factors. In an attempt to mitigate supply risk, the Group works closely with its key suppliers around the world and also produces some of its key resources in-house.