M-REAL?S COMPARATIVE IFRS INFORMATION

M-real Corporation Stock Exchange Bulletin 19.4.2005 klo 11.15 1(16)

TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

M-REAL’S COMPARATIVE IFRS INFORMATION

M-real changed its financial reporting standards from Finnish
Accounting Standards (FAS) to International Financial Reporting
Standards (IFRS) at the start of 2005. In August 2004, the company
released its preliminary estimate of the impacts of this transition
on its opening IFRS balance sheet. The purpose of this release, and
the appendix to it, is to provide specified information on the
effects of adoption of IFRS on the company’s consolidated income
statement and balance sheet. For M-real the main effects of the
adoption of IFRS relate to the reporting of pension liabilities,
deferred taxes, derivative contracts and some financing arrangements,
and the recognition of certain impairment losses in the opening IFRS
balance sheet.

The transition date is January 1, 2004 and on that date M-real has
prepared its opening IFRS balance sheet. In preparing the opening
balance sheet the company has applied some exemptions available to
first-time adopters of IRFS, which are explained in more detail in
the appendix to this release.

The following tables address the effects of adoption of IFRS on the
company’s consolidated key figures.


                     1-12/2004     1-9/2004    1-6/2004     1-3/2004
Year 2004              FAS  IFRS   FAS  IFRS    FAS  IFRS   FAS  IFRS
Operating profit,      -75    27   -47    41    -19    33     1    24
EUR million
Profit/loss            -15    45    49    91    111   123   142   141
attributable
to shareholders of
parent
company, EUR
million
Earnings per share,                                                  
EUR
  From continuing    -0.79 -0.52 -0.58 -0.40  -0.29 -0.25 -0.14 -0.17
operations
  From discontinued   0.71  0.72  0.81  0.83   0.81  0.83  0.81  0.83
  operations
  From continuing    -0.08  0.20  0.23  0.43   0.52  0.58  0.67  0.66
and
  discontinued
operations
Equiry attributable   2627 2 393  2241  2004   2303  2033  2328  2038
to shareholders of
parent company at
the end of period,
EUR million
Net interest          2161  2183  2278  2293   2614  2669  2551  2619
bearing liabilities
at the end of
period, EUR million
Total assets at the   6394  6486  6447  6510   6489  6540 6 550  6589
end of period, EUR
million
Return on capital     -1.0   0.9  -0.8   1.6   -0.3   1.8   0.3   2.0
employed, %
Equity ratio, %       41.5  37.5  37.2  31.4   35.8  31.5  35.8  31.4
Gearing, %              82    90   100   112    113   129   109   127
                                                                     
Opening balance        FAS                                           
sheet                       IFRS
1 Jan 2004
Total equity, EUR    2 245 1 960                                     
million
Net interest         3 109 3 171                                     
bearing
liabilities, EUR
million
Total assests, EUR   7 106 7 162                                     
Equity ratio, %       31.9  27.8                                     
Gearing ratio, %       137   159                                     

The company’s consolidated operating profit for 2004 was EUR 102
million higher under IFRS than FAS. IFRS-based operating profit was
improved in comparison to FAS reporting by the discontinuance of
goodwill amortisation (EUR 52 million) and the inclusion of fixed
asset write-downs of Reflex and Savon Sellu mills (EUR 62 million) on
the opening IFRS balance sheet but in income statement under FAS.
Other IFRS effects resulted in a net reduction of EUR 12 million in
operating profit.

The adoption of IFRS had a negative effect on the consolidated
shareholders’ equity reported on the opening IFRS balance sheet in
the amount of EUR 285 million, contrary to the EUR 320 million
anticipated in the August 18, 2004 estimate. The reduction in
negative effect is mainly due to changes in Finnish pension plan
related to the principles applied in calculating disability pension
contribution that will go into effect on January 1, 2006 and,
contrary to earlier interpretation, will cause disability pension
arrangements to be treated as defined contribution plans. The most
significant negative effects on shareholders’ equity originate from
the inclusion of pension liabilities on the balance sheet (EUR 115
million), reversal of sale and leaseback agreement (EUR 45 million),
recognition of a deferred tax liability with respect to the fair
value of forest assets in excess of their tax basis (EUR 40 million),
valuation of derivatives at fair value and discontinuing the
application of hedge accounting (EUR 30 million), and the recognition
of impairment losses on certain assets (EUR 126 million). The
combined effect of positive adjustments totals EUR 71 million on the
opening balance sheet, EUR 24 million of which relates to tax assets
due to decrease in the Finnish corporate tax rate, EUR 26 million to
other deferred tax assets, and EUR 21 million to other items.

By the end of 2004, the negative effect of IFRS adoption on
shareholders’ equity had fallen to EUR 234 million.

The appended tables and notes further describe the effects of IFRS on
the company’s 2004 consolidated income statement and its opening and
year-end 2004 balance sheets.

M-REAL CORPORATION

Corporate Communications

For more information contact Juhani Pöhö, Executive Vice President
and CFO, tel. +358 10469 5283


TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

Comparative IFRS figures with notes; year 2004 by quarter and opening
IFRS balance sheet as of January 1, 2004 (both unaudited)

General

M-real changed its financial reporting standards from Finnish
Accounting Standards (FAS) to International Financial Reporting
Standards (IFRS) from January 1, 2005. The transition date is January
1, 2004 and on that date M-real has prepared its opening IFRS balance
sheet. The first interim report prepared in accordance with the
accounting and valuation principles defined in IFRS will be released
for the first quarter of 2005.

This release describes key changes in accounting principles and the
effects of the adoption of IFRS on M-real’s consolidated financial
statements and opening IFRS balance sheet. Accounting principles
under IFRS will be addressed in full in the company’s annual report
of 2005.

M-real has applied exemptions permitted by IFRS 1 “First time
adoption of International Financial Reporting Standards” in the
following areas:
-        property, plant and equipment; valuation
-        financial instruments / derivative contracts
-        business combinations
-        pension obligations
-        cumulative translation differences

The transition from FAS to IFRS reporting will have an effect on the
accounting treatment of such items as
-        pension arrangements
-        derivative contracts
-        asset revaluations
-        deferred taxes
-        finance leases and other similar contracts
-        provisions
-        business combinations

Application of certain exemptions as permitted by IFRS 1 (First-time
adoption of International Financial Reporting Standards)

1.       Presentation of comparative data

M-real will prepare and release its first annual financial statements
under IFRS for year ending December 31, 2005. As permitted by IFRS 1
the company shall present one year of comparative data for the income
statement, balance sheet, cash flow statement and shareholders’
equity, as well as for the notes to the financial statements.

2.       Property, plant and equipment

In the opening IFRS balance sheet M-real has valued its property,
plant and equipment at cost less accumulated depreciation and
impairment, added with revaluations made under FAS as permitted under
IFRS 1. Forest assets constitute an exception to this rule. and have
been reported at fair value in accordance with IAS 41 (Biological
Assets).

3.       Intangible assets

M-real’s intangible assets are included in its opening IFRS balance
sheet at cost less accumulated amortisation and impairment.

4.       Business combinations

M-real has applied an exemption permitted under IFRS 1 with respect
to business combinations in preparing its opening IFRS balance sheet.
The assets and liabilities of subsidiaries have not been restated
retrospectively at their fair value but have been included in the
opening IFRS balance sheet at their book value under previously
applied accounting standards (FAS), less impairment losses recognised
on the balance sheet date.

5.       Pension obligations

M-real has elected an exemption to recognise all cumulative actuarial
gains and losses relating to its defined benefit pension plans in the
opening IRFS balance sheet. The 10 percent ”corridor approach” as
defined in IAS 19 is applied to actuarial gains and losses arising
after the transition date.

6.       Financial instruments/derivative contracts

M-real has applied an exemption allowed by IFRS 1, and has classified
financial instruments in the opening IFRS balance sheet in accordance
with the requirements under IAS 32 (Financial Instruments: Disclosure
and Presentation) and IAS 39 (Financial Instruments: Recognition and
Measurement). Gains and losses arising from the fair value
measurement of derivative contracts established to hedge financial
assets and liabilities and currency and interest rate exposures have
thus been recognised in the shareholders’ equity on the opening IFRS
balance sheet.

7.       Cumulative translation differences

M-real applies the transitional option of IFRS 1, and assumes that no
cumulative translation differences exist on the transition date. This
means that cumulative exchange differences arising from the
translation of the financial statements of foreign subsidiaries into
euro have been included in retained earnings at the date of
transition.
         
                  
Changes in accounting principles and their impacts

1.       Employee benefits (IAS 19)
         
Under FAS pension expenses have been recognised on the consolidated
financial statements in accordance with the local accounting practice
in countries where M-real operates. IFRS requires that pension
arrangements are classified as either defined contribution or defined
benefit plans. In the case of latter the plan’s assets and
liabilities are calculated using actuarial methods and the difference
between them is recognised as either an asset or liability on the
balance sheet.

Under FAS, the Finnish employee pension plan (TEL) was regarded as a
defined contribution plan. According to the original IFRS
interpretation the disability element of TEL was considered as a
defined contribution plan. In December 2004, Finnish authorities
approved changes regarding the principles applied in calculating
disability pension contributions that will take effect on January 1,
2006. As a consequence of the changes, the TEL pension arrangement as
whole (incl. disability element) will be classified as defined
contribution plan. M-real’s opening IFRS balance sheet includes TEL
disability pension liabilities for the years 2004 and 2005 in the
amount of EUR 7 million (EUR 5 million after tax). and the balance
sheet as of December 31, 2004 EUR 4 million for 2005 (EUR 3 million
after tax).

A total of EUR 108 million of the pension liabilities of foreign
subsidiaries have been recognised on the opening IFRS balance sheet.
The negative impact of this on the shareholders’ equity was EUR 91
million, net of taxes. Due to changes made for the pension plans
during 2004 and the disposal of Metsä Tissue, the liability decreased
to EUR 95 million by the end of 2004 (impact on equity EUR 79 million
net of taxes).
      
2.       Business combinations (IFRS 3)
                  
IFRS 3 requires that any goodwill arising from business acquisitions
should be recorded at cost less accumulated impairment losses.
Goodwill is not to be amortised after the adoption of IFRS. but
instead must be tested for impairment on an annual basis. Since M-
real has applied transitional option permitted by IFRS and thus has
not restated the effects of business acquisitions retrospectively,
goodwill has been recognised on the opening IFRS balance sheet at
cost, net of accumulated amortisations up to the date of transition
and impairment losses recognised on the date of transition.

Total goodwill included in the opening IFRS balance sheet was EUR 643
million, and EUR 568 million in the balance sheet as of December 31,
2004. The reduction is mainly due to the disposal of Metsä Tissue in
January 2004. Goodwill amortisation made under FAS in 2004 totalled
EUR 52 million. Goodwill has been allocated to business segments.

The company has included Kemiart Liners on its opening IFRS balance
sheet as a fully-owned subsidiary due to prior binding agreement on
the purchase price and on the final execution of the transaction
during 2004. Negative goodwill totalling EUR 11 million was
recognised on the opening balance sheet. Under FAS reporting Kemiart
Liners was fully consolidated in M-real’s financial statements from
the beginning of July 2004.

3.       Impairment of assets (IAS 36)

M-real tests the value of assets of its cash generating units for
possible impairment using the discounted future cash flow method.
Tests are performed annually or whenever there is an indication that
the unit may be impaired, as required by IAS 36. Based on the tests
the company has recognised impairment losses of EUR 126 million in
the transition date balance sheet. This total consists of EUR 26
million related to the company’s Consumer Packaging business (fixed
assets of Savon Sellu mill). EUR 36 million relating to the
Commercial Printing business (fixed assets of Zanders’ Reflex mill).
and EUR 60 million pertaining to goodwill allocated to the company’s
paper merchanting business. The after-tax effect of impairment losses
on sharehoders’ equity totalled EUR 120 million.

The fixed assets of the above mills have been written down in their
entirety, with the exception of land. This is due to the current
operating losses of these units as well as their poor prospects. The
impairment of goodwill allocated to the paper merchanting business
related to the poor financial performance of some operating units
within the business.

The annual impairment tests performed for the cash generating units
did not result in requirement for recognition of impairment losses in
the financial statements of 2004.

The definition of cash-generating units employed in the impairment
testing of assets is based on the business segmentation used as a
basis for segment reporting. Business segmentation has changed
slightly in the course of 2004 as a result of organisational changes.
but this has had no material effect on the outcome of impairment
tests.

4.       Property, plant and equipment / Capitalisation of borrowing
  costs (IAS 16, IAS 23)

M-real reports tangible fixed assets on its balance sheet at cost
less accumulated depreciation according to plan and impairment
losses. After the IFRS transition date the company also capitalises
borrowing costs that are directly attributable to the purchase,
construction or manufacture of fixed asset as part of the cost of
such asset. Such capitalisation only applies to long-term projects.
Under FAS, such costs have mainly been expensed during the reporting
period incurred. A total of EUR 0.5 million of interest expenses
related to the construction of the Kaskinen BCTMP mill were
capitalised during 2004. This change in capitalisation policy has no
effect on the opening IFRS balance.

5.       Valuation of forest assets (IAS 41. Biological Assets)
      
Under FAS, M-real’s forest assets have been valued at cost added with
revaluations (write-ups) recognised over the years. Under IAS 41
forest assets have been classified as biological assets on the
opening IFRS balance sheet and reported at fair value. Accordingly, a
total of EUR 135 million of revaluation amounts, recognised in
addition to acquisition costs, have been reversed.

The carrying value of M-real’s forest assets, including land,
totalled EUR 168 million on December 31, 2003 under FAS. Based on the
valuation made by an external expert the carrying value was estimated
to roughly correspond to the fair value.

During 2004, M-real entered into a binding agreement regarding the
sale of its forest assets (shares of Forestia Oy). This transaction
took effect on January 31, 2005. The sale generated a loss of EUR 7
million, which was recognised on the 2004 IFRS income statement.

M-real’s consolidated financial statements also included a 47 percent
share of Metsä-Botnia’s Finnish and Uruguayan forest assets. The fair
value of M-real’s share in them was EUR 25 million on the opening
balance sheet. This amount includes increase of EUR 5 million as a
result of measurement at fair value compared to the carrying value
under FAS.
      
6.       Leases (IAS 17)
      
M-real is a party to certain agreements relating to power plants and
other facilities and also mill equipment leases that under FAS have
been treated as off-balance sheet rental or supply contracts, but
that under IFRS are included on the balance sheet as either finance
leases or special purpose entities (SPEs). The negative impact of
these items on the shareholdes’ equity reported on the opening IFRS
balance sheet was EUR 6 million after tax, and they increased the
total assets by EUR 129 million and the total liabilities by EUR 85
million.

The company has a sale & leaseback contract concerning the real
estate of the Tako Board mill in Tampere, Finland. As this agreement
includes a binding repurchase obligation at the end of the lease
period at the original selling price, under IFRS the agreement is
considered as a financing arrangement. This agreement and the
recorded gain on sale have been reversed on the opening IFRS balance
sheet. This reduces shareholders’ equity and increases interest-
bearing liabilities by EUR 45 million.

7        Income taxes (IAS 12)

      
Under FAS it was permitted alternative approaches to the recognition
of deferred tax liabilities and assets. Under the approach applied by
M-real, deferred taxes have not been recognised on all taxable
temporary differences between the financial statements and tax basis
of assets and liabilities. IFRS requires the recognition of deferred
tax liabilities for all temporary taxable differences. The most
significant difference between the approach applied by M-real under
FAS and IFRS is an increase in deferred tax liabilities in respect of
the fair value of forest assets in excess of their tax basis
(acquisition cost). The opening IFRS balance sheet reflects a related
deferred tax liability of EUR 40 million and a corresponding
reduction in shareholders’ equity. Other divergences between Finnish
and IFRS reporting practices for taxable temporary differences have
given rise to a EUR 12 million deferred tax liability. A deferred tax
asset of EUR 38 million has been recorded, in turn, on the opening
IFRS balance sheet for the IFRS adjustments with the negative impact
on shareholders’ equity.

A deferred tax asset and a related increase in shareholders’ equity
in the amount of EUR 24 million has been recognised on the opening
IFRS balance sheet due to a change in the Finnish corporate tax rate.
Under FAS reporting this asset was recognised in the second quarter
of 2004. The corporate tax rate was reduced from 29 to 26 percent as
of January 1, 2005. The positive impact of this rate reduction
related almost entirely to the accumulated difference between
depreciation of fixed assets made in the financial statements and
taxation.

8.       Provisions (IAS 37)
      
Provisions for future liabilities and charges have been permitted to
be recognised earlier in some cases under FAS than will be allowed
under IFRS. Such cases include provisions for reorganisation or
restructuring expenses, for example. M-real has reversed EUR 21
million of provisions on its opening IFRS balance sheet that does not
meet IFRS recognition criteria. Of this total, EUR 16 million relates
to the sale and winding-up of Price & Pierce trading business. This
sale was finalised in 2004, and the IFRS income statement reflects a
corresponding negative difference compared to the income statement
reported under FAS.
      
9.       Financial instruments (IAS 32, IAS 39)

In the transition IFRS balance sheet M-real has classified and valued
its financial assets and liabilities as well as derivative contracts.
made to hedge currency and interest rate exposure. according to the
requirements under IAS 32 and IAS 39. Under FAS the company also has
reported currency derivatives at their market value but recognised
related hedging income or losses over the remaining hedging period.
The company has decided to discontinue the application of hedge
accounting (recognition of hedging profits and losses over the
hedging period) in hedging its currency flow upon the adoption of
IFRS. M-real will continue to enter in to derivative contracts to
hedge its cash flows, but will now recognise any income or losses
relating to the measurement at fair value of such contracts directly
on the income statement. However, hedge accounting will be applied to
equity hedging and in selected cases in hedging of interest rate
exposure related to financial liabilities.

Open interest rate derivative contracts have not been measured at
fair value under FAS and are thus not recognised on the balance
sheet.

The valuation at fair value of financial instruments resulted in a
negative net effect of EUR 22 million on shareholders’ equity on the
opening IFRS balance sheet.

Under FAS, where hedge accounting has been applied to currency
derivatives. hedging income and losses have been recognised as
adjustments to sales, cost of goods sold or financing expenses
depending on the item hedged. As the company has discontinued the
application of hedge accounting, all exchange rate differences have
been recognised as financing items on the IFRS income statement.

10.      Sales

Reported sales in 2004 were EUR 69 million higher under IFRS than
FAS. This is mainly due to the full inclusion of Kemiart Liners in
the consolidated IFRS statements as of January 1, 2004.

Changes in the treatment of currency exchange differences did not
have an effect on the sales reported under IFRS because foreign
exchange gains and losses recognised under FAS fully offset one
another.

11        Profit on discontinued operations
                  
M-real disposed its tissue operations at the start of 2004. The
related gain on disposal has been treated as extraordinary income in
the income statement under FAS and taxes payable on the gain have
been included in tax expense. IFRS does not recognise a corresponding
concept of extraordinary items. On the IFRS income statement the
after-tax gain on sale has been presented as a separate line item
after profit on continuing operations.

12       Interest-bearing net liabilities
1
Some pension liabilities of foreign subsidiaries have been
transferred from interest-bearing liabilities to pension liabilities
on the opening IFRS balance sheet. Under FAS these liabilities were
included in the interest-bearing liabilities but under IFRS they are
considered as non-interest bearing obligations. The transferred
amount totalled EUR 122 million on January 1, 2004 and EUR 96 million
on  December 31, 2004. The reduction in the liability was mainly due
to the sale of Metsä Tissue.
      
13.      Costs of share issue
                  
Under FAS costs of share issue have been expensed during the
accounting period incurred. Under IFRS they are recorded directly
under shareholders’ equity as a reduction of retained earnings.
Expenses relating to M-real’s share issue in 2004 totalled EUR 12
million after tax (EUR 17 million pre-tax), which has been recorded
as an adjustment of the company’s IFRS earnings for the year.

      
14.      Cash flow statements

M-real has not prepared reconciliation of consolidated cash flow
statement since the adoption of IFRS does not have material effect on
that.


Reconciliation of shareholders’ equity

EUR million               31 Dec  1 Jan 04
                              04
Shareholders’ equity       2 627     2 245
according
to FAS
Effects of adopting                       
IFRS
 Pension obligations         -98      -115
 Other post-employment        -2        -2
 benefit 
 obligations
 Financial leases, sale      -58       -58
 &
 leaseback
 Impairment losses                     -127
 Reversal of goodwill         52         0
 amortizations
 Restatement of                1        14
 business
 combinations
 Biological assets            -1         5
 Provisions                    2        22
 Financial instruments       -35       -30
 Deferred taxes on IFRS      -27        10
 adjustments
 Other                        -2        -4
Equity attributable to     2 393     1 960
shareholders of parent
company, according to
IFRS
Difference                  -234      -285


Reconciliation of net profit for the period

EUR million              1-12/04    1-9/04   1-6/04    1-3/04
Profit according to FAS      -15        49      111       142
Effects of adopting                                          
IFRS
 Pension obligations          18        14       14         8
 Other post-employment         0         0        0         0
 benefit
 obligations
 Financial leases. sale        0         0        0         1
 &
 leaseback
 Impairment losses            61        56        2         1
 Reversal of goodwill         52        37       25        12
 amortizations
 Restatement of              -13       -13        1         0
 business
 combinations
 Biological assets            -6        -9        0         0
 Provisions                  -20        -9        0         0
 Financial instruments        -5        -1       -3       -30
 Share issue expenses         17         0        0         0
 Deferred taxes on IFRS      -39       -27      -21         7
 adjustments
 Other                        -5        -6       -6         0
Profit attributable to        45        91      123       141
shareholders of parent
company. according to
IFRS


CONSOLIDATED INCOME STATEMENT AND BALANCE SHEET

CONSOLIDATED INCOME        1-12/2004                 1-9/2004
STATEMENT
EUR million              FAS Effects    IFRS     FAS  Effects    IFRS
                                  of                       of
                             transit                  transit
                              ion to                   ion to
                                IFRS                     IFRS
Sales                  5 460      69   5 529   4 078       86   4 164
Other operating           86       3      89      64        4      68
income
Operating expenses    -5 152     -47  -5 199  -3 822      -68  -3 890
Share of results in       -7       7       0      -5        5       0
associated
companies
Depreciation and        -462      70    -392    -362       61    -301
impairment losses
Operating profit         -75     102      27     -47       88      41
Share of results in        0       0       0       0        1       1
associated
companies
Net exchange gains        13      -9       4       4      -21     -17
and losses
Other financial         -147       7    -140     -94       -4     -98
income and
expenses. net
Profit on               -209     100    -109    -137       64     -73
continuing
operations before
tax
Income taxes              19     -37     -18      15      -25     -10
Profit on               -190      63    -127    -122       39     -83
continuing
operations
Profit on                176      -1     175     173        3     176
discontinued
operations
Profit for the           -14      62      48      51       42      93
period
Minority interests        -1      -2      -3      -2        0      -2
Profit/loss              -15      60      45      49       42      91
attributable to
shareholders of
parent company

CONSOLIDATED INCOME         1-6/2004                 1-3/2004
STATEMENT
EUR million              FAS Effects    IFRS     FAS  Effects    IFRS
                                  of                       of
                             transit                  transit
                              ion to                   ion to
                                IFRS                     IFRS
Sales                  2 715      60   2 775   1 382       30   1 412
Other operating           40       1      41      16        1      17
income
Operating expenses    -2 556     -26  -2 582  -1 288      -18  -1 306
Share of results in       -4       4       0      -2        2       0
associated
companies
Depreciation and        -214      13    -201    -107        8     -99
impairment losses
Operating profit         -19      52      33       1       23      24
Share of results in        0       0       0       0        0       0
associated
companies
Net exchange gains         4     -25     -21       5      -23     -18
and losses
Other financial          -63       1     -62     -34      -14     -48
income and
expenses. net
Profit on                -78      29     -49     -28      -14     -42
continuing
operations before
tax
Income taxes              17     -20      -3      -2        9       7
Profit on                -61       9     -52     -30       -5     -35
continuing
operations
Profit on                173       3     176     173        3     176
discontinued
operations
Profit for the           112      12     124     143       -2     141
period
Minority interests        -1       0      -1      -1        1       0
Profit/loss              111      12     123     142       -1     141
attributable to
shareholders of
parent company


CONSOLIDATED          31 Dec                  31 Dec            1 Jan
BALANCE SHEET           2004                    2003             2004
EUR million              FAS Effects    IFRS     FAS  Effects    IFRS
                                  of                       of
                             transit                  transit
                              ion to                   ion to
                                IFRS                     IFRS
ASSETS                                                               
Non-current assets                                                   
Intangible assets        666     -22     644     789      -64     725
Tangible assets        3 182      80   3 262   3 588       83   3 671
Biological assets        187       2     189     186        6     192
                                                                     
Financial assets                                                     
Interest bearing          40       3      43      54        2      56
Deferred tax              26      13      39      22       16      38
receivables
Other non-interest       128       8     136     156        0     156
bearing
                       4 229      84   4 313   4 795       43   4 838
Current assets                                                       
Inventories              727      -1     726     802        5     807
Receivables                                                          
Interest bearing          41      -3      38      78       -4      74
Non-interest           1 155      10   1 167   1 247       10   1 257
bearing
Cash and cash            242       0     242     184        2     186
equivalents
                       2 165       8   2 173   2 311       13   2 324
Total assets           6 394      92   6 486   7 106       56   7 162


SHAREHOLDERS’         31 Dec                  31 Dec            1 Jan
EQUITY AND              2004                    2003             2004
LIABILITIES
Shareholders’                                                        
equity
Equity attributable    2 627    -234   2 393   2 245     -285   1 960
to shareholders of
parent company
Minority interest         24      13      37      19       10      29
Total equity           2 651    -221   2 430   2 264     -275   1 989
Non-current                                                          
liabilities
Deferred tax             379      42     421     432        8     440
liabilities
Post employment           21     195     216      26      241     267
benefit obligations
Provisions                37      -1      36      52      -14      38
Interest bearing       1 629      11   1 640   2 583       65    2648
Other non-interest        12       3      15      15       29      44
bearing
                       2 078     250   2 328   3 108      330   3 438
                                                                     
Current liabilities                                                  
Interest bearing         855      11     866     841       -3     838
Non-interest             810      52     862     893        4     897
bearing
                       1 665      63   1 728   1 734        1   1 735
Total liabilities      3 743     313   4 056   4 842      331   5 173
Total shareholders’    6 934      92   6 486   7 106       56   7 162
equity and
liabilities


CONSOLIDATED          31 Dec          30 Sep           30 Jun        
BALANCE SHEET           2004            2004             2004
EUR million              FAS    IFRS     FAS    IFRS      FAS    IFRS
ASSETS                                                               
Non-current assets                                                   
Intangible assets        666     644     675     640      686     644
Tangible assets        3 182   3 262   3 177   3 262    3 243   3 311
Biological assets        187     189     189     185      189     194
                                                                     
Financial assets                                                     
Interest bearing          40      43      43      44       42      43
Deferred tax              26      39      17      31       16      30
receivables
Other non-interest       128     136     143     150      144     148
bearing
                       4 229   4 313   4 244   4 312    4 320   4 370
Current assets                                                       
Inventories              727     726     748     742      734     744
Receivables                                                          
Interest bearing          41      38      40      33       76      73
Non-interest           1 155   1 167   1 165   1 230    1 223   1 226
bearing
Cash and cash            242     242     242     193      136     127
equivalents
                       2 165   2 173   2 173   2 198    2 169   2 170
Total assets           6 394   6 486   6 486   6 510    6 489   6 540


SHAREHOLDERS’       31 Dec            30 Sep           30 Jun   
EQUITY AND          2004             2004             2004
LIABILITIES
Shareholders’            FAS    IFRS     FAS    IFRS      FAS    IFRS
equity
Equity attributable   2  627   2 393   2 241   2 004    2 303   2 033
to shareholders of
parent company
Minority interest         24      37      28      39       19      30
Total equity           2 651   2 430   2 269   2 043    2 322   2 063
Non-current                                                          
liabilities
Deferred tax             379     421     381     417      391     423
liabilities
Post employment           21     216      27     239       25     240
benefit obligations
Provisions                37      36      29      23       39      25
Interest bearing       1 629   1 640   1 606   1 610    1 833   1 847
Other non-interest        12      15      12       7       13      11
bearing
                       2 078   2 328   2 054   2 297    2 302   2 546
Current liabilities                                                  
Interest bearing         855     866     952     953    1 035   1 065
Non-interest             810     862   1 172   1 217      830     866
bearing
                       1 665   1 728   2 124   2 170    1 865   1 931
Total liabilities      3 743   4 056   4 178   4 467    4 167   4 477
Total shareholders’    6 394   6 486   6 447   6 510    6 489   6 540
equity and
liabilities


CONSOLIDATED BALANCE      31 Mar             31 Dec     1 Jan
SHEET                       2004               2003      2004
EUR million                  FAS      IFRS      FAS      IFRS
ASSETS                                                       
Non-current assets                                           
Intangible assets            696       643      789       725
Tangible assets            3 271     3 338    3 588     3 671
Biological assets            187       192      186       192
Financial assets                                      
Interest bearing              54        56       54        56
Deferred tax                  16        31       22        38
receivables
Other non-interest           152       154      156       156
bearing
                           4 376     4 414    4 795     4 838
Current assets                                               
Inventories                  725       732      802       807
Receivables                                           
Interest bearing              89        89       78        75
Non-interest bearing       1 215     1 208    1 247     1 256
Cash and cash                145       146      184       186
equivalents
                           2 174     2 175    2 311     2 324
Total assets               6 550     6 589    7 106     7 162


SHAREHOLDERS’ EQUITY      31 Mar             31 Dec         1
AND LIABILITIES             2004               2003   Jan2004
Shareholders’ equity         FAS      IFRS      FAS      IFRS
Equity attributable to     2 328     2 038    2 245     1 960
shareholders of parent
company
Minority interest             19        29       19        29
Total equity               2 347     2 067    2 264     1 989
Non-current liabilities                               
Deferred tax                 412       412      432       440
liabilities
Post employment benefit       24       244       26       267
obligations
Provisions                    40        25       52        38
Interest bearing           1 841     1 862    2 583     2 648
Other non-interest            24        71       15        44
bearing
                           2 341     2 614    3 108     3 438
Current liabilities                                  
Interest bearing             999     1 048      841       838
Non-interest bearing         863       860      893       897
                           1 862     1 908    1 734     1 735
Total liabilities          4 203     4 522    4 842     5 173
Total shareholders’        6 550     6 589    7 106     7 162
equity and liabilities


KEY FIGURES           Jan-Dec,     Jan-Sep,    Jan-Sep,     Jan-Mar,
                        2004         2004        2004         2004
Year 2004              FAS  IFRS   FAS  IFRS    FAS  IFRS   FAS  IFRS
Operating profit,     -75    27   -47    41    -19    33     1    24
EUR million
Profit/loss            -15    45    49    91    111   123   142   141
attributable to
shareholders of
parent company, EUR
million
Earnings per share,                                                  
EUR
 From continuing     -0.79 -0.52 -0.58 -0.40  -0.29 -0.25 -0.14 -0.17
operations
 From discontinued    0.71  0.72  0.81  0.83   0.81  0.83  0.81  0.83
 operations
 From continuing     -0.08  0.20  0.23  0.43   0.52  0.58  0.67  0.66
operations
 and discontinued
operations
Equity attributable   2627  2393  2241  2004   2303  2033  2328  2038
to shareholders of
parent Company at
the end of period, 
EUR million
Net interest          8.01  7.29 10.54  9.42  10.83  9.56 10.95  9.59
bearing liabilities
at the end of
period, EUR million
Net interest          2161  2183  2278  2293   2614  2669  2551  2619
bearing liabilities
at the end of
period, EUR million
Total assets at the  6 394  6486  6447  6510   6489  6540  6550  6589
end of period, EUR
million
Return on capital     -1.0   0.9  -0.8   1.6   -0.3   1.8   0.3   2.0
employed, %
Equity ratio, %       41.5  37.5  37.2  31.4   35.8  31.5  35.8  31.4
Gearing, %              82    90   100   112    113   129   109   127
                                                                     
Adjusted number of         32816       21261        21261       21261
shares (1000)                  5           4            4           4
                                                                     
Opening balance        FAS  IFRS                                     
sheet
1 Jan 2004
Total equity, EUR    2 245 1 960                                     
million
Net interest         3 109 3 171                                     
bearing
liabilities, EUR
million
Total assets, EUR    7 106 7 162                                     
million
Equity ratio, %       31.9  27.8                                     
Gearing, %             137   159                                     

Computation of key figures

Earning per share = Profit for the period/ Adjusted average number of
shares in issue during the reporting period

Equity per share = (Shareholders´equity/ Adjusted number of shares at
the end of the reporting period) x 100

Return on capital employed % = (Profit on continuing operations
before tax + interest expenses + net exchange gains or losses + other
financial expenses /Capital employed (average)) x 100

Capital employed = Total assets – non interest bearing liabilities

Interest-bearing net liabilities = Interest-bearing liabilities -
interest-bearing assets

Equity ratio % = (Equity/Total assets – advance payment received) x
100

Gearing ratio % = (Interest-bearing net liabilities/Equity) x 100

Equity = Shareholders equity + minority interest


M-REAL CORPORATION

Corporate Communications

About Us

Metsä Boardwww.metsaboard.com Metsä Board is a leading European producer of premium fresh fibre paperboards and forerunner in sustainability. We produce premium lightweight folding boxboards, food service boards and white kraftliners for consumer goods packaging as well as retail-ready and food service applications. We work together with our customers on a global scale to innovate solutions for better consumer experiences with less environmental impact. The pure fresh fibres Metsä Board uses are a renewable resource, traceable to origin in sustainably managed northern forests. We aim for completely fossil-free mills and raw materials by 2030. The global sales network of Metsä Board supports customers worldwide, including brand owners, retailers, converters and merchants. In 2019, the company’s sales totalled EUR 1.9 billion, and it has approximately 2,400 employees. Metsä Board, part of Metsä Group, is listed on the Nasdaq Helsinki.

Subscribe