Published: 2005-04-08 07:30:00 CEST
Elisa Oyj - Company Announcement
ELISA?S COMPARATIVE IFRS INFORMATION FOR 2004
ELISA CORPORATION STOCK EXCHANGE RELEASE 8 APRIL 2005 AT 8.30am

ELISA’S COMPARATIVE IFRS INFORMATION FOR 2004

As from the beginning of 2005, the Finnish Accounting Standards (FAS)
have been replaced by International Financial Reporting Standards (IFRS)
in Elisa Corporation’s consolidated reporting.  Elisa will disclose its
IAS 34 compliant first quarter interim report on Thursday, 28 April 2005.

This release includes the reconciliation of the equity and profit as per
transition date and comparative quarterly accounts, as well as the
quarterly income statements, balance sheets, segment information and key
ratios for 2004. Cumulative comparative information for 2004 is available
on Elisa’s Web site at elisa.fi. There are no substantial differences
between the cash flow statement pursuant to the IFRS and FAS standards.

Elisa uses the exemptions allowed by the IFRS 1 standard for the
retrospective application of single standards. The most significant
exemption concerns business combinations carried out before the
transition date. These acquisitions of subsidiaries and associates are
consolidated at original cost or consolidation method. The IFRS 3
standard is applied to acquisitions subsequent to 1 January 2004.
Impairment tests have been performed, and no impairments are recorded in
the balance sheet of the transition date nor are impairments booked in
the balance sheet of the subsequently terminated financial period.

An exemption is used for pensions classified as defined benefit plans.
According to this, the IAS 19 standard is not applied retrospectively,
but at the date of transition the liability of defined benefit plans are
recognised in the opening balance sheet and at fair value valid at the
time.  Revaluations of non-current assets are reversed. After the
adjustment the group’s total non-current assets are based on original
acquisition costs.

Key income statement items            
                                      FAS Change       IFRS
                                1-12/2004         1-12/2004
                                                  
Revenue, MEUR                       1 356             1 356
EBITDA, MEUR                          432      22       455
Depreciation, MEUR                   -239      26      -213
EBIT, MEUR                            193      48       242
Financial income and expenses,        -27      -2       -29
MEUR
Profit before taxes, MEUR             166      46       212
Net profit for the period, MEUR       107      45       152
Earnings per share, EUR              0.78    0.32      1.10

Key balance sheet items                         
                                      FAS  Change      IFRS
                               31.12.2004        31.12.2004
                                    
Non-current assets, MEUR            1 253     124     1 377
Current assets, MEUR                  488      -2       486
Equity and minority interest,         885      30       915
MEUR
Non-current liabilities, MEUR         566      93       658
Current liabilities, MEUR             274      17       291
Provisions for liabilities and          
charges, MEUR                          17     -17         0
                                                   
Key financial ratios                           
                                      FAS  Change      IFRS
                                1-12/2004         1-12/2004
Interest-bearing net liability        411      51       462
MEUR
Return on capital employed                         
(ROCE), %                           13.6%    2.1%     15.7%
Return on equity (ROE), %                          
                                    13.7%    5.5%     19.2%
Equity ratio, %                     51.1%   -1.8%     49.3%
Gearing ratio, %                    46.4%    4.2%     50.6%


Adopting the IFRS reporting does not cause changes to revenue. The
percentage completion method pursuant to IAS 11 has in principal part
been used since the beginning of 2003.

The improved EBITDA is mainly due to EUR 11 million finance lease
agreements and the effect of the treatment of EUR 11 million defined
benefit pensions. The abolishment of goodwill amortisation will reduce
depreciation by EUR 45 million. New depreciation of EUR 18 million is
made on finance lease assets. Adopting the treatment of financial
instruments in compliance with IAS 39 and the interests of the finance
lease agreements will not have a significant impact on financial income
and expenses. The effect of the transition on the 2004 taxes will not be
substantial.

The increase in the balance sheet is mainly due to the reversal of
goodwill amortisation, finance lease handling as well as due to
derecognising the offsetting of tax assets and liabilities carried out in
2004. Shifting to amortised cost in loan recognition instead of nominal
value will reduce the balance sheet by EUR 14 million.  In accordance
with IFRS, the minority interest is presented under equity. A GSM network
provision of EUR 7 million relating to finance lease agreements under
provisions for liabilities and charges will be derecognised. Other
provisions of EUR 11 million are grouped under non-current liabilities.

The differences between IFRS standards and FAS in this release are listed
under ‘attached data’. Principal changes in accounting principles are
described after the attached data.

The IFRS figures are unaudited.

A conference call for investors and analysts will commence at 13.00 
Finnish time. The telephone number for conference is +358 9 8248 5799,
pin 4310.

ELISA CORPORATION

Velipekka Nummikoski
Vice President, Corporate Communications

For further information, please contact:

Ms Tuija Soanjärvi, CFO, tel. +358 10 262 2606

Distribution:

Helsinki Stock Exchange
Major media


ELISA CORPORATION


Statement of changes in equity
(EUR million)                                      
                              Note 1.1.04 31.3.04 30.6.04 30.9.04 31.12.04
Consolidated equity according  
to the Finnish accounting 
standards                             699     731     735     760      851
 Effects of transition to IFRS
 Amortisation on consolidated 
 goodwill                        1             11      23      34       45
 Employee benefits               2    -24     -23     -22     -20      -14
 Leases                          3      5      -2      -1      -1       -5
 Revaluations of tangible assets 4    -11     -11
 Financial instruments           5      1       1       0       1        1
 Other adjustments               6      2       2       2       2        2
 Income tax                      7      3       5       4       3        4
 IFRS adjustments, total              -25     -18       5      18       33
Equity held by parent 
company shareholders                  674     713     741     778      884

Minority interest according 
to the Finnish accounting 
standards                             77       76      65      64       34
IFRS adjustments                 8    -4       -4      -4      -4       -3
Equity held by 
parent company shareholders, 
IFRS                                  73       71      61      60       31

Equity according to IFRS             748      784     802     838      915


Statement of changes in  net profit                             
(EUR million) 

                                             Jan-    Apr-    Jul-     Oct-
                                              Mar     Jun     Sep      Dec
                                     Note      04      04      04       04

Net profit according 
to the Finnish accounting standards            32      15      24       36
Effects of transition to IFRS
Consolidated goodwill                   1      11      11      11       11
Employee benefits                       2       1       1       1        7
Leases                                  3      -7       1       1       -4
Financial instruments                   5       0       0       0        0
Others                                  6       0       0       0        0
Income tax                              7       2      -1      -1       -1
IFRS adjustments, total                         7      12      13       13

Net profit according to FAS                    38      27      38       48

Items presented in the tables 
for each row have been rounded.


ELISA CORPORATION

CONSOLIDATED INCOME STATEMENT    
(EUR million) 
                            FAS  IFRS               FAS     IFRS
                           Jan-  Jan-              Apr-     Apr-  
                            Mar   Mar               Jun      Jun  
                     Note    04    04       Diff.    04       04       Diff.
Revenue                     333   333           0   339      339           0
Other operating 
income                        7     7           0     4        4           0
Operating expenses  2,3,6  -221  -220           1  -248     -242           6
Depreciation and 
impairments:
 On tangible assets   3,6   -49   -53          -4   -49      -53          -4
 On consolidated 
 goodwill               1   -11     0          11   -11        0          11
EBIT                        -59    67           8    35       48          13
Financial income 
and expenses:
 Income from associates 1     0     0           0    -1        0           1
 Other financial income 
 and expenses         3,5    -8   -10          -2    -7       -7           0
Profit before tax            51    56           5    28       41          13
Income tax              7   -18   -17           1   -11      -12          -1
Minority interest       8    -1    -1           0    -2       -2           0
Net profit for the 
period                       32    38           6    15       27          12

Earnings per share, 
basic (EUR/share)          0.23  0.28        0.05  0.11     0.20        0.09
Earnings per share, 
diluted (EUR/share)        0.23  0,28        0.05  0.11     0.20        0.09


CONSOLIDATED INCOME STATEMENT                 
(EUR million)  

                            FAS  IFRS               FAS     IFRS
                           Jul-  Jul-              Oct-     Oct-   
                            Sep   Sep               Dec      Dec  
                     Note    04    04       Diff.    04       04       Diff.
Revenue                     333   333           0   351      351           0
Other operating 
income                        1     0          -1    20       16          -4
Operating expenses  2,3,6  -229  -222           7  -257     -245          12
Depreciation and 
impairments:
 On tangible assets   3,6   -49   -54          -5   -48      -53          -4
 On consolidated 
 goodwill               1   -11     0          11   -11        0          11
EBIT                         45    57          12    55       69          15
Financial income 
and expenses:
 Income from associates 1     0     0           0     2        1           0
 Other financial 
 income and expenses  3,5    -8    -7           1    -5       -6          -1
Profit before tax            36    50          13    51       65          14
Income tax              7   -11   -11           0   -13      -13          -1
Minority interest       8    -1    -1           0    -3       -3           0
Net profit for 
the period                   24    38          13    36       48          13

Earnings per share, 
basic (EUR/share)          0.18  0.27        0.09  0.26     0.35        0.09
Earnings per share, 
diluted (EUR/share)        0.18  0.27        0.09  0.26     0.35        0.09


ELISA CORPORATION

CONSOLIDATED BALANCE SHEET            
(EUR million) 

                       FAS IFRS      FAS  IFRS         FAS  IFRS 
                    31.12. 1.1.      31.3. 31.3.      30.6. 30.6.   
                Note    03   04 Diff.   04    04 Diff.   04    04 Diff.
Non-current 
assets
Intangible 
assets           1,6    64   56    -8   54    48    -6    58   57    0
Consolidated 
goodwill           1   460  460     0  446   457    11   439  457   18
Tangible
assets         3,4,6   856 1006   149  711   777    66   678  750   72
Investments 
in associates      6    20   15    -5   17    12    -4    16   12   -4
Available-for-sale 
financial 
assets         1,5,6    12    9    -3   11     8    -3    11    7   -4
Receivables        5     3    2    -1   42    41    -1    47   46   -1
Deferred tax 
asset              7    82  123    42   90   129    40    63  104   42
                      1497 1671   174 1371  1473   102  1312 1435  123
Current assets
Inventories             16   16     0   14    14     0    15   15    0
Tax asset                1    1     0    0     0     0     7    7    0
Trade and 
other receivables  5   348  356     8  374   375     0   258   259   0
Financial asset 
recognised in 
profit or loss           6    6     0   24     24    0   114  114    0
Cash and cash 
equivalents             61   61     0   44     43    0    39    39   0
                       433  440     8  456    456    0   433   433   0
Total assets          1930 2112   182 1827   1929  102  1745  1868 123

Capital and reserves
Issued capital          69   69     0   69     69    0    69    69   0
Capital paid-in in 
excess of par value    517  517     0  517    517    0   517   517   0
Reserve fund             3    3     0    3      3    0     3     3   0
Revaluation reserve      0    0     0           0    0           0   0
Treasury shares        -25  -25     0  -25    -25    0   -25   -25   0
Retained earnings      135  110   -25  135    110  -25   125   111 -14
Net profit for 
the period                              32     38    6    46    65  19
Minority interests  8        73    73          71   71          61  61
                       699  748    49  731    784   53   735   802  67

Minority interests  8   77        -77   75         -75    66       -66
Provisions for 
liabilities and 
charges             3   52        -52   31         -31    24       -24

Non-current 
liabilities
Retirement benefit 
obligation          2        24    24          23   23          22  22
Deferred tax 
liability           7        40    40          36   36          40  40
Provisions          6        26    26          22   22          17  17
Non-current 
liabilities       3,5  617  755   138  562    616   54   561   612  51
                       617  845   228  562    698  136   561   691 130
Current liabilities
Current portion of 
non-current 
liabilities            102  102     0  102    102    0   101   101   0
Tax liability            3    3     0    4      4    0    11    11   0
Current liabilities 3  380  414    34  322    342   19   247   263  16
                       485  519    34  428    447   19   359   375  16
Total equity 
and liabilities      1930  2112   182 1827   1929  102  1745  1868 123


ELISA CORPORATION

CONSOLIDATED BALANCE SHEET                      
(EUR million)               

                              FAS    IFRS              FAS    IFRS 
                            30.9.   30.9.           31.12.  31.12. 
                     Note      04      04    Diff.      04      04    Diff.
Non-current assets
Intangible assets     1,6      55      55        0      63      76       13
Consolidated 
goodwill                1     428     457       29     441     466       26
Tangible assets     3,4,6     665     736       71     650     724       74
Investments in 
associates              6      16      12       -4      16      12       -5
Available-for-sale 
financial 
assets              1,5,6      11       7       -4      13      10       -2
Receivables             5      61      47      -14      58      46      -11
Deferred tax asset      7      48      86       38      14      43       29
                             1283    1400      117    1253    1377      124
Current assets
Inventories                    15      15        0      15      15        0
Tax asset                       3       3        0                        0
Trade and other 
receivables             5     302     302        0     310     308       -2
Financial asset 
recognised 
in profit or loss             129     129        0      96      96        0
Cash and cash 
equivalents                    89      89        0      67      67        0
                              538     538        0     488     486       -2
Total assets                 1821    1938      117    1741    1864      122

Capital and reserves
Issued capital                 69      69        0      71      71        0
Capital paid-in 
in excess of par value        517     517        0     562     562        0
Reserve fund                    3       3        0       3       3        0
Revaluation reserve                    -1       -1               0        0
Treasury shares               -25     -25        0      -3      -3        0
Retained earnings             125     111      -14     111      99      -12
Net profit for the 
period                         71     103       32     107     152       45
Minority interests       8             60       60              31       31
                              760     838       78     851     915       64

Minority interests       8     64              -64      34              -34
Provisions for 
liabilities and charges  3     21              -21      17              -17

Non-current liabilities
Retirement benefit 
 obligation              2              20       20              15      15
Deferred tax liability   7              38       38              30      30
Provisions               6              14       14              10      10
Non-current 
liabilities            3,5     574     608       34     566     604      38
                               574     680      107     566     658      93
Current liabilities
Current portion of 
non-current liabilities        101     101        0       0       0       0
Income tax liability             5       5        0       2       2       0
Current liabilities      3     297     314       17     272     289      17
                               403     420       17     274     291      17
Total equity and 
liabilities                   1821    1938      117    1741    1864     122


ELISA CORPORATION


KEY FIGURES BY SEGMENT                      
(EUR million) 
                                   EBITDA                  EBITDA
                                   Jan-Mar                Apr-Jun      
                                  04     04              04     04          
                                 FAS   IFRS    Diff.    FAS   IFRS    Diff.

Segment: Mobile communications    66     64       -2     44     47        3
Consolidated entries
Total                             66     64       -2     44     47        3

Segment: Fixed network            52     55        3     45     48        3
Consolidated entries
Total                             52     55        3     45     48        3

Other companies
Comptel                            3      3        0      5      6        1
Other companies*)                  0      0        0      0     -1       -1
Consolidated entries
Total                              3      3        0      5      5        0

Unallocated expenses **)          -2     -2        0      1      1        0
Group, total                     119    120        1     95    101        6


                                   EBITDA                  EBITDA
                                 July-Sept                 Oct-Dec       
                                 04      04              04     04  
                                 FAS   IFRS    Diff.    FAS   IFRS    Diff.

Segment: Mobile communications    57     60        3     52     57        5
Consolidated entries
Total                             57     60        3     52     57        5

Segment: Fixed network            47     50        3     42     48        6
Consolidated entries
Total                             47     50        3     42     48        6

Other companies
Comptel                            3      3        0      5      6        1
Other companies*)                  0      1        1      1      1        0
Consolidated entries **)
Total                              3      4        1      6      7        1

Unallocated expenses **)          -2     -2        0     14     10       -4
Group, total                     105    112        7    114    122        8

*)Includes Yomi IT companies 
and the parent company of 
Yomi Group, for instance.
**) Includes corporate staff 
and corporate administration.

ELISA CORPORATION

KEY FIGURES BY SEGMENT                       
(EUR million) 
                                      EBIT                  EBIT
                                   Jan-Mar               Apr-Jun      
                                   04    04              04   04  
                                  FAS  IFRS    Diff.    FAS IFRS    Diff.
Segment: Mobile communications     45    42       -3     25   25        0
Amortisation of consolidated 
goodwill                           -8              8    -10            10
Total                              37    42        5     15   25       10

Segment: Fixed network             26    27        1     20   20        0
Amortisation of consolidated 
goodwill                           -1              1     -1             1
Total                              25    27        2     19   20        1

Other companies
Comptel                             3     3        0      5    4       -1
Other companies*)                  -2    -1        1     -2    0        2
Amortisation of consolidated 
goodwill
Total                               1     1        0      3    4        1

Unallocated expenses **)           -4    -4        0     -2   -1        1
Group, total                       59    67        8     35   48       13

                                     EBIT                   EBIT
                                    Jul-Sep                Oct-Dec       
                                   04    04              04     04  
                                  FAS  IFRS    Diff.    FAS   IFRS  Diff.

Segment: Mobile communications     35    36        1     32     35      3
Amortisation of consolidated 
goodwill                          -10             10    -10            10
Total                              25    36       11     23     35     13

Segment: Fixed network             21    24        3     16     20      4
Amortisation of consolidated 
goodwill                                                 -1             1
Total                              21    24        3     15     20      5

Other companies
Comptel                             3     3        0      5      5      0
Other companies*)                  -2    -2        0     -1     -1      0
Amortisation of consolidated 
goodwill                                                  0             0
Total                               1     1        0      3      4      1

Unallocated expenses **)           -3    -3        0     13     10     -3
Group, total                       45    57       12     55     69     15

*)Includes Yomi IT companies and 
the parent company of Yomi Group, 
for instance.
**) Includes corporate staff and 
corporate administration.

ELISA CORPORATION

KEY FIGURES                             FAS       IFRS     
                                     31.12.       1.1.       
                                         03         04    Diff. 

Equity/share, (EUR)                    5.09       4.91    -0.18       
Gearing ratio                          87 %      114 %           
Equity ratio                           40 %       36 %                
Interest-bearing liabilities, 
(EUR million)                           747        922      176        
Non-interest bearing liabilities,
(EUR million)                           407        442       35        
Adjusted number of shares
on average                        137320789  137320789            
Adjusted number of shares at
the balance sheet date            137320789  137320789             


                      FAS       IFRS               FAS       IFRS 
                    31.3.      31.3.             30.6.      30.6. 
                       04         04  Diff.         04         04   Diff.  

Equity/share, (EUR)  5.32       5.19  -0.13       5.36       5.40    0.04
Gearing ratio        76 %       87 %              64 %       72 %     
Equity ratio         44 %       41 %              46 %       43 %    
Interest-bearing 
liabilities,
(EUR million)         680        754     74        666        733      67
Non-interest bearing 
liabilities, 
(EUR million)         341        391     51        278        333      55
Adjusted number  
of shares on 
average         137320789  137320789         137320789  137320789
Adjusted number 
of shares at
the balance 
sheet date      137320789  137320789         137320789  137320789


                      FAS       IFRS               FAS       IFRS 
                    30.9.      30.9.            31.12.     31.12. 
                       04         04   Diff.        04         04   Diff.

Equity/share, (EUR)   5.54       5.67   0.13      6.00       6.23    0.23
Gearing ratio         56 %       61 %              46 %       51 %    
Equity ratio          45 %       43 %              51 %       49 %    
Interest-bearing 
liabilities,
(EUR million)          679        730     52        573        625     52
Non-interest bearing 
liabilities,
(EUR million)          319        370     51        283        324     41
Adjusted number 
of shares
on average       137320789  137320789         137569703  137569703
Adjusted number 
of shares at
the balance 
sheet date       137320789  137320789         141778437  141778437


Notes on the IFRS tables

1. Goodwill

Subsidiaries and associates acquired before 1 January 2004 are
consolidated by using the acquisition cost or consolidation method
in accordance with FAS. The IFRS 3 standard applies to acquisitions
made after 1 January 2004.

The depreciation according to plan on consolidated goodwill
pursuant to FAS has been reversed. The annual impact of the
reversal is EUR 45 million. The total amount of goodwill in the
balance sheet of the transition date as at 1 January 2004 was EUR
462 million. Of the acquisition of Finnet International Ltd in June
2004, EUR 3.5 million was targeted at intangible assets. EUR 11.2
million from the acquisition of Yomi Plc was directed to customer
relationships, EUR 1.6 million to available-on-sale IT business,
and EUR 8.9 million was recognised as goodwill. On 31 December
2004, the total amount of goodwill was EUR 473 million.

2.  Employee benefits
 
The pension security and supplementary pension arrangements of the
statutory Finnish pension scheme (TEL), which in principal are
taken care by the Elisa Pension Fund, are calculated as a defined
benefit plan in the balance sheet as at the transition date. In
defined benefit pensions, the IAS 19 standard is not applied
retrospectively, but on the transition date the liability of
defined benefit plan is booked in the opening balance at fair value
valid at the time (pension liability on 1 Jan 2004 EUR 24 million).

Due to the changes in calculation bases approved by the Ministry of
Social Affairs and Health in December 2004, the disability element
of TEL is calculated as a defined contribution plan in the IFRS
balance sheet as per 31 December 2004. As a consequence of this,
the TEL liability arranged in insurance companies and entered in
the balance sheet on the day of the transition was capitalised in
total in the fourth quarter 2004. The liability for the employment
pension and supplementary pension security arranged in the Pension
Fund was capitalised during the last quarter of 2004. This was due
to the amendments in the TEL legislation and the layoffs taken
place during 2004. The treatment of the retirement benefit
obligation arranged in the Pension Fund will continue as a defined
benefit plan. The balance sheet as at 31 December 2004 included EUR
14.8 million defined benefit liability, of which the share of the
Pension Fund arrangements accounts for 12.8 million, the company’s
own liability EUR 1.7 million, and the share of insurance company
arrangements EUR 0.3 million.

3.  Leases
 
The Elisa group has categorised several leases to be treated as
finance lease agreements in accordance with the IAS 17 Leases
standard. The most significant changes in the categories apply to
the leasing and rental agreements of the telecom network, leasing
and rental agreements of IT servers and a number of real estate.
According to the previous practice, these agreements were disclosed
in notes under leasing and rental liabilities.

The share of the telecom premises, EUR 3.6 million, from the
capital gain on the former main office is reversed  because a long-
term agreement was signed on the premises. The agreement is
classified as a finance lease agreement, For this part, the capital
gain will be capitalised during the lease period.

Assets leased through finance lease agreements less accumulated
depreciation are booked under property, plant and equipment, and
correspondingly, liabilities from the agreement are recognised as
interest-bearing liabilities. Leases generated by finance lease
agreements have been replaced by entries in financial expenses and
repayment of debt.

At the end of 2004, tangible assets included finance lease assets
of EUR 59 million (EUR 146 million on 1 Jan 2004) and liabilities 
included finance lease liability of EUR 72 million (EUR 179 million
on 1 Jan 2004). The balance sheet of the transition date included 
EUR 72 million Germany-based finance lease assets and finance lease 
liability of EUR 79 million. Provisions of EUR 7 million (EUR 30 
million on 1 Jan 2004) from the provisions for liability and charges 
pursuant to FAS were reversed on the GSM network.

4.  Revaluation of tangible assets
 
Revaluations recognised in the carrying amounts of real estate in
accordance with FAS have been reversed (EUR 11 million on 1 Jan 
2004). After the adjustment the group’s non-current assets are 
entirely based on original acquisition costs.

5.  Financial instruments

Elisa complies with the IAS 39 standard as of 1 January 2004.

In accordance with FAS, borrowings are valued at their amortised
cost instead of nominal capital. The change in the value method
will reduce the interest-bearing net liability by EUR 13.4 million
during the third quarter 2004.

The group’s derivative contracts consist of Comptel Corporation’s
forward currency contracts. Comptel adopted hedge accounting on 1
January 2005, and the company has deployed FAS in handling forward
currency contracts in its comparative information. Forward currency
contracts are measured at fair value in Elisa’s opening balance
sheet and re-valued at fair value at the end of comparative annual
quarters.  Changes in value are recognised as income in financial
income and expenses.

The treatment of financial instruments had no major impact on the
2004 result.

6. Other adjustments
 
The capitalisation principles relating to product development have
been specified mainly for the part of the capitalisation of own
work. After the adjustment of software product development
expenses, intangible assets rose by EUR 3.0 million in 2004 (EUR
2.9 million on 1 Jan 2004).
 
Equities which entitle to the management of real estate companies
are consolidated by using the proportionate consolidation method in
accordance with IAS 31. As a result of the consolidation, the item
presented as the value of the equities is principally reported as
part of the buildings.
 
The anticipated dismantlement costs of treated telephone poles are
recognised as environmental liability. Dismantlement costs, EUR
1.7 million on 1 Jan 2004, are capitalised in non-current assets. 
The corresponding debt is presented under provisions.

Elisa will apply the IFRS 2 Share-based Payment standard to all
stock option schemes in which the options have been granted after 7
November 2002 and which do not vest before 1 January 2005. Option
arrangements prior to this have not been presented as expenses in
the income statement.  Stock options are measured at fair value at
the time they are granted, and they are expensed on a straight-line
basis in the income statement over the period from the date they
were granted to commencement of the right to exercise them. The
fair value of the options is determined on the basis of the Black-
Scholes pricing model. Stock options granted to the personnel
pursuant to the application of this standard exist in Elisa’s
subsidiary Comptel. The impact on earnings was not substantial in
2004.

Reporting lines in the income statement and balance sheet have also
been regrouped.

7. Income tax
 
Deferred taxes have been entered for IFRS adjustments causing
temporary differences. Deferred taxes are not recognized for
goodwill and other permanently tax free or non-deductible items.

The deferred tax assets and liabilities settled on a net basis
according to FAS have been derecognised. Deferred tax liabilities
are grouped under non-current liabilities in IFRS reporting.

8. Minority interests
 
The changes brought about by IFRS reporting also concern
subsidiaries with minority interests. These changes have an effect
on the respective subsidiaries’ equity and thereof on the group’s
minority interests.  Minority interests are grouped under corporate
equity in IFRS reporting.


PRINCIPAL CHANGES IN ACCOUNTING PRINCIPLES

Consolidation principles

Business combinations before the date of transition to IFRS on 1
January 2004 are reported as they were recognized under FAS.
Acquisitions after 1 January 2004 are recognised in accordance with
IFRS 3.

In accordance with IAS 36, depreciation according to plan is no
longer made on goodwill but is instead tested annually for
impairment. Goodwill is allocated to the segments. Impairment tests
in segments are performed at the date of the transition, and
annually thereafter and always when there is a particular reason.

In accordance with IAS 31, equities of real estate companies are
consolidated by using the proportionate consolidation method. As a
result of the consolidation, the item presented as the value of the
equities is principally reported as part of the buildings.

Segment-specific information

Business segments are defined as Elisa’s primary segments under
IFRS reporting: Fixed network business, Mobile communications and
Other businesses. Thus, the segment breakdown of the present
reporting will not change when transferring to IFRS reporting.

Geographical segments – Finland and Other countries – are defined
as secondary segments under IFRS reporting.

Property, plant and equipment

Leases
In Elisa, several leases have been classified to be treated as
finance lease agreements in compliance with the IAS 17 Leases
standard. The most significant changes in the classifications
concern the leasing and rental agreements of the telecom network,
IT servers and leasing and rental agreement of a number of real
estate.

Property rented with finance lease agreements less accumulated
depreciation is booked under property, plant and equipment, and
obligations from the agreements are correspondingly recognised in
interest-bearing liabilities. Rents due to finance lease agreements
are replaced by entries in financial expenses and repayment of
debt. The assets financed with finance leasing agreements pursuant
to the IAS 17 standard are capitalised in the balance sheet and
amortised in accordance with the depreciation plans relating to
property, plant and equipment during the economic life of the
commodity or during a shorter period of the lease agreement.

Revaluations
Revaluations recognised in the carrying amounts of real estate in
accordance with FAS have been reversed in the IFRS balance sheet.
After the adjustment the group’s non-current assets are entirely
based on original acquisition costs.

Financial instruments

Investments in equity instruments, except for investments in
associates and real estate companies, are classified as available-
for-sale instruments. Investments in equity instruments are valued
at fair value. Unlisted securities, for which the values cannot be
measured reliably, are recognized at cost.  Changes in the fair
value of equities are recognized directly in equity. When the
investment is sold, the accumulated fair value adjustment is
recognized in income.

Investments in money market instruments and fixed income securities
are classified as financial assets at fair value and recognised in
income. Borrowings are valued at their amortised cost instead of
nominal capital. The acquisition cost may include management fees,
trading costs and issue gains or losses.

In accordance with the IAS 39 standard, derivative agreements are
measured at fair value and recognised as income, unless hedge
accounting is applied. Hedge accounting is applied as of 1 January
2005 in Comptel to non-euro items that relate to the outstanding
order book. When hedging is efficient the change in the fair value
of these forward contracts is directly recognised in the equity.

Retirement benefit obligation

Elisa has a number of pension arrangements both in the Pension Fund
and in pension insurance companies. Pension arrangements are
different, depending on each country’s legislation and practice. As
a rule, pension security and supplementary pension under the
Finnish statutory pension scheme (TEL) have been organised through
Elisa’s Pension Fund.

In IFRS reporting pensions are either defined contribution plans or
defined benefit plans. Payments made on defined contribution plans
are booked as expenses in the income statement of the respective
financial period. Pension arrangements of foreign subsidiaries are
defined contribution plans. The difference in financial statement
practices is due to the different handling of pension arrangements
classified as defined benefit pension plans in IFRS financial
statements.

The IAS 19 standard is not retrospectively applied to defined
benefit pensions, but the liability of the defined benefit plans is
booked in the opening balance sheet at fair value. In the long run
actuarial gains or losses to be recognised in the income statement
will be divided by the expected average remaining working lives of
the employees participating in that plan for each defined benefit
plan for the portion that exceeds 10% of the present value of the
defined benefit pension obligation or of the greater fair value of
any plan assets.

Stock options

Elisa will apply the IFRS 2 Share-based Payment standard to all
stock option schemes in which the options have been granted after 7
November 2002 and which do not vest before 1 January 2005. Option
arrangements prior to this have not been presented as expenses in
the income statement.

Stock options are measured at fair value at the time they are
granted, and they are expensed on a straight-line basis in the
income statement over the period from the date they were granted to
commencement of the right to exercise them. The fair value of the
options is determined on the basis of the Black-Scholes pricing
model.

Treasury shares

Treasury shares are presented in their own line under equity.
Previously treasure shares were deducted from retained earnings.


ELISA CORPORATION

Velipekka Nummikoski
Vice President, Corporate Communications

Additional information:
Tuija Soanjärvi
Executive Vice President, Corporate Finance, tel. +358 50 3822606

Distribution:

Helsinki Exchanges 
Major media