Note 7 Net Financial Items

	Year Ended 31 December
EUR million	2002	2003	2004
Interest expense
Bank borrowings	-242.5	-188.9	-149.3
Finance leases	-34.3	-30.2	-17.3
Interest capitalised	9.0	5.2	2.5
Interest income	38.3	27.8	22.7
Dividend income	9.2	5.8	17.1
Exchange gains and losses
Currency derivatives	271.2	236.0	-59.2
Borrowings and deposits	-226.3	-223.5	58.1
Other financial income
Fair value change of hedge-accounted derivatives	1.8	1.5	13.8
Other fair value changes	26.3	20.8	18.7
Others	20.0	14.4	8.1
Other financial expense
Fair value change of hedge-accounted derivatives	-	-11.3	-0.2
Other fair value changes	-78.5	-11.2	-0.2
Others	-0.4	-84.1	-20.8
Total	-206.2	-237.7	-106.0

Gains and losses on derivative financial instruments are shown in Note 24.

A provision of EUR 53.9 (USD 61.1) million for additional leasing costs arising from the early termination of finance leases was included in Other Financial Expense in 2003. Stora Enso North America Inc had terminated a portfolio of 1996 UK finance leases which had been due to expire in 2011, but as a consequence of changes in the interpretation of UK leasing tax rules, early termination of the leases became appropriate. The transaction was closed on 2 March 2004 and the remaining provision of USD 3.5 (EUR 2.8) million was credited back to the Income Statement.

Aggregate foreign exchange gains and losses included in the Consolidated Income Statement are:

	Year Ended 31 December
EUR million	2002	2003	2004
Sales	-19.0	-47.9	-19.2
Costs and expenses	2.5	5.2	3.2
Net financial items	44.9	12.5	-1.1
Total	28.4	-30.2	-17.1

This page was printed from www.storaenso.com