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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005

OR

	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report For the transition period from                          to

Commission file number 33-99284

STENA AB (publ)

(Exact name of Registrant as specified in its charter and translation of Registrant's name into English)

Kingdom of Sweden

(Jurisdiction of incorporation or organization)

Masthuggskajen, SE-405 19 Gothenburg, Sweden

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

None
(Title of Class)

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
9 5/8% Senior Notes due 2012, 7½% Senior Notes due 2013 and 7% Senior Notes due 2016
(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

50,000 ordinary shares, par value SEK 100 per share
(as of December 31, 2005)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
    Yes         No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act.

Yes         No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes         No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non accelerated filer. See definition of ‘‘accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer			Accelerated filer			Non-accelerated filer

Indicate by check mark which financial statement item the registrant has elected to follow:
Item 17          Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes        No

TABLE OF CONTENTS

						Page
PART I								2
Item 1.			Identity of Directors, Senior Management and Advisors					2
Item 2.			Offer Statistics and Expected Timetable					2
Item 3.			Key Information					2
Item 4.			Information on the Company					20
Item 4A.			Unresolved Staff Comments					46
Item 5.			Operating and Financial Review and Prospects					46
Item 6.			Directors, Senior Management and Employees					60
Item 7.			Major Shareholders and Related Party Transactions					63
Item 8.			Financial Information					66
Item 9.			The Offer and Listing					66
Item 10.			Additional Information					67
Item 11.			Quantitative and Qualitative Disclosures About Market Risk					71
Item 12.			Description of Securities Other than Equity Securities					73
PART II								74
Item 13.			Defaults, Dividend Arrearages and Delinquencies					74
Item 14.			Material Modifications to the Rights of Security Holders and Use of Proceeds					74
Item 15.			Controls and Procedures					74
Item 16.			[Reserved]					74
Item 16A.			Audit Committee Financial Expert					74
Item 16B.			Code of Ethics					74
Item 16C.			Principal Accountant Fees and Services					75
Item 16D.			Exemptions from the Listing Standards for Audit Committees					75
Item 16E.			Purchases of Equity Securities by the Issuer and Affiliated Purchasers					75
PART III								76
Item 17.			Financial Statements					76
Item 18.			Financial Statements					76
Item 19.			Exhibits					76

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Introduction

Unless otherwise indicated, all references in this Annual Report to ‘‘we,’’ ‘‘us,’’ ‘‘our,’’ and similar terms, as well as references to the ‘‘Company,’’ refer to Stena AB (publ) (‘‘Stena AB’’) and its subsidiaries.

Forward-looking Information

This Annual Report includes statements that are, or may be deemed to be, ‘‘forward-looking statements’’ within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Some of these statements can be identified as ‘‘forward-looking statements’’ by the use of forward-looking terminology including terms such as ‘‘anticipate,’’ ‘‘should,’’ ‘‘likely,’’ ‘‘foresee,’’ ‘‘believe,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘continue,’’ ‘‘could,’’ ‘‘may,’’ ‘‘plan,’’ ‘‘project,’’ ‘‘predict,’’ ‘‘will’’ or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Annual Report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including among others, changes in general economic and business conditions; changes in laws and regulations; changes in currency exchange rates and interest rates; risks incident to vessel operations, including discharge of pollutants; introduction of competing services or products by other companies; changes in trading or travel patterns; increases of costs of operations or the inability to meet efficiency or cost reduction objectives; changes in our business strategy; and various other factors listed in this Annual Report and in our reports filed with the Securities and Exchange Commission (the ‘‘SEC’’) from time to time. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described herein as anticipated, believed, estimated, expected, intended, planned or projected. We do not intend, nor assume any obligation, to revise these forward-looking statements to reflect any future events or circumstances.

PART I

Item 1.    Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2.    Offer Statistics and Expected Timetable

Not applicable.

Item 3.    Key Information

The following selected consolidated financial information should be read in conjunction with and is qualified in its entirety by reference to our Consolidated Financial Statements and the notes thereto included elsewhere herein. The selected consolidated financial information for each of the years in the five-year period ended December 31, 2005 has been derived from the audited financial statements. The Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles in Sweden (‘‘Swedish GAAP’’), which differs, in certain significant respects, from generally accepted accounting principles in the United States (‘‘US GAAP’’). Reconciliation of such differences which significantly affect the determination of stockholders' equity as of December 31, 2004 and 2005 and net income for the years ended December 31, 2003, 2004 and 2005 is set forth in Note 31 to our Consolidated Financial Statements.

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Currency of Presentation

Stena AB maintains its Consolidated Financial Statements in Swedish kronor. In this Annual Report, references to ‘‘SEK’’ are to Swedish kronor, references to ‘‘US dollars,’’ ‘‘dollars,’’ ‘‘US$’’ or ‘‘$’’ are to US dollars, references to ‘‘EUR’’ and ‘‘euro’’ are to the currency introduced at the start of the third stage of European Economic and Monetary Union pursuant to the treaty establishing the European Community, as amended by the Treaty on European Union, references to ‘‘DKK’’ are to Danish Kronor and references to ‘‘(pounds sterling),’’ ‘‘pounds sterling’’ or ‘‘GBP’’ are to British pounds. For the convenience of the reader, this Annual Report contains translations of Swedish kronor amounts into US dollars at specified rates. No representation is made that the Swedish kronor amounts have been, could have been or could be converted into US dollars at the rates indicated or at any other rates. Unless otherwise stated, the translations of Swedish kronor into US dollars have been made at $1.00 = SEK 7.9370, the noon buying rate in New York City for cable transfers in Swedish kronor as certified for customs purposes by the Federal Reserve Bank of New York (the ‘‘Noon Buying Rate’’) on December 31, 2005. Unless otherwise stated, the translations of other currencies into SEK have been made at the applicable conversion rates as reported by Sveriges Riksbank, the Central Bank of Sweden, on December 31, 2005. No representation is made that these amounts have been, could have been or could be converted into such amounts at the rates indicated or at any other rates.

GLOSSARY

The following are abbreviations and definitions of certain terms commonly used in the shipping industry and this Annual Report on Form 20-F.

Aframax tanker.    Tankers ranging in size from 80,000 dwt to 120,000 dwt.

Annual survey.    The inspection of a vessel pursuant to international conventions, by a classification society surveyor, on behalf of the flag state, that takes place every year.

Bareboat charter.    Rental or lease of an empty ship, without crew, stores or provisions with the lessee responsible for complete operation and maintenance of the vessel, including crewing.

Charter.    The hire of a vessel for a specified period of time or to carry a cargo for a fixed fee from a loading port to a discharging port. The contract for a charter is called a charterparty. A vessel is ‘‘chartered in’’ by a lessee and ‘‘chartered out’’ by a lessor.

Classification society.    A private self-regulatory organization which has as its purpose the supervision of vessels during their construction and afterward, in respect to their seaworthiness and upkeep, and the placing of vessels in grades or ‘‘classes’’ according to the society's rules for each particular type of vessel.

Contract of affreightment.    A contract between a shipowner and a shipper, whereby the shipowner undertakes to carry a cargo over a certain route on specified occasions.

DnV.    Det Norske Veritas, a Norwegian classification society.

Drillship.    Maritime vessel modified to include a drilling rig and special station-keeping equipment. The vessel is typically capable of operating in deep water, or ultra-deep water up to 10,000 or 12,000ft. A drillship must stay relatively stationary on location in the water for extended periods of time. This positioning may be accomplished with multiple anchors, dynamic propulsion (thrusters) or a combination of these. Drillships typically carry larger payloads than semisubmersible drilling rigs.

Drydock.    Large basin where all the fresh/sea water is pumped out to allow a ship to dock in order to carry out cleaning and repairing of those parts of a vessel which are below the water line.

Dwt. Deadweight tonne.    A unit of a vessel's capacity, for cargo, fuel oil, stores and crew, measured in metric tonnes of 1,000 kilograms. A vessel's dwt or total deadweight is the total weight the vessel can carry when loaded to a particular load line.

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Dynamic positioning (DP).    Computer controlled power management system which controls thrusters allowing a vessel to maintain position in most weather without anchors.

Freight unit.    Trucks, trailers, containers and railcars.

Gross ton.    Unit of 100 cubic feet or 2.831 cubic meters.

Hull.    Shell or body of a ship.

IMO.    International Maritime Organization, a United Nations agency that issues international standards for shipping.

Lane meter.    Number of useable length meters of lanes for cars, trailers or trucks, except with respect to RoRo vessels that do not carry cars.

Lightering.    To put cargo in a lighter to partially discharge a vessel or to reduce her draft. A lighter is a small vessel used to transport cargo from a vessel anchored offshore.

Linkspan.    The docking facility for the HSS vessels.

Lloyds Register.    British ship classification society.

Newbuilding.    A new vessel recently delivered or under construction.

Offhire.    The period a vessel is unable to perform the services for which it is immediately required under its contract. Offhire periods, which may be scheduled or unscheduled, include days spent on repairs, drydockings, special surveys, vessel upgrades, initial positioning after the purchase of a vessel and periods awaiting employment.

P&I Insurance.    Third party insurance obtained through a mutual association (P&I Club) formed by shipowners to provide protection from large financial loss to one member by contribution towards that loss by all members.

Panamax tanker.    Tankers ranging in size from 60,000 dwt to 80,000 dwt.

Pool.    A co-operation between two or more parties whereby each party supplies its vessels to the pool and the revenues from the pool are split between the pool members in proportion to the number and characteristics of tankers each delivered to the pool.

Product tanker.    Vessels designed to carry a variety of liquid products varying from crude oil to clean and dirty petroleum products, acids and other chemicals. The tanks are coated, this being a requirement of some of the products carried, and the ship may have equipment designed for the loading and unloading of cargoes with a high viscosity.

RoPax vessels.    Vessels designed to transport trucks, freight trailers, buses and cars and which also provide cabin accommodations for passengers.

RoRo vessels.    Vessels designed primarily to transport freight trailers and a limited number of passengers.

Scrapping.    The disposal of old vessel tonnage by way of sale as scrap metal.

Semi-submersible rig.    Semi-submersible rigs are floating platforms which, by means of a water ballasting system, can be submerged to a predetermined depth so that a substantial portion of the lower hulls, or pontoons, is below the water surface during drilling operations. Semi-submersible rigs are capable of operating in the ‘‘submerged’’ mode sitting on the seabed in water depths of approximately 40 to 50 feet. Typically, the rig is ‘‘semi-submerged,’’ remaining afloat, off bottom, in a position in which the lower hull is approximately 60 feet below the water line and the upper deck protrudes well above the surface. These rigs maintain their position over the well through the use of an anchoring system or a computer-controlled thruster system. Semi-submersible rigs are divided into five generations which are determined by rig design and the year of delivery of the units. Generally, first generation drilling rigs are drilling rigs that were delivered before 1973, second generation drilling rigs are drilling rigs that were delivered between 1973 and 1981, third generation drilling rigs are drilling rigs that were delivered

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between 1982 and 1985 and fourth generation drilling rigs are drilling rigs that have been delivered since 1986. Fifth generation drilling rigs are drilling rigs that have been delivered since 1997.

Service speed.    The average maximum speed a vessel can reach when utilized on a daily basis.

Shuttle tankers.    A tanker, usually with special fittings for mooring, which lifts oil from offshore fields and transports it to a shore side storage or refinery terminal on repeated trips.

Spot market.    The market for immediate chartering of a vessel, usually on voyage charters.

Tanker.    Ship designed for the carriage of liquid cargoes in bulk with cargo space consisting of many tanks. Tankers carry a variety of products including crude oil, refined products, liquid chemicals and liquid gas. Tankers load their cargo by gravity from the shore or by shore pumps and discharge using their own pumps.

Time charter.    The hire of a vessel for a specified period of time. The lessor provides the ship with crew, stores and provisions, ready in all aspects to load cargo and proceed on a voyage and pays for insurance, repairs and maintenance. The lessee pays for bunkering and all voyage related expenses including canal tolls and port charges.

ULCC.    Ultra large crude carrier — a tanker larger than 320,000 dwt.

VLCC.    Very large crude carrier — a tanker of 200,000 to 320,000 dwt.

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SELECTED FINANCIAL DATA

			2001						2002						2003						2004						2005						2005
			SEK						SEK						SEK						SEK						SEK						$(1)
			(in millions)
CONSOLIDATED GROUP(2)
INCOME STATEMENT DATA (SWEDISH GAAP):
Total revenues					13,104						13,425						13,619						16,721						19,619						2,472
Direct operating expenses					(8,829	)					(9,020	)					(9,333	)					(10,943	)					(12,631	)					(1,592	)
Selling and administrative expenses					(1,421	)					(1,468	)					(1,522	)					(1,761	)					(1,861	)					(234	)
Depreciation and amortization					(1,605	)					(1,764	)					(1,742	)					(1,790	)					(2,734	)					(345	)
Total operating expenses					(11,837	)					(12,252						(12,597	)					(14,494	)					(17,226	)					(2,171	)
Income from operations					1,267						1,173						1,022						2,227						2,393						301
Share of affiliated companies' results					131						51						—						17						21						3
Gain on sale of affiliated company					—						601						—						—						—						—
Interest income					120						212						85						382						567						71
Interest expense					(913	)					(1,036	)					(824	)					(1,135	)					(1,395	)					(176	)
Other financial items(3)					196						(1	)					212						965						876						111
Minority interest					4						1						2						(77	)					(21	)					(3	)
Income before taxes					805						1,001						497						2,379						2,441						307
Net income					1,410						1,031						510						2,359						2,268						286
BALANCE SHEET DATA (SWEDISH GAAP):
Cash and marketable securities(4)					3,635						3,499						4,568						5,088						9,252						1,166
Investment in VIEs(5)					—						—						—						4,440						5,753						725
Total assets					35,062						30,664						30,127						46,311						54,812						6,906
Debt in VIEs(5)					—						—						—						3,925						4,844						610
Other debt(6)					19,028						14,756						14,826						23,024						26,793						3,376
Stockholders' equity(7)					11,110						11,589						11,470						13,419						15,132						1,906
OTHER DATA (SWEDISH GAAP):
Capital expenditures					(3,875	)					(2,359	)					(3,148	)					(3,343	)					(5,152	)					(649	)
Cash dividends received(8)					—						52						—						—						—						—
Cash dividends paid					50						50						60						70						195						25
Cash flow from operating activities					1,026						2,143						1,790						1,456						2,403						303
Cash flow from investing activities					(1,998	)					936						(3,556	)					(5,331	)					(2,948	)					(371	)
Cash flow from financing activities					2,014						(3,164	)					1,444						4,536						1,850						233
CONSOLIDATED AMOUNTS (US GAAP):
Income from operations					1,328						1,106						1,171						2,340						2,165						273
Net income					942						1,413						316						1,852						2,008						253
Total assets					34,049						30,401						30,761						45,319						55,229						6,958
Stockholders' equity					10,352						10,671						10,954						11,982						14,913						1,879

(1)	Amounts in U.S. dollars have been translated, solely for the convenience of the reader, at an exchange rate of $1.00 = SEK 7.9370, the Noon Buying Rate on December, 31 2005.

(2)	The Consolidated group includes from 2004 the Bostads AB Drott group (‘‘Drott’’) and investments in variable interests entities (‘‘VIEs’’).

(3)	Other financial items refer to financial income (expense) including dividends received, gain (loss) on securities, foreign exchange gains (losses) and other financial income (expense), In 2005, we changed our accounting policy to value financial instruments at market value. The accounts for 2003 and 2004 have been restated.

(4)	Cash and marketable securities consists of cash and cash equivalents, short-term investments and marketable securities.

(5)	We have invested in three VIEs, whose purpose is to invest primarily in high yield securities and corporate bank loans. Due to changes in Swedish GAAP in 2005, these VIEs are consolidated as subsidiaries. The accounts for 2004 have been restated.

(6)	Other debt includes short-term debt, long-term debt and capitalized lease obligations, current and noncurrent.

(7)	Certain pension liabilities, which were previously accounted for as contingent liabilities, have been recorded as pension liabilities in the consolidated balance sheet as of December 31, 2005. The change has been recorded directly against stockholders' equity and deferred tax liabilities, respectively.

(8)	Cash dividends received excludes dividends received on investments held for trading purposes, but includes dividends from strategic investments. Cash dividends in 2002 relates to P&O Stena Line, which was sold in April 2002.

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Restricted Group Data

We issued $200 million 9 5/8% Senior Notes due 2012 on November 27, 2002, $175 million 7½% Senior Notes due 2013 on December 3, 2003 and $250 million 7% Senior Notes due 2016 on November 18, 2004 (collectively, the ‘‘Notes’’). In 2004 and 2005 we repurchased $12 million and $6 million principal amount of the 9 5/8% Senior Notes due 2012, respectively. For the year ended December 31, 2005 Restricted Group Data represents our selected consolidated financial information, excluding the real estate operations (other than three small properties) and three subsidiaries, Stena Finanzverwaltungs AG, Stena Investment Luxembourg SARL and Stena Adactum AB, whose activities consist primarily of investing in securities and in companies outside our traditional lines of business. Our real estate operations are conducted through various subsidiaries. For purposes of the Indentures under which the Notes were issued (the ‘‘Indentures’’), the subsidiaries through which the property operations are conducted (other than the three small properties), together with Stena Finanzverwaltungs AG, Stena Investment Luxembourg SARL and Stena Adactum AB, are designated Unrestricted Subsidiaries, as defined in the Indentures, and, as a result, are not bound by the restrictive provisions of the Indentures. The Drott group (‘‘Drott’’) was acquired in August 2004. Effective as of January 1, 2005, the Company transferred Drott from the Restricted group to the Unrestricted group.

The following information is presented solely for the purpose of additional analysis for investors of our results of operations and financial condition.

SELECTED FINANCIAL DATA

			2003						2004						2005						2005
			SEK						SEK						SEK						$(1)
			(in millions)
RESTRICTED GROUP
INCOME STATEMENT DATA (SWEDISH GAAP):
Revenues from operations					12,451						14,397						15,352						1,934
Net gain on sale of vessels					114						656						316						40
Net gain on sale of properties					—						33						145						18
Total revenues					12,565						15,086						15,813						1,992
Direct operating expenses					(8,960	)					(9,998	)					(10,761	)					(1,355	)
Selling and administrative expenses					(1,448	)					(1,653	)					(1,586	)					(200	)
Depreciation and amortization					(1,667	)					(1,697	)					(2,357	)					(297	)
Total operating expenses					(12,075	)					(13,348	)					(14,704	)					(1,852	)
Income from operations					490						1,738						1,109						140
Share of affiliated companies' results					—						19						—						—
Interest income					122						168						224						28
Interest expense					(585	)					(751	)					(690	)					(87	)
Other financial items(2)					133						343						658						83
Total financial income and expense					(330	)					(240	)					192						24
Minority interest					2						(57	)					(1	)					—
Income before taxes					162						1,460						1,300						164
Net income					256						1,695						1,298						164

(1)	Amounts in U.S. dollars have been translated, solely for the convenience of the reader, at an exchange rate of $1.00 = SEK 7.9370, the Noon Buying Rate on December 31, 2005.

(2)	Other financial items refer to financial income (expense) including dividends received, gain (loss) on securities, foreign exchange gains (losses) and other financial income (expense). In order to present the accounts in a true and fair view, we decided to introduce in 2005 valuation of financial instruments at market. The accounts for 2003 and 2004 have been restated.

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			2004						2005						2005
			SEK						SEK						$(1)
			(in millions)
RESTRICTED GROUP
BALANCE SHEET DATA (SWEDISH GAAP):
Intangible fixed assets					278						307						39
Tangible fixed assets					26,146						17,007						2,143
Marketable securities					155						370						47
Other noncurrent assets					3,928						5,385						678
Total noncurrent assets					30,507						23,069						2,907
Short-term investments					1,083						1,369						172
Cash and cash equivalents					2,304						3,608						455
Other current assets					2,930						5,416						682
Total current assets					6,317						10,393						1,309
Total assets					36,824						33,462						4,216
Total stockholders' equity(2)					12,965						13,556						1,708
Deferred income taxes					1,939						247						31
Other provisions					399						1,876						236
Long-term debt					17,020						14,120						1,779
Other noncurrent liabilities					88						91						11
Total noncurrent liabilities					17,108						14,211						1,790
Short-term debt					73						680						86
Other current liabilities					4,340						2,892						365
Total current liabilities					4,413						3,572						451
Total stockholders' equity and liabilities					36,824						33,462						4,216

(1)	Amounts in U.S. dollars have been translated, solely for the convenience of the reader, at an exchange rate of $1.00 = SEK 7.9370, the Noon Buying Rate on December 31, 2005.

(2)	Certain pension liabilities, which were previously accounted for as contingent liabilities, have been recorded as pension liabilities in the consolidated balance sheet as of December 31, 2005. The change has been recorded directly against stockholders' equity and deferred tax liabilities, respectively.

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			2003						2004						2005						2005
			SEK						SEK						SEK						$(1)
			(in millions)
RESTRICTED GROUP
CONSOLIDATED STATEMENT OF CASH FLOW :
Net income					256						1,695						1,298						164
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization					1,667						1,697						2,357						297
Share of affiliated companies' results					—						(19	)					—						—
(Gain)/loss on sale of property, vessels and equipment					(114	)					(686	)					(461	)					(58	)
(Gain)/loss on securities, net					(108	)					(293	)					(682	)					(86	)
Unrealized foreign exchange (gains) losses					257						(160	)					112						14
Deferred income taxes					(126	)					(333	)					2						—
Minority interest					(2	)					57						1						—
Other non cash items					139						9						(117	)					(15	)
Net cash flows from trading securities					11						(605	)					86						11
Changes in working capital					(75	)					(403	)					(212	)					(27	)
Net cash provided by/(used in) operating activities					1,905						959						2,384						300
Net cash flows from investing activities:
Purchase of intangible assets					—						(162	)					(78	)					(10	)
Cash proceeds from sale of property, vessels and equipment					738						2,403						1,406						177
Capital expenditure on property, vessels and equipment					(2,860	)					(2,901	)					(3,176	)					(400	)
Purchase of subsidiary net of cash acquired					—						(3,183	)					(756	)					(95	)
Sale of subsidiary					—						—						325						41
Proceeds from sale of securities					869						2,951						591						74
Purchase of securities					(707	)					(1,236	)					(456	)					(57	)
Increase of non-current assets					(190	)					(111	)					(130	)					(17	)
Decrease of non-current assets					—						18						14						2
Other investing activities					(151	)					132						32						5
Net cash used in investing activities					(2,301	)					(2,089	)					(2,228	)					(280	)
Net cash flows from financing activities:
Proceeds from issuance of debt					1,795						2,171						148						19
Principal payments on debt					(4,273	)					(1,735	)					(222	)					(28	)
Net change in borrowings on line-of-credit agreements					1,242						1,675						3,243						409
New capitalized lease obligations					1,167						—						—						—
Principal payments capital lease obligations					(64	)					(42	)					(41	)					(5	)
Net change in restricted cash accounts					1,695						(10	)					37						5
Intercompany accounts					(811	)					65						(1,634	)					(206	)
Dividends paid					(60	)					(70	)					(195	)					(25	)
Other financing activities					(493	)					(244	)					(245	)					(31	)
Net cash provided by financing activities					198						1,810						1,091						138
Effect of exchange rate changes on cash and cash equivalents					(59	)					1						57						7
Net change in cash and cash equivalents					(257	)					681						1,304						165
Cash and cash equivalents at beginning of year					1,880						1,623						2,304						290
Cash and cash equivalents at end of year					1,623						2,304						3,608						455

(1)	Amounts in U.S. dollars have been translated, solely for the convenience of the reader, at an exchange rate of $1.00 = SEK 7.9370, the Noon Buying Rate on December 31, 2005.

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Exchange Rate Information

The following table sets forth, for the years and dates indicated, certain information concerning the exchange rates between Swedish kronor and US dollars based on the Noon Buying Rate. The exchange rate information is expressed in Swedish kronor per US $1.00.

YEAR ENDED DECEMBER 31,			AVERAGE(1)						HIGH						LOW
2001					10.4328						11.0270						9.3250
2002					9.6571						10.7290						8.6950
2003					8.0351						8.7920						7.1950
2004					7.3320						7.7725						6.5939
2005					7.5200						8.2434						6.6855
December 2005					—						8.1162						7.8323
January 2006					—						7.8097						7.5385
February 2006					—						7.9656						7.6487
March 2006					—						7.9604						7.6491
April 2006					—						7.7580						7.3579
May 2006					—						7.3929						7.1975

(1)	Represents the average of the Noon Buying Rates on the last business day of each full month during the relevant period.

On June 26, 2006, the Noon Buying Rate for the Swedish kronor, expressed as Swedish kronor per U.S. dollar, was $1.00 = SEK 7.3877.

Risk Factors

We are subject to various risks resulting from changing economic, political, social, industry and business and financial conditions. These risks are described below:

Our level of indebtedness could limit cash flow available for our operations and could adversely affect our operations and flexibility.

As of December 31, 2005, we had outstanding consolidated indebtedness of SEK 31.6 billion ($4.0 billion), of which SEK 16.8 billion ($2.1 billion) was the obligation of unrestricted subsidiaries (as defined in the Indentures governing our indebtedness). Our total debt as a percentage of our total capitalization was approximately 68%. For the restricted group, the debt as a percentage of total capitalization was approximately 52%.

Our indebtedness could restrict our operations. Among other things, our indebtedness may:

	•	limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions of vessels or other strategic acquisitions and general corporate purposes;

	•	require us to dedicate all or a substantial portion of our cash flow to service our debt, which will reduce funds available for other business purposes, such as capital expenditures or acquisitions;

	•	limit our flexibility in planning for or reacting to changes in the markets in which we compete;

	•	place us at a competitive disadvantage relative to our competitors with less indebtedness;

	•	render us more vulnerable to general adverse economic and industry conditions; and

	•	make it more difficult for us to satisfy our financial obligations or be able to refinance maturing indebtedness.

Subject to compliance with various financial and other covenants imposed by our revolving credit facilities and the agreements governing our other indebtedness, we may incur additional

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indebtedness from time to time, including to finance the purchase or completion of newbuildings, and other vessels. As of April 30, 2006, the remaining cost for one tanker we had on order was approximately $21 million and the remaining cost for four RoPax vessels on order, fully equipped was approximately $216 million. In addition, our aggregate remaining cost, as of April 30, 2006, fully equipped, for two drillships on order was approximately $990 million. Since April 30, 2006, the tanker newbuilding has been delivered.

Although certain indebtedness of ours bears a fixed rate of interest, certain other indebtedness of ours bears interest at rates that fluctuate with prevailing interest rates. As a result, our interest expense under such facilities could increase. In addition, future financings we may undertake may also provide for rates that fluctuate with prevailing interest rates that could increase. We currently hedge a portion of our interest rate exposure. However, there can be no assurance that such debt will be effectively hedged or that we will continue such hedging.

Our incurrence of additional debt could further increase the risks described in this Annual Report and could result in a material adverse effect on our business, financial condition and results of operations.

Our ability to service our debt and meet our cash requirements depends on many factors, some of which are beyond our control.

Although there can be no assurances, we believe that the level of borrowings available to us combined with cash from our operations will be sufficient to provide for our cash requirements. To date, we have been able to generate sufficient cash flow from operations, borrowings and refinancing to meet interest and principal payments on our indebtedness. However, our continued ability to satisfy our obligations will depend on our future operating performance and financial results that will be subject, in part, to factors beyond our control, such as interest rates and general economic, financial and business conditions, as well as other factors. If we are unable to generate sufficient cash flow to service our debt, we may be required to:

	•	refinance all or a portion of our debt;

	•	obtain additional financing;

	•	sell certain of our assets or operations;

	•	reduce or delay capital expenditures; or

	•	revise or delay our strategic plans.

If we are required to take any of these actions, it could have a material adverse effect on our business, financial condition and results of operations. In addition, we cannot assure you that we would be able to take any of these actions, that these actions would enable us to continue to satisfy our capital requirements or that these actions would be permitted under the terms of our various debt instruments then in effect.

The covenants in our revolving credit facilities, the agreements governing our other indebtedness and the Indentures governing our notes impose restrictions on our business.

Our revolving credit facilities, the Indentures and the instruments governing our other indebtedness contain a number of covenants imposing significant restrictions on our business. These restrictions may affect our ability to operate our business and to take advantage of business opportunities as they arise. The restrictions these covenants place on us include limitations on our ability and the ability of our restricted subsidiaries to, among other things:

	•	incur liens and debt or provide guaranties in respect of obligations of any other person;

	•	issue preferred stock;

	•	pay dividends or make distributions;

	•	make redemptions and repurchases of capital stock;

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	•	make loans, investments and capital expenditures;

	•	prepay, redeem or repurchase debt;

	•	engage in mergers, consolidations and asset dispositions;

	•	engage in sale-leaseback transactions and affiliate transactions;

	•	change our business and issue and sell capital stock of subsidiaries; and

	•	restrict distributions from subsidiaries.

In addition, our revolving credit facilities and other loans require us to maintain a number of financial ratios. If we violate these covenants and are unable to obtain waivers from our lenders, our debt under the revolving credit facilities would be in default and could be accelerated by our lenders. If our indebtedness is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us. If our expectations of future operating results are not achieved, or our debt is in default for any reason, our business, financial condition and results of operations would be materially and adversely affected. In addition, complying with these covenants may also cause us to take actions that are not favorable to holders of our notes and may make it more difficult for us to successfully execute our business strategy and compete against companies who are not subject to such restrictions.

Because Stena AB is a holding company, repayment of our indebtedness is dependent on cash flow generated by our subsidiaries.

Stena AB is a holding company. All of our operations are conducted by, and substantially all of our assets (including our vessels) are owned by, our subsidiaries. Repayment of our indebtedness is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Under the Swedish Companies Act, there are restrictions as to the ability of our subsidiaries to pay us dividends or make loans and advances to us. The Indentures contain covenants that restrict the ability of our subsidiaries to enter into any agreement limiting distributions and transfers, including dividends. However, our real estate operations and certain of our investment activities are conducted through Unrestricted Subsidiaries which are not bound by restrictive provisions of the Indentures and there can be no assurance that the cash flows or assets of those subsidiaries will be available to us to pay our obligations under the notes.

We conduct our real estate operations and certain investment activities through subsidiaries that are not subject to certain restrictive provisions in the Indentures.

Our real estate operations and certain investment activities are conducted through various subsidiaries. For purposes of the Indentures, these subsidiaries (other than three small properties) are designated as unrestricted subsidiaries and, as a result, are not bound by the restrictive provisions of the Indentures. We transferred Drott to the unrestricted group as of January 1, 2005. At December 31, 2005, these unrestricted subsidiaries had outstanding indebtedness of approximately SEK 16.8 billion ($2.1 billion) substantially all of which, in the case of the real estate subsidiaries, was secured by their real property interests. Neither we nor any of our subsidiaries that has not been designated as an unrestricted subsidiary (referred to as the restricted subsidiaries) have guaranteed payment of any of this indebtedness. There is no limitation in the Indentures on the amount of indebtedness such unrestricted subsidiaries may incur in the future. The Indentures require that any indebtedness of an unrestricted subsidiary must be non-recourse to Stena AB and its restricted subsidiaries. Nevertheless, there can be no assurance that a creditor of an unrestricted subsidiary could not successfully seek satisfaction from us and our restricted subsidiaries or that, in the event of the bankruptcy of Stena AB or one or more of our unrestricted subsidiaries, a bankruptcy court would not consolidate the assets and debts of us and our restricted subsidiaries with those of the unrestricted subsidiaries. The Indentures contain certain limitations on our ability to make investments in unrestricted subsidiaries.

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In addition, because the covenant of the Indentures prohibiting, subject to certain limitations, the creation of limitations on the ability of our subsidiaries to pay dividends does not apply to the unrestricted subsidiaries and because our real estate investments are subject to significant indebtedness, there can be no assurance that the cash flows or assets of unrestricted subsidiaries will be available to us to pay our obligations under any of our indebtedness. The Indentures also provide for designating other of our subsidiaries as unrestricted subsidiaries.

The ferry industry is highly competitive in areas where we operate.

We compete with other ferry operators as well as different forms of transportation, including airlines, other freight carriers and fixed links such as bridges and tunnels. In particular, competition from low cost airlines has increased.

Some of these other forms of transportation are faster or may be more convenient than ferry service. In the case of competition with other ferry operators, such competition is based on the location of the routes, the rates charged, the quality and reliability of the vessel and the onshore and onboard services provided. The principal effect of this competition is to affect our volumes and limit our ability to increase prices. Some of our competitors may have greater financial resources than us, are owned by governments or benefit from government subsidies. As a result, such competitors may be better able to withstand price competition and price volatility than us.

Rising fuel prices may adversely affect the profitability of our ferry operations.

Fuel represents a significant cost incurred by us in the operation of our fleet. In addition, each of our four HSS vessels consumes significantly more fuel than a conventional ferry. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. In recent years, the prices for fuel have been increasing as well as volatile. A significant or sustained increase in the price of fuel or reductions in supply could increase our operating expenses and have a material adverse effect on our financial condition and results of operations. Road and port blockades in the future, arising from fuel protests or other reasons, may have similar effects resulting in loss of carryings.

We seek to reduce our exposure to adverse changes in fuel prices by entering into hedging transactions to cover our fuel requirements. We primarily use swaps and options to hedge our exposure to variations in the price of fuel. However, there can be no assurance that such hedging activities will be successful. Recent increases in fuel prices have required us to take an impairment charge with respect to certain of our HSS vessels.

Our operating results are subject to seasonal fluctuations.

Our ferry operations are highly seasonal principally because passenger volumes are linked to tourism. The period from June through September is the peak travel season for passengers. As a result, our ferry operations generate a significantly greater portion of their revenues and substantially all of their profits in the second and third quarters and generally report losses in the first and fourth quarters.

The offshore drilling rig market is competitive and the future demand for our rigs unpredictable.

The offshore drilling rig market is highly competitive. All of our drilling rigs are currently under contract. One of our contracts expires in 2006, one expires in 2010 and our other contracts expire in 2007. The first of our two drillship newbuildings has a contract in place for four years starting from delivery which is expected in December 2007. The level of demand for offshore drilling rigs has historically fluctuated significantly in connection with oil price changes.

Drilling contracts are generally awarded on a competitive bid basis with price competition as the primary factor. Some oil companies are seeking to negotiate contracts with a lower day rate

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and an incentive payment payable only upon achieving specified operating goals. In these cases, in the event of rig equipment failures or if we do not achieve the stated goals, our revenues will be lower. However, contracts for drilling projects are increasingly being negotiated directly between an oil company and its preferred contractor with quality of service, safety and suitability of equipment, as well as price, as significant factors in awarding the contract. We cannot predict the timing or extent of any changes in the industry or the future level of demand for our drilling rigs.

Charter rates, utilization levels and values for our vessels and drilling rigs may decrease.

Over the last decade, charter rates, vessel values and the general profitability of the shipping and offshore drilling industries have been volatile. There can be no assurance that charter rates or vessel values in the businesses in which we operate will be stable or increase over time. Vessel values are strongly influenced by charter rates which in turn are influenced by the number and types of vessels generally available, costs of newbuildings, changes in trading patterns affecting the demand for particular types and sizes of vessels and technological advances in vessel design and propulsion, as well as the level and pattern of global economic growth.

For the five years ended December 31, 2005, our RoRo, RoPax and car/passenger ferry fleet utilization has averaged approximately 97% (excluding planned offhire days). In the case of our RoRo, RoPax and car/passenger ferry vessels, a substantial portion of this utilization has been through long-term charters. As of April 30, 2006, three charters for our fleet of eight owned RoRo and RoPax vessels (which includes one RoRo vessel in which we have a 49% ownership interest) expire in 2006, two expire in 2007, two in 2008 and one in 2010. The large number of RoRo and RoPax newbuildings ordered and delivered in the industry in recent years and the increasing demand for larger vessels have adversely impacted charter rates and the value of older, smaller and slower vessels.

For the five years ended December 31, 2005, our drilling rig utilization rate has averaged approximately 84% (excluding planned offhire days). One of our contracts expires in 2006, one expires in 2010 and our other contracts expire in 2007. The first of our two newbuilding drillships has a contract in place for four years starting from delivery which is expected in December 2007. Although we are in negotiations for future rig charters, there can be no assurance that these negotiations will lead to charter contracts. Our customers may terminate some of our drilling contracts if the drilling unit is destroyed or lost or if drilling operations are suspended for a specified period of time as a result of a breakdown of major equipment or, in some cases, due to other events beyond the control of either party. In reaction to depressed market conditions, our customers may also seek renegotiation of firm drilling contracts to reduce their obligations.

For the five years ended December 31, 2005, the utilization for our fleet of chartered in, owned and finance leased tankers has averaged 97% (excluding planned offhire days). Although we have long term time charters in place for five of our six owned and finance leased tankers (including three tankers in which we have a 50% ownership interest), 33 of our 39 chartered in tankers are currently trading on the spot market. There can be no assurance that rates on the spot market will not decline, that charters on the spot market will continue to be available or that dependence on the spot market will not result in generally lower overall utilization and lower profitability. The time charters for our two finance leased tankers expire in 2007 and 2011.

We actively seek new charters in an effort to maintain a high level of vessel and rig utilization. However, we cannot assure you that we will be successful in renewing charter agreements, obtaining charter agreements for our newbuildings or replacing charter agreements for our existing vessels or that future charter rates will enable our vessels to be operated profitably.

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Conversions of our vessels and drilling rigs, upgrades or newbuildings may be subject to delays and cost overruns.

From time to time we may undertake to add new capacity through conversions or upgrades to our vessels and drilling rigs or through new construction. These projects are subject to risks of delay or cost overruns inherent in any large construction project resulting from numerous factors, including the following:

	-	shortages of equipment, materials or skilled labor;

	-	unscheduled delays in the delivery of ordered materials and equipment;

	-	unanticipated cost increases;

	-	weather interferences;

	-	difficulties in obtaining necessary permits or in meeting permit conditions;

	-	design and engineering problems;

	-	failure to meet agreed-upon specifications; and

	-	bankruptcy or other failures of the shipyard.

The shipping industry is cyclical and subject to a variety of external factors.

Historically, the profitability of the shipping industry has been cyclical. The cyclicality of the shipping industry has been due to changes in the level and pattern of global economic growth and trading and the highly competitive nature of the shipping industry, as well as changes in the supply of and demand for vessel capacity which impact charter rates and vessel values. The worldwide supply of vessels is influenced by the number of newbuildings and scrappings and government and industry regulation of maritime transportation practices. The overall demand for vessel capacity is influenced by global and regional economic conditions, increases and decreases in industrial and agricultural production, energy consumption, tourism patterns, political changes and armed conflicts, developments in international trade and changes in sea borne and other trading patterns. Because many of the factors influencing the supply of and demand for vessel capacity are unpredictable, the timing, direction and degree of changes in the shipping markets in which we participate, including the RoRo, RoPax, car/passenger ferry and tanker markets, as well as future charter rates and vessel values, are also unpredictable and we cannot assure you that demand for our services or vessels will increase or even remain stable.

Our international operations expose us to risks and uncertainties arising from international political conflicts, economic conditions and other events that could negatively impact our results of operations.

Our operations are global and are affected by international economic, political and governmental conditions, especially in the countries where we are engaged in business or where our vessels operate or are registered.

Economic conditions and fluctuations in currency exchange rates among the countries in which we conduct our ferry operations affect the travel and trade patterns of our customers. We are also subject to governmental and regulatory risks including taxation, nationalization, inflation and protectionist measures that can affect our ability to operate our current routes or alter our routes. We are further subject to political risks. For example, passenger, private car and freight traffic on our Scotland-Northern Ireland route has been affected by civil disturbances from time to time in Northern Ireland and may be so affected in the future. Health concerns such as the outbreaks of SARS and hoof and mouth disease also have negatively impacted our ferry business.

We are also subject to risks pertaining to the Middle East conflict. The tankers owned, chartered in or managed by us trade from time to time in the Arabian Gulf. In the past, political

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and armed conflicts in this region have included attacks on tankers and other efforts to disrupt shipping in this area. Future political instability or future hostilities in this region could adversely impact our tanker operations and therefore could have a material adverse affect on our operations.

These circumstances may materially adversely affect our trade patterns, operations and results of operations.

Terrorist attacks or acts of war may adversely affect the markets in which we operate, our operations and our profitability.

The occurrence of acts of terrorism and any military response would likely cause instability in financial markets and disruptions in travel and trade patterns. Furthermore, terrorist attacks and military actions may result in reduced demand from our customers for our services. Acts of terrorism and regional military conflict may subject our worldwide operations to increased risks and, depending on their magnitude, could have a material adverse effect on our business.

We have potential conflicts of interest with our owners that may adversely affect us.

Our owners own other companies and have other business interests. In the past, certain of such companies have engaged in the same business as or in businesses similar to those conducted by us. In the future, due to the availability of funds, restrictions contained in debt or other instruments or for other reasons, our owners may determine to allocate a particular business opportunity, such as the acquisition of a vessel or drilling rig or the construction of a new vessel to such other companies. In addition, our owners may make these investments or engage in these businesses directly. In such event, we would not incur any debt or be subject to any risks related to such transaction, but also would not receive any cash flow or income generated by it. Further, such activities by our owners may result in such other companies or our owners directly competing with us.

In the case of corporate opportunities and conflicts of interest, Swedish corporate law requires our directors to act in our best interests. Our board of directors is advised by Swedish counsel with respect to such matters. Our eight directors and one deputy director include four directors who are neither employees nor officers of Stena AB and three directors, including our deputy director, who is appointed by the trade unions representing our employees.

The loss of the services of our key employees could materially adversely affect our revenues, results of operations and prospects.

We rely, and expect to continue to rely, upon Dan Sten Olsson, our Chief Executive Officer, and Svante Carlsson, our Chief Financial Officer, as well as certain other key employees for the successful pursuit of our activities. The loss of any of their services could have an adverse effect on our operations. We do not maintain life insurance with respect to Messrs. Olsson or Carlsson.

Most of our onboard staff and onshore shipping staff are unionized. Strikes by them may disrupt our services and adversely affect our operations.

The shipping industry in Sweden and other jurisdictions in which we operate is susceptible to industrial action due to the strong influence of maritime trade unions. While we believe that we have good relations with our work force, we cannot assure you that we will not be adversely affected by future industrial action against efforts by our management to reduce labor costs, restrain wage increases or modify work practices.

We are party to separate agreements covering substantially all our employees in our ferry operations in Sweden, the United Kingdom and The Netherlands. Generally, the terms of these agreements are for one to two years or the agreements continue until terminated or renegotiated. In the United Kingdom, we have an agreement with our labor unions for which the pay level is negotiated on an annual basis. We negotiate labor agreements for our offshore drilling operations separately on an annual basis.

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Although we have not experienced any major strike or work stoppage for many years, there can be no assurance that we will in the future be able to favorably negotiate the terms and conditions of such labor agreements or that strikes or disruptions will not occur in the future as a result of the failure to negotiate such terms or otherwise.

Currency fluctuations may have a material adverse effect on our financial statements and/or our operating margins.

Although we report our results of operations in Swedish kronor, we earn a substantial portion of revenues and incur a substantial portion of expenses in other currencies, principally US dollars, British pounds, Euros and Norwegian kroner. In particular, we incur significant expenses in US dollars for fuel and for expenses in our tanker operations. As of December 31, 2005 approximately $2.1 billion of our debt was denominated in US dollars. Fluctuations in the exchange rates between the US dollar and other currencies could have a material effect on the amount of funds denominated in other currencies needed by us to satisfy our US dollar-denominated obligations. In addition, a substantial portion of our assets and liabilities are denominated in currencies other than the Swedish kronor. As a result, these assets and liabilities will also be impacted by changes in the exchange rate between the Swedish kronor and such other currencies. Our financial results as reported in Swedish kronor in the past and in the future are expected to be significantly affected by changes in the exchange rate between the Swedish kronor and such other currencies. We seek to manage our foreign currency exposure by using forward exchange contracts. We also hedge certain of our currency exchange exposures with borrowings denominated in the same currency as the investment. However, there can be no assurance that such hedging will be successful and foreign exchange fluctuations may have a material adverse effect on our financial statements and/or our operating margins.

We utilize various financial instruments, including hedging arrangements, to manage financial risks, which may not be successful.

We have traditionally used various financial instruments as part of an overall risk management policy to seek to reduce our exposure to interest rate and foreign currency exchange fluctuations. To manage our interest rate risks, we utilize swaps, forward rate agreements, interest rate futures, options and interest rate collars. To manage our foreign currency exchange rate exposure, we utilize forward foreign currency exchange contracts, foreign currency options and currency swaps. We also hedge certain of our currency exchange exposures with borrowings denominated in the same currency as the investment. However, there can be no assurance that we will continue such hedging or that such hedging will be successful in mitigating the risk that interest rate fluctuations will have an adverse effect on our financial statements and/or operating results.

By utilizing hedging instruments, we potentially forego benefits that might result from fluctuations in currency exchange rates, declines in short term interest rates and declines in oil prices. Additionally, we are exposed to credit risk in the event of the failure of counterparties to meet their obligations under these arrangements. The theoretical risk is the cost of replacement at current market prices of these transactions in the event of defaults by counterparties. Although we believe the possibility of non-performance by counterparties is remote (given that we maintain a policy of entering into such arrangements only with highly rated institutions), the impact of such a default may have an adverse effect on our result of operations.

We maintain an investment portfolio of equity and debt securities and market fluctuations may have a material effect on our financial statements and our financial results.

As of December 31, 2005, the fair value of our marketable securities and short-term investments amounted to SEK 5.2 billion, as compared to SEK 2.4 billion as of December 31, 2004. Our equity investments currently include both publicly traded and private companies. The debt securities currently held by us are primarily bank floating rate notes and high yield government

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and corporate bonds from emerging markets. We have also invested in three VIEs, whose purpose is to invest primarily in high yield securities and bank loans. Due to changes in Swedish GAAP in 2005, these VIEs are consolidated as subsidiaries. As of December 31, 2005, total assets of these VIEs amounted to SEK 6.2 billion, which partly was financed by bank debt in the VIEs of SEK 4.8 billion. We seek to maintain a diversified investment portfolio to balance our exposure to various risks and have established a series of procedures and limits we believe are designed to manage the risks of these activities on a day-to-day basis. Investments however are subject to various risks and fluctuations and are highly volatile and, as a result, there can be no assurance that our investment activities will be profitable.

Compliance with safety, environmental and other governmental requirements may adversely affect our operations.

The shipping industry in general, and our business and the operation of our vessels in particular, are affected by a variety of governmental regulations in the form of numerous international conventions, national, state and local laws and national and international regulations in force in the jurisdictions in which such vessels operate, as well as in the country or countries in which such vessels are registered. These regulations include, but are not limited to:

	•	the United States Oil Pollution Act of 1990 (OPA) with respect to strict liability for the discharge of oil and other materials into the environment, the issuance of certificates of financial responsibility for vessels trading in United States waters and requiring that newly constructed tankers that trade in United States waters be constructed with double hulls;

	•	the International Convention on Civil Liability for Oil Pollution Damage of 1969 and the protocol of 1992 (CLC) entered into by certain countries (other than the United States) relating to strict liability and limitation of liability of the shipowner for pollution damage caused by the discharge of persistent oil;

	•	International Convention for the Prevention of Pollution from Ships (MARPOL 73/78) with respect to strict technical and operational requirements for tankers including an enhanced inspection regime and the requirement that all new tankers are built with double hulls;

	•	the International Maritime Organization International Convention for the Safety of Life at Sea of 1974 (SOLAS) with respect to crew and passenger safety, certain safety regulations concerning car/passenger ferry and RoPax vessels and a subsequent chapter, as revised in 2000, with respect to the construction and operation of high speed craft such as the HSS ferries as well as recently adopted mandatory security provisions for ships engaged in international voyages and mandatory compliance with the new International Ship and Port Facility Security Code (ISPS code) and the International Safety Management (ISM) Code which sets out guidelines for the safe operation of ships;

	•	the International Convention on Load Lines of 1966 with respect to the safeguarding of life and property through limitations on load capability for vessels on international voyages;

	•	the International Convention Relating to the Carriage of Passengers and their Luggage by Sea (the Athens Convention) which, by its recent protocol has significantly increased the limits of liability of carriers and has introduced a strict liability regime with limited defenses; and

	•	The U.S. Marine Transportation Security Act of 2002 with respect to vessel security.

In order to maintain compliance with existing and future laws, treaties and international agreements, we incur, and expect to continue to incur, substantial costs in meeting maintenance and inspection requirements, developing and implementing emergency preparedness procedures, and obtaining insurance coverage or other required evidence of financial ability sufficient to address pollution incidents.

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Additional laws and regulations, both international and national, may be adopted as a result of recent oil spills from single-hull tankers, and due to heightened security concerns which could limit our ability to do business or increase the cost of our doing business and that could have a material adverse effect on our operations. In addition, we are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our operations. In the event of war or national emergency, our vessels may be subject to requisition by the government of the flag flown by the vessel without any guarantee of compensation for lost profits.

We believe our vessels are maintained in good condition in compliance with present regulatory requirements, are operated in compliance with applicable safety/environmental laws and regulations and are insured against usual risks for such amounts as our management deems appropriate. The vessels' operating certificates and licenses are renewed periodically during each vessel's required annual survey. However, government regulation of vessels, particularly in the areas of safety and environmental impact may change in the future and require us to incur significant capital expenditure on our ships to keep them in compliance.

Catastrophic loss and other liabilities of our business could adversely affect our results of operations.

The operation of any oceangoing vessel carries with it an inherent risk of catastrophic maritime disaster, mechanical failure, collision, and loss of or damage to cargo.

Additionally, in the course of operating vessels, marine disasters such as oil spills and other environmental mishaps, cargo loss or damage, business interruption due to political or other developments, as well as maritime disasters not involving us, labor disputes, strikes and adverse weather conditions could result in loss of revenues, liabilities or increased costs, personal injury, loss of life, severe damage to and destruction of property and equipment, pollution or environmental damage and suspension of operations. Damage arising from such occurrences may result in lawsuits asserting large claims. In addition, offshore drilling operations are subject to many of the same risks as shipping, including risks relating to the environment and possible catastrophic loss or liability, and are subject to the usual hazards inherent in drilling for oil and gas offshore, such as blowouts, reservoir damage, loss of well control, punchthroughs, craterings or fires.

Although we maintain insurance which we believe is consistent with industry norms against certain of these risks, including loss of life, there can be no assurance that such insurance would be sufficient to cover the cost of damages suffered by us or the loss of income resulting from a vessel being removed from operation. We also cannot assure you that a claim will be paid or that we will be able to obtain insurance at reasonable rates in the future. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we obtain insurance coverage for tort liability. Our payment of these calls could result in significant expenses to us which would reduce our profits or cause losses.

In the event that such claims were assessed against us, all of our assets could be subject to attachment and other judicial process.

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Item 4.    Information on the Company

History and Development of the Company

Stena AB was incorporated as a stock corporation of limited liability in 1897 under the laws of the Kingdom of Sweden. Stena AB was acquired by the Sten A. Olsson family in 1967 to serve as a holding company for certain of the family's businesses. On September 27, 2002, we converted into a public company. Our principal corporate offices are located at Masthuggskajen, SE-405 19 Gothenburg, Sweden and our telephone number at that address is 46-31-855000.

We are one of the largest privately held companies in Sweden. We are owned by certain members of the Olsson family including Dan Sten Olsson, our Chief Executive Officer. The Olsson family has been involved in various aspects of the shipping business since 1946 and we are a leading participant in the worldwide shipping industry. In addition, in order to capitalize on our experience and knowledge of the shipping industry, we have expanded our activities to include other operations related to shipping.

We, together with Stena Sessan AB (‘‘Sessan’’) and Stena Metall AB (‘‘Stena Metall’’), which are also owned by Dan Sten Olsson and other members of the Sten A. Olsson family, and Concordia Maritime AB (‘‘Concordia’’), which is 52% owned by Sessan, comprise the ‘‘Stena Sphere’’ of companies. The Stena Sphere of companies is engaged in shipping, ferry lines, offshore drilling, metal and paper recycling, sales of bunker fuel, real estate, financial activities and limited industrial operations.

We own and operate one of the world's largest international passenger and freight ferry services and own and charter drilling rigs, Roll-on/Roll-off vessels and crude oil and petroleum product tankers. We also invest in and manage residential and commercial real estate, principally in Sweden and The Netherlands. For the year ended December 31, 2005, we generated revenues of SEK 19.6 billion. Cash flows from operating activities for the same period were SEK 2.4 billion, all of which was generated by our restricted group which, for purposes of the Indentures governing our indebtedness, includes all our businesses except our real estate operations (other than three small properties) and three subsidiaries whose activities consist primarily of investing in securities and in companies outside our traditional lines of business. We transferred Drott to the unrestricted group as of January 1, 2005.

Since January 1, 2003, our principal capital expenditures and divestitures have consisted of the purchase and sale of vessels, the purchase and sale of real property and the acquisition of other companies. From January 1, 2003 until March 31, 2006, we have invested approximately SEK 10.1 billion for the purchase of vessels, SEK 3.6 billion for the purchase of real estate and SEK 3.8 billion for the acquisitions of the Drott, Blomsterlandet and Envac Centralsug AB companies. During the same period, we have divested vessels for total consideration of SEK 2.0 billion (excluding sale-leaseback transactions) and real estate for total consideration of SEK 4.9 billion. As of the date of this Annual Report, our capital expenditures in progress consist of two drillships under construction in Korea, two RoPax vessels under construction in Norway and two RoPax vessels ordered in Russia. We expect that the substantial portion of the purchase price of our newbuildings will be financed by the existing revolving credit facility, new capital lease agreements, new bank loans or other financing arrangements.

Business Overview

Ferry Operations

We operate 18 routes with a fleet of 34 vessels in Scandinavia and the United Kingdom under the ‘‘Stena Line’’ and ‘‘Scandlines’’ brand names. Our ferry operations generate revenues from three principal business activities: (i) travel, which consists primarily of ticket sales for passengers and private cars, package tours and hotel sales; (ii) onboard sales, which consists primarily of retail sales, restaurants, bars, arcades, gaming and, on one of our routes, duty and

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tax free sales; and (iii) freight, which consists primarily of trailer and truck transportation. For the year ended December 31, 2005, we carried a total of 11.5 million passengers, 2.2 million private cars and 1.5 million freight units on our routes. For the year ended December 31, 2005, our ferry operations generated revenues of SEK 9.0 billion, operating income (loss) of SEK (7), including impairment charges for our HSS vessels of SEK 765 million due to high oil prices. Total depreciation and amortization expense (including impairment charges) amounted to SEK 1,578 million. Ferry operation revenues were generated from travel (35%), onboard sales (20%) and freight/other (45%).

Pursuant to a tax subsidy system in Sweden, our ferry operations receive a subsidy equal to all social security costs and income taxes payable by the employers on behalf of employees who work on board Swedish-flagged vessels. The amount of this subsidy was approximately SEK 402 million for the 12-month period ended December 31, 2005.

We agreed to establish a joint venture with P&O in October 2003 to acquire the Port of Cairnryan in Scotland from P&O for a purchase price of GBP 22 million. We and P&O will have equal control of the joint venture and share equally in its profits. The port is to be redeveloped to provide separate port facilities for Stena and P&O and each party will pay port user fees to the joint venture. The acquisition and redevelopment of the port will be principally financed with borrowings by the joint venture with Stena and P&O each providing approximately 5% of the acquisition and redevelopment costs by way of equity funding of the joint venture. The completion of the acquisition is conditioned upon, among other things, finalizing construction designs for the redevelopment of the port, negotiating construction contracts related thereto, obtaining financing on satisfactory terms and obtaining necessary permits from Scottish planning and environmental authorities.

In April 2004, we completed our transaction with P&O for the acquisition of P&O's Fleetwood-Larne ferry operations on the Irish Sea, including five vessels and certain related equipment. We sold one vessel to a third party and nominated a subsidiary of our affiliate Stena Metall to purchase a vessel which we then chartered from such subsidiary. In connection with this transaction, we gave an undertaking to the Irish Competition Authority that we would not acquire P&O's Liverpool-Dublin route within the next ten years without obtaining its prior written consent.

Business Activities

We generate revenue from our ferry operations from three principal business activities: travel, onboard sales and freight. The following table sets forth the revenue and percentage of total revenue for each of our business areas for the last three years.

			Year Ended December 31,
(SEK in millions, except percentages)			2003												2004												2005
Travel					3,242						38	%					3,240						36	%					3,139						35	%
Onboard sales					2,144						25	%					2,120						23	%					1,828						20	%
Freight					3,109						36	%					3,553						40	%					3,970						44	%
Other					102						1	%					111						1	%					108						1	%
Total revenues					8,597						100	%					9,024						100	%					9,045						100	%

We generate travel revenue from sales of tickets for passengers, private cars, motorbikes, recreational vehicles and buses, as well as from package tour sales. Our travel revenue also includes revenue from our two Danish hotels, which are marketed as part of packages for conferences or vacations and provision of travel agency services. In July 2005, the smaller hotel was sold to a third-party.

We generate onboard sales from retail sales, restaurants, bars, arcades, gaming and onboard duty and tax free sales. As a consequence of the abolition of duty and tax free sales in the European Union on July 1, 1999, onboard sales have declined as a percentage of our total

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revenues. However, our non-European Union route, Norway-Denmark, has not been affected by the abolition of duty and tax free sales. Poland joined the European Union on May 1, 2004; accordingly, we no longer provide duty and tax free sales on our Sweden-Poland route.

Our freight activities consist of the transportation of trucks, trailers, containers and railcars. Our freight customers are primarily large freight transport and forwarding companies. The majority of our freight cargo consists of trucks accompanied by drivers which generate a higher freight rate than unaccompanied freight. We believe that, as a result of our route network and ability to provide transportation across more than one route, we are well positioned to benefit from the future growth of European freight trade.

Set forth below is certain financial and operating data for our ferry operations for the years ended December 31, 2004 and 2005:

			Year Ended December 31,
Volumes (in millions)			2004						2005						% change
Number of passengers					12.5						11.5						(8.0	)
Private cars					2.4						2.2						(8.3	)
Freight units					1.4						1.5						7.1
Financial (SEK in millions)
Revenues
Travel					3,240						3,139						(3.1	)
Onboard					2,120						1,828						(13.8	)
Freight/Other					3,664						4,078						11.3
Total revenues					9,024						9,045						0.2

Route Network

We currently operate 18 routes in Scandinavia and the United Kingdom. Our routes are geographically well positioned and generally located in high traffic areas.

Sweden-Denmark.    We operate ferry services on three routes. We estimate that we had an approximate 25%, 15% and 40% share of the volume of passengers, private cars and freight units, respectively, transported on Roll-on/Roll-off vessels between Sweden and Denmark for the year ended December 31, 2005.

The following table sets forth the volumes of passengers, private cars and freight units on our Sweden-Denmark routes for the last three years:

			Passengers																		Private cars																		Freight units
(In Thousands)			2003						2004						2005						2003						2004						2005						2003						2004						2005
Gothenburg-Fredrikshavn					2,056						1,947						1,597						425						397						342						160						170						161
Varberg-Grena					195						124						170						45						29						39						35						21						40
Helsingborg-Helsingör(1)					4,166						4,240						4,009						704						756						711						130						138						137

(1)	Represents only 50% of volume on this route. This route is operated in partnership with Scandlines Danmark A/S.

The Gothenburg-Fredrikshavn route is our single largest route on a revenue basis. The Gothenburg-Fredrikshavn route is 52 nautical miles. We operate one day ferry, two RoPax vessels and one HSS 900 vessel on this route. The scheduled crossing time is approximately 3.25 hours, except in the case of the HSS 900, which makes the crossing in approximately two hours.

The Varberg-Grena route is 65 nautical miles and has a scheduled crossing time of approximately 4.5 hours. We operate one RoPax vessel on this route. There was no operations on this route from February 2004 to June 2004 due to repairs being made on the vessel.

The Helsingborg-Helsingor route is three nautical miles and has a scheduled crossing time of approximately 20 minutes. This route is operated in a 50/50 partnership with Scandlines Danmark

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A/S. Each partner receives a 50% share of the accounting profit or loss of the partnership and receives an agreed fixed monthly management fee. We operate three vessels on this route, one is chartered and operated by us, one is owned by Scandlines Danmark A/S and one is owned jointly by us and Scandlines Danmark A/S.

Sweden-Germany.    We operate ferry service on five routes, including two routes operated in cooperation with Scandlines Deutschland GmbH. We estimate that we had an approximate 43%, 48% and 29% share of the volume of passengers, private cars and freight units, respectively, transported on Roll-on/Roll-off vessels between Sweden and Germany for the year ended December 31, 2005.

The following table sets forth the volumes of passengers, private cars and freight units on our Sweden-Germany routes for the last three years.

			Passengers																		Private cars																		Freight units
(In Thousands)			2003						2004						2005						2003						2004						2005						2003						2004						2005
Gothenburg-Kiel					498						476						474						98						92						94						39						34						35
Gothenburg-Travemunde					4						3						4						—						—						—						61						78						82
Trelleborg-Sassnitz(1)					395						354						330						83						81						79						15						18						18
Trelleborg-Rostock(1)					147						157						166						25						26						27						51						59						67
Trelleborg-Travemunde(2)					49						46						35						—						—						—						54						51						54

(1)	Represents only 50% of the volumes on these routes. These routes are operated under a pooling arrangement with Scandlines Deutschland GmbH.

(2)	In April 2005, one of the two RoPax vessels was redelivered to its owner. To make up for this lost capacity, Stena Line has made an agreement with a third party to buy deck-space on such party’s ships for our customers.

On the Gothenburg-Kiel route, we operate two large overnight RoPax vessels with cabin accommodations. The Gothenburg-Kiel route is 214 nautical miles and has a scheduled crossing time of approximately 13.5 hours.

In March and April 2004, we replaced the two RoRo vessels on the Gothenburg-Travemunde route with two new RoRo vessels. The Gothenburg-Travemunde route is 265 nautical miles and has a scheduled crossing time of approximately 15 hours. Throughout the year, we operate one overnight crossing in each direction on each of these routes.

We operate the route Trelleborg-Sassnitz in cooperation with Scandlines Deutschland GmbH, a subsidiary of the Danish-German group of Scandlines AG, in a pooling arrangement. Pursuant to the pooling arrangement, revenue is split 50/50 between us and Scandlines Deutschland GmbH, we each pay our own expenses and retain proceeds from on-board sales. The route is 60 nautical miles and represents the shortest distance between Sweden and Germany. The crossing time is approximately 3.5 hours. Two vessels operate on this route, one contributed by us and one contributed by Scandlines Deutschland GmbH.

We operate the route Trelleborg-Rostock in cooperation with Scandlines Deutschland GmbH under a pooling arrangement. Pursuant to the pooling arrangement, revenue is split 50/50 between us and Scandlines Deutschland GmbH, we each pay our own expenses and retain proceeds from on-board sales. The route is 85 nautical miles and has a scheduled crossing time of five hours. Two vessels operate on this route, one contributed by us and one contributed by Scandlines Deutschland GmbH.

We operated two RoPax vessels on the freight route Trelleborg-Travemunde until March, 2005. In April 2005, one of the Ropax vessels was redelivered to its owner. To make up for this lost capacity, Stena Line has made an agreement with a third party to buy deck-space on such party’s ships for our customers. The route is 120 nautical miles and has a scheduled crossing time of seven hours.

Norway-Denmark.    We operate ferry service on one route. We estimate that we had an approximate 11%, 7% and 9% share of the volume of passengers, private cars and freight units,

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respectively, transported on Roll-on/Roll-off vessels between Norway and Denmark/Germany for the year ended December 31, 2005.

The following table sets forth the volumes of passengers, private cars and freight units on our Norway-Denmark route for the last three years.

			Passengers																		Private cars																		Freight units
(In Thousands)			2003						2004						2005						2003						2004						2005						2003						2004						2005
Oslo-Fredrikshavn					554						592						487						60						61						52						14						15						16

We operate a large overnight ferry with cabin accommodations on this route. The Norway-Denmark route is 143 nautical miles and has a scheduled crossing time of approximately 12.0 hours. Throughout the year we offer a daily overnight sailing from Oslo with a day return from Fredrikshavn. Because Norway is not part of the European Union, we continue to offer duty and tax free retail sales on this route.

Sweden-Poland.    We operate ferry service on one route. We estimate that we had an approximate 38%, 33% and 31% share of the passengers, private cars and freight units volume, respectively, transported on Roll-on/Roll-off vessels between Sweden and Poland for the year ended December 31, 2005.

The following table sets forth the volumes of passengers, private cars and freight units on our Sweden-Poland route for the last three years.

			Passengers																		Private cars																		Freight units
(In Thousands)			2003						2004						2005						2003						2004						2005						2003						2004						2005
Karlskrona-Gdynia(1)					385						420						361						54						65						72						47						62						73

(1)	The Stena Baltica was rebuilt during spring 2005 to increase car-deck capacity.

The Karlskrona-Gdynia route is 164 nautical miles and has a scheduled crossing time of approximately 10 hours. We operate one RoPax vessel and one night ferry on this route. To accommodate increasing volumes, we replaced the existing RoPax vessel with a new larger RoPax vessel in May 2004. We also rebuilt the night ferry during spring 2005 to increase car-deck capacity. Poland joined the European Union on May 1, 2004; accordingly, we no longer provide duty and tax free sales on our Sweden-Poland route.

Wales/England-Republic of Ireland.    We operate ferry services on three routes. We estimate that we had an approximate 54%, 52% and 28% share of the volume of passengers, private cars and freight units, respectively, transported on Roll-on/Roll-off vessels between Wales or England and the Republic of Ireland for the year ended December 31, 2005.

The following table sets forth the volumes of passengers, private cars and freight units on our Wales/England-Republic of Ireland routes for the last three years.

			Passengers																		Private cars																		Freight units
(In Thousands)			2003						2004						2005						2003						2004						2005						2003						2004						2005
Fishguard-Rosslare					645						614						589						154						153						142						40						45						52
Holyhead-Dun Laoghaire					967						888						850						197						191						184						42						36						38
Holyhead-Dublin					242						354						343						59						62						60						64						115						136

We operate one HSS 1500, two RoPax vessels and, in the high season, an additional conventional fast ferry on these routes. The Holyhead-Dun Laoghaire route is 58 nautical miles and has a scheduled crossing time of approximately 1.75 hours with an HSS. The Holyhead-Dublin route is 59 nautical miles with a scheduled crossing time of approximately 3.0 hours. The Fishguard-Rosslare route is approximately 54 nautical miles and has a scheduled crossing time of approximately 3.75 hours, except in the case of a conventional fast ferry which makes the crossing in approximately 1.65 hours.

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Scotland/England-Northern Ireland.    We operate ferry service on two routes. We estimate that we had an approximate 55%, 52% and 35% share of the volume of passengers, private cars and freight units, respectively, transported on Roll-on/Roll-off vessels between Scotland/England and Northern Ireland for the year ended December 31, 2005.

The following table sets forth the volumes of passengers, private cars and freight units on these routes for the last three years.

			Passengers																		Private cars																		Freight units
(In Thousands)			2003						2004						2005						2003						2004						2005						2003						2004						2005
Stranraer-Belfast					1,345						1,321						1,236						261						268						260						128						128						125
Fleetwood-Larne(1)					—						50						62						—						9						9						—						95						134

(1)	We commenced operations on the Fleetwood-Larne route in April 2004.

We operate one RoPax vessel and one HSS 1500 on Stranraer-Belfast. This route is 46 nautical miles and has a scheduled crossing time of approximately 3.25 hours, except in the case of the HSS 1500 which makes the crossing in approximately two hours.

We commenced operations on the Fleetwood-Larne route in April 2004. We operate three RoPax vessels on the Fleetwood-Larne route carrying passengers, private cars and freight. The Fleetwood-Larne route is 110 nautical miles and has a scheduled crossing time of approximately eight hours.

England-The Netherlands.    We operate ferry services on three routes. We estimate that we had an approximate 32%, 36% and 17% share of the volume of passengers, private cars and freight units, respectively, transported on Roll-on/Roll-off vessels between England and The Netherlands for the year ended December 31, 2005.

The following table sets forth the volumes of passengers, private cars and freight units on this route for the last three years.

			Passengers																		Private cars																		Freight units
(In Thousands)			2003						2004						2005						2003						2004						2005						2003						2004						2005
Harwich-Hook of Holland					879						849						738						212						196						160						147						155						161
Killingholme-Hook of Holland					26						26						26						—						—						—						58						57						58
Harwich-Rotterdam					37						34						39						—						—						—						132						129						135

We operate two RoPax vessels and one HSS 1500 on our Harwich-Hook of Holland route. The Harwich-Hook of Holland route is 110 nautical miles and has a scheduled crossing time of approximately eight hours, except in the case of the HSS 1500, which makes the crossing in approximately 3.75 hours.

We operate two RoPax vessels on our Killingholme-Hook of Holland route. The Killingholme-Hook of Holland route is 187 nautical miles and has a scheduled crossing time of approximately 12 hours.

We operate three RoPax vessels on our Harwich-Rotterdam route. This route is 109 nautical miles and has a scheduled crossing time of approximately 6.75 hours.

Ferry Fleet

As of April 30, 2006, our ferry fleet consisted of 34 vessels.

Newbuildings.    Two RoPax vessels of 3,100 lanemetres are being built. They are expected to be put into service on the route Hook of Holland-Killingholme in July and December 2006 respectively.

HSS vessels.    We currently operate three HSS 1500s and one HSS 900. HSS vessels are designed to travel with significantly less vertical motion than other fast ferries at service speeds

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of up to 40 knots. The HSS 1500 is currently the largest high speed ferry in service in the world and has the capacity to carry significant numbers of trucks, freight trailers, cars and buses and up to 1,500 passengers. The HSS 900 can carry up to 900 passengers and 210 cars or a combination of cars and buses.

HSS Vessels

Vessel			Route			Year Delivered						Gross Tons						Passenger Capacity						Number Of Berths						Lane Meters						Service Speed (Knots)
Stena Carisma(1)			Gothenburg-Fredrikshavn					1997						8,631						900						—						N/A						38
Stena Discovery			Harwich-Hook of Holland					1997						19,638						1,500						—						800						40
Stena Explorer			Holyhead-Dun Laoghaire					1996						19,638						1,500						—						800						40
Stena Voyager			Stranraer-Belfast					1996						19,638						1,500						—						800						40

(1)	The Stena Carisma does not carry freight.

Conventional, day and night ferries.    Our fleet of conventional day and night ferries is designed to transport a combination of cars, trucks, freight trailers and passengers. This type of ferry comes in two different designs, the day ferry and the night ferry. Night ferries provide cabin accommodation for passengers.

Conventional Fast Ferry

Vessel

Route

Year Delivered

Gross Tons

Passenger Capacity

Number Of Berths

Lane Meters

Service Speed (Knots)

Stena Lynx III

Fishguard-Rosslare

1996

4,113

620

—

—

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Day Ferries

Vessel			Route			Year Delivered/ Refitted						Gross Tons						Passenger Capacity						Number Of Berths						Car Capacity						Lane Meters					Service Speed (Knots)
Stena Danica			Gothenburg-Fredrikshavn			1983/2003								28,727						2,274						64						555						1,640					19.5
M/S Aurora af Helsingborg(1)			Helsingborg-Helsingor					1992						10,918						1,250						—						240						535					14
Hamlet(2)			Helsingborg-Helsingor					1997						10,067						1,000						—						240						535					15

(1)	Chartered on long-term contract expiring January 2008.

(2)	The vessel is 50% owned by us and 50% owned by Scandlines AG.

Night Ferries

Vessel			Route						Year Delivered/ Refitted						Gross Tons						Passenger Capacity						Number Of Berths						Lane Meters						Service Speed (Knots)
Stena Baltica(1)					Karlskrona-Gdynia						1986/2005						31,189						1,800						949						1,590						20
Stena Saga(2)			Oslo-Fredrikshavn						1981/2006								33,750						1,700						1,862						1,050						22

(1)	Stena Baltica has been rebuilt to increase car-deck capacity.

(2)	In early 2006, the onboard area at Stena Saga was refurbished.

RoPax vessels.    RoPax vessels are designed to transport trucks, freight trailers, buses and cars and also provide accommodation for passengers. RoPax vessels are flexible and can adapt their capacity in line with seasonal variations in freight and passenger traffic. During the peak passenger season, the RoPax vessel acts as a ferry for passengers and cars and, during the low season, we operate this type of vessel as a freight ferry.

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RoPax Vessels

Vessel			Route			Year Delivered/ Refitted						Gross Tons						Passenger Capacity						Number Of Berths						Lane Meters						Service Speed (Knots)
Stena Jutlandica(1)			Gothenburg-Fredrikshavn					1996						29,690						1,500						200						2,100						21.5
Stena Scanrail			Gothenburg-Fredrikshavn			1973/1996								7,504						65						26						1,000						16.5
Stena Nautica			Varberg-Grena					1986						19,763						900						126						1,265						18
Stena Scandinavica			Gothenburg-Kiel			1988/1999								39,169						1,700						2,364						1,628						21
Stena Germanica			Gothenburg-Kiel			1987/1999								39,178						1,700						2,364						1,628						21
M/S Gotaland			Trelleborg-Travemunde			1973/1994								18,060						400						148						1,296						18
M/S Trelleborg			Trelleborg-Sassnitz			1982/94								20,028						900						50						1,189						17
M/S Skane(2)			Trelleborg-Rostock					1998						42,705						600						550						3,297						21
Stena Nordica(3)			Karlskrona-Gdynia					2000						24,206						405						222						1,949						25.7
Stena Adventurer			Holyhead-Dublin					2003						45,532						1,500						600						3,517						22
Stena Europe			Fishguard-Rosslare			1981/2002								24,828						1,400						452						1,150						19
Stena Caledonia			Stranraer-Belfast					1981						12,619						1,000						—						780						19.5
Stena Leader			Fleetwood-Larne					1975						12,879						45						42						1,540						17.5
Stena Seafarer			Fleetwood-Larne					1975						10,957						40						—						1,180						18.5
Stena Pioneer			Fleetwood-Larne					1975						14,426						76						76						1,540						17.5
Stena Searider			Killingholme-Hook of Holland			1969/1995								21,019						120						105						2,390						17
Stena Seatrader			Killingholme-Hook of Holland					1973						17,991						221						180						2,100						17.5
Stena Britannica			Harwich-Hook of Holland					2003						43,487						1,500						600						3,400						22
Stena Hollandica			Harwich-Hook of Holland					2001						33,360						400						452						2,918						22
Stena Partner			Harwich-Rotterdam			1978/1981								21,162						124						166						2,450						17
Stena Transfer			Harwich-Rotterdam			1977/1981								21,162						124						166						2,450						17
Stena Transporter			Harwich-Rotterdam			1978/1995								16,776						80						102						1,850						17

(1)	Chartered from Stena Sessan on a long-term contract expiring December 2014.

(2)	The long-term charter contract expired in July 2005. Stena Line has exercised the option to extend the contract until January 2019.

(3)	Chartered in vessel from Stena Metall group.

RoRo vessels.    The RoRo vessel is designed primarily to transport freight trailers and a limited number of passengers, primarily truck drivers.

RoRo Vessels

Vessel			Route						Year Delivered						Gross Tons						Passenger Capacity						Number Of Berths						Lane Meters						Service Speed (Knots)
Stena Carrier					Gothenburg-Travemunde						2004						21,104						12						12						2,715						22
Stena Freighter(1)			Gothenburg-Travemunde								2004						21,104						12						12						2,715						22

(1)	Chartered in vessel from Stena Metall group.

Sales and Marketing

Passengers and cars.    Our travel service targets our marketing efforts to three groups: individual travelers, bus operators and business travelers. The travel products and services we offer consist of day trips, package trips (ferry ticket plus shore based arrangements), cruises (ferry tickets used primarily for onboard activities) and transport (ferry ticket plus a vehicle transport). We also offer conference services and other business related services to our business travel customers.

Our sales organization is divided into national sales offices in each of the countries where we have ferry operations and is responsible for sales and reservations, sales training and route coordination. Telephone reservations are centralized at one call center in each country. Products are sold directly to consumers and through travel agents with which we maintain various

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arrangements, including direct booking access. Individual customer bookings can also be made by telephone, internet, e-mail, mail, fax and directly at each of our ferry terminals.

Freight.    Our freight operations are centralized into a single freight organization. This single freight organization provides sales, marketing and reservation services to customers and coordinates freight services for customers seeking transportation across more than one route. Freight operations are handled by sales representatives in each country where we operate, as well as independent sales agents in other European countries.

Other Properties

Ports.    We own two ports: Holyhead and Stranraer, located in England and Scotland respectively. We also own land along the quay in Hook of Holland, The Netherlands, enabling us to control our port area at Hook of Holland. In addition, we own 50% of the capital stock of a company that owns the ports of Fishguard and Rosslare and we operate the port of Fishguard in England. Additionally, in October 2003 we entered into an agreement with P&O relating to, among other things, the acquisition of a 50% ownership interest in P&O's port in Cairnryan in Scotland. The completion of the acquisition is conditioned upon, among other things, finalizing construction designs for the redevelopment of the port, negotiating construction contracts related thereto, obtaining financing on satisfactory terms and obtaining necessary permits from Scottish planning and environmental authorities. In the case of our other routes, we use port facilities owned by third parties and pay applicable port and harbor fees.

Hotels.    We sold one of our two owned hotels in Denmark in July 2005. The remaining hotel is marketed as part of tour packages. We have an agreement with Scandic Hotels to operate the hotel. Scandic Hotels also work with us in relation to the marketing of the hotel.

Offshore Drilling

We own and operate two third generation, one fourth generation and two fifth generation semi-submersible drilling rigs. Stena Dee, previously a third generation rig, underwent a $25 million upgrade to a fourth generation rig in 2004. We took delivery of our fifth generation drilling rigs in 1999 and 2001. We believe our excellent safety record, our quality of service and fleet provide us with a significant competitive advantage. For the twelve months ended December 31, 2005, our drilling operations generated revenues of SEK 1.9 billion, operating income (loss) of SEK (2) million and had depreciation and amortization expense of SEK 590 million. The table below sets forth selected information with respect to our drilling rigs as at December 31, 2005.

Drilling Rig Fleet

Drilling Rig

Generation

Year Built

Water Depth (Ft.)

Blow-Out Preventors

Propellers

Class

Stena Clyde

3rd

1976

1,650

15,000 psi(1)

2 In Line Propellers

DnV

Stena Spey

3rd

1983

1,500

15,000 psi

2 In Line Propellers

DnV

Stena Dee

4th

1984

1,500

15,000 psi

4 Azimuth Thrusters

DnV

Stena Tay

5th

1999

7,500

15,000 psi

8 Azimuth Thrusters

DnV

Stena Don

5th

2001

1,600

15,000 psi

6 Azimuth Thrusters

DnV

(1)	‘‘psi’’ means pound per square inch.

We operate our five drilling rigs from our headquarters in Aberdeen, Scotland with a sub-office in Bergen, Norway. We also have base offices in Australia, Norway and Houston. Stena Spey is currently deployed in the North Sea, and Stena Clyde is currently deployed in Australia. Stena Tay is currently working in the U.S. gulf of Mexico and Stena Don and Stena Dee are both currently deployed in the Norwegian sector of the North Sea. All of our drilling rigs are equipped to drill high pressure wells. As of December 31, 2005, the average age of our fleet was approximately 17 years.

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The table below sets forth the average utilization rates for our drilling rigs for each of the years indicated.

Rig Utilization

			2001						2002						2003						2004						2005
Number of vessels					5	(1)					5						5						5						5
Total vessel days available					1,472						1,825						1,825						1,830						1,825
Vessel days utilized					1,396						1,578						1,337						1,457						1,591
Vessel utilization (percentage)					94.8						86.5						73.3						79.6						87.2
Offhire days planned					31						37						132						83						126
Offhire days planned (percentage)					2.1						2.0						7.2						4.5						6.9
Offhire days unutilized					45						210						356						290						108
Offhire days unutilized (percentage)					3.1						11.5						19.5						15.9						5.9
Average daily rates					121,132						134,628						144,472						130,619						154,451

(1)	Stena Don commenced operations December 20, 2001.

In September 2004 we chartered Stena Tay to Woodside in Mauritania. This contract was for 18 months firm which could be extended, at Woodside’s option, for an additional period of two years in extension term of six months each. In August 2005 we agreed with Woodside that the contract would terminate on March 31, 2006 with no options to be exercised. In September 2005 we entered into a contract with Total E&P Services for the Stena Tay. The duration of this contract is 4 years firm plus 1 year option.

In July 1998, we entered into a long-term contract with Statoil, the Norwegian State Oil company, to construct Stena Don. Stena Don was chartered to Statoil in December 2001 under a five year charter contract which can be extended, at Statoil's option, for an additional period of ten years in extension terms of one year each. Stena Don is designed to work in all currently planned and producing sub-sea oilfields in the greater North Sea area.

Stena Clyde was contracted in Indonesia to work with ConocoPhillips for five firm wells and seven option wells. Stena Clyde completed this contract in July 2005. The unit then carried out its classification survey and modifications were also made to enable the rig to work in Australia. Towards the end of October 2005 Stena Clyde commenced a six firm well plus two option well contract with Peak. We also obtained a contract for twelve months firm plus six months option with Apache in Australia.

In January 2005 Stena Dee commenced a one year firm contract with Norsk Hydro. This contract can be extended, at Norsk Hydro’s option, for an additional period of six extension periods of six months each. Two of the six options have been declared.

During 2005, Stena Spey worked on short term contracts with Maersk Oil & Gas, Nexen and Total UK through October 2005. The rig then commenced a seven month firm contract with Chevron which was subsequently extended by a further 12 months firm period. This contract can be extended by mutual agreement of rates and terms by a deadline four months after commencement of the second term of 12 months.

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Selected information with respect to our drilling contracts as of April 30, 2006 is set forth below:

Rig			Customer			Contract Expiration Date
Stena Clyde			Peak			September 2006
			Apache			September 2007(1)
Stena Spey			Chevron			April 2007
Stena Dee			Norsk Hydro			January 2007(2)
Stena Tay			Total			January 2010(3)
Stena Don			Statoil ASA			December 2006(4)

(1)	Firm contract + 1x6 months option.

(2)	Firm contract + 4x6 months option.

(3)	Firm contract + 1 year option.

(4)	Statoil has the option to extend the contract for ten years in ten additional terms of one year each. Negotiations have commenced with Statoil in May 2006 regarding the option rate.

The contracts for our drilling rigs typically provide for compensation on a ‘‘day rate’’ basis, under which we receive a fixed fee for each day that the rig is operating under contract. Under day rate contracts, we pay the operating expenses of the rig, including wages and the costs of incidental supplies. At April 30, 2006, the daily charter rates for our drilling rigs are as follows: Stena Clyde: $170,000; Stena Spey: $90,000; Stena Tay: $425,000 to $500,000 dependent on incentive earned; Stena Don: $239,000 and Stena Dee: $163,500.

Additions and Disposals.    In August 2005 we entered into a contract with Samsung Heavy Industries, Korea for the construction of a deepwater dynamically positioned drillship which is scheduled for delivery in December 2007, with an option for a second identical drillship with delivery in June 2008. The option for the second drillship was exercised in March 2006.

The first Drillship has been awarded a contract for 4 years firm plus 1 year option with day rates of $450,000 to $500,000 depending on incentives.

In February 2006 we entered into a Memorandum of Agreement to sell and bareboat-charter back Stena Dee with Songa Offshore ASA. The sale was completed in May 2006. The bareboat charter will enable Stena Dee to fulfill its contract with Norsk Hydro.

Competition.    The offshore drilling rig market is highly cyclical and competitive, reflecting the historic oversupply of offshore drilling rigs and the ability of operators to move rigs from areas of low utilization and low day rates to areas of greater activity and relatively higher day rates. Although drilling contracts are generally awarded on a competitive bid basis with price competition as the primary factor, contracts for drilling projects are also being negotiated directly between an oil company and its preferred contractor with quality of service, safety and suitability of equipment, in addition to price, being significant factors in awarding contracts.

Shipping

Our shipping operations consist of the ownership and chartering of Roll-on/Roll-off vessels and crude oil and petroleum product tankers. To support these activities, we are also engaged in the design, purchase, sale, management and staffing of these vessels. We generally collect charter hire payments monthly in advance in the case of time charters and upon completion with respect to charters on the spot market. For the year ended December 31, 2005, our shipping operations generated revenues of SEK 4.7 billion, operating income of SEK 1.1 billion and had depreciation and amortization expenses of SEK 176 million.

Roll-on/Roll-off Vessel Operations

Roll-on/Roll-off vessels permit trucks, freight trailers, buses and cars to drive directly onto and off the ship. As a result, these vessels permit more rapid loading and unloading and do not require cranes or other port facilities associated with traditional cargo handling and container

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ship operations. Our Roll-on/Roll-off vessel operations are divided into RoPax vessels, which carry trucks, freight trailers, buses and cars and provide accommodations for passengers, RoRo vessels, which carry freight trailers only and limited number of passengers, and car/passenger ferry vessels.

Over the past five years, our RoRo and RoPax fleet size has been approximately ten vessels. As of April 30, 2006, we owned six RoRo vessels. We also have a 49% ownership in a RoRo Vessel. As of April 30, 2006, we also chartered in one RoPax vessel. Over the last five years our average utilization rate was 97% (excluding planned offhire days).

The table below sets forth selected information with respect to our Roll-on/Roll-off vessel fleet as of April 30, 2006.

RoRo Vessels

Vessel			Flag			Year of Delivery						DWT						Passenger Capacity						Lane Meters						Service Speed (Knots)
Stena Shipper			U.K.					1979						8,800						12						2,050						19.0
Stena Forwarder			U.K.					1998						12,300						12						2,715						22.0
Stena Foreteller			Sweden					2002						12,300						12						3,000						22.0
Stena Forecaster			Sweden					2003						12,300						12						3,000						22.0
Stena Forerunner			Sweden					2003						12,300						12						3,000						22.0
Mont Ventoux			U.K					1996						13,300						12						2,250						19.0
RoRo Gothica(1)			Marshall Island					1975						14,400						12						2,000						16.0

(1)	Stena Gothica was refitted in 1990. In October 2004 she was sold to a company in which Stena holds 49% of the shares and re-named RoRo Gothica

RoPax Vessels

Vessel

Flag

Year of Delivery

DWT

Passenger Capacity

Number Of Berths (cabins)

Lane Meters

Service Speed (Knots)

Stena Challenger(1)

U.K.

1995

5,800

1,650

132

1,780

21.0

(1)	Stena Challenger is chartered on a bare-boat basis from P&O Ferries Ltd.

For the five years ended December 31, 2005, our average Roll-on/Roll-off vessel utilization rate was approximately 97% (excluding planned offhire days). The table below sets forth information with respect to the utilization of our Roll-on/Roll-off vessels, including the vessels chartered to Stena Line, during the last five years.

Roll-on/Roll-off Vessel Utilization

			Year ended December 31,
			2001						2002						2003						2004						2005
Total vessel days available(1)					2,729						2,348						3,059						3,250						3,886
Vessel days utilized(2)					2,683						2,272						2,948						3,188						3,758
Vessel utilization (percentage)(2)					98.3						96.8						96.4						98.1						96.7
Offhire days(3)					2.6						7						43						47						109
Offhire days (percentage)					1.0						0.3						1.4						1.4						2.8
Unutilized days					20						69						68						15						19
Unutilized days (percentage)					0.7						2.9						2.2						0.5						0.5

(1)	Total vessel days are determined by aggregating the number of days in each year we owned, chartered in or leased such vessels.

(2)	In the case of bareboat charters, the vessel is deemed to be utilized during the entire time the vessel is on charter.

(3)	Due to planned dry-dockings and damage.

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The customers for our Roll-on/Roll-off vessels consist primarily of operators in the international freight and passenger transportation business. Since we frequently purchase and sell our Roll-on/Roll-off vessels and because our customers charter specific vessels to suit their particular needs, our customer base varies with changes in our fleet.

Chartering activities.    Our strategy is to charter our Roll-on/Roll-off vessels on either long-term time charters or bareboat charters. We seek operationally experienced and financially stable customers to charter our Roll-on/Roll-off vessels. In the case of time charters, we provide the crew, technical management and insurance coverage. In the case of bareboat charters, the charterer provides the fuel, crew, insurance and daily maintenance of the vessel. Bareboat charters also provide us with the right to inspect our vessels on a periodic basis.

Our operating expenses in connection with vessels chartered under time charters are higher than in the case of vessels chartered under bareboat charters. However, in the case of vessels chartered under time charters, the charter rate is generally higher because the person chartering out the vessel provides more services. As a result, there is generally no material effect on our cash flow between vessels chartered under time or bareboat charters or as a result of changes from time to bareboat charters.

The table below sets forth information about existing chartering arrangements in place with respect to our Roll-on/Roll-off vessels as of April 30, 2006.

RoRo vessels

Vessel			Type of charter			Charterer			Current charter period(1)
Stena Shipper			Time			Kess			02/06 – 08/06
Stena Forwarder			Time			Trasmed			10/05 – 10/06
Stena Foreteller(1)			Time			Transfennica			12/04 – 06/06
Stena Forecaster			Time			Transfennica			06/03 – 11/08
Stena Forerunner			Time			Transfennica			10/03 – 12/08
Mont Ventoux			Time			Sudcargos			11/05 – 11/07
RoRo Gothica(2)			Time			Crowley ATI			10/05 – 10/07

(1)	Excludes optional extension periods.

(2)	In October 2004, the Stena Gothica was sold to a company in which Stena hold 49% of the shares and re-named RoRo Gothica.

RoPax vessels

Vessel			Type Of Charter			Charterer			Current Charter Period
Stena Challenger(1)			Bareboat			Toll, New Zealand			02/05 – 06/10

(1)	Chartered in vessel.

Fleet management.    We order new vessels to be built, purchase existing vessels, charter vessels in, charter vessels out and sell vessels. We believe that our close relationships with customers and our ability to understand, anticipate and service customer needs provides us with important market information which can be used in determining whether to purchase, sell or reconstruct existing vessels or order newbuildings. We base our decision as to whether to purchase or sell vessels on market conditions, the size of our fleet of Roll-on/Roll-off vessels, our view of future demand, vessel values, charter rates and other factors. We typically sell vessels to operators of passenger and freight services. We also charter in vessels.

While we prefer to negotiate outright sales of our vessels for cash, we may extend financing or enter into hire/purchase contracts with purchasers of our vessels. Sales of our vessels are an integral part of our business and have provided a significant portion of our shipping revenue in past years. The market for vessel sales is highly competitive and there can be no assurance that we will be able to realize gains from the sale of vessels in the future.

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The table below sets forth for each of the years indicated information with respect to our purchases and sales of Roll-on/Roll-off vessels and the income recognized from such sales.

Roll-on/roll-off vessel sales and purchases

			2001						2002						2003						2004						2005
Fleet as of January 1					8						7						8						8						8
Newbuildings delivered					—						1						2						1						—
Vessels purchased					—						—						1						3						1
Vessels sold					1						1						3						4						1
Fleet as of December 31,					7						8						8	(1)					8						8
Net gain on sale of vessels (SEK in millions)					91						—						64						273						191

(1)	Stena Line delivered the Stena Gothica to the Roll-on/Roll-off operations in the beginning of 2004.

Newbuilding program.    In March 2004, we sold our RoRo Newbuilding vessel, the Chieftain to a subsidiary of our affiliate Stena Metall on delivery. We chartered the vessel back (renamed the Stena Freighter) on a long-term charter for use in our ferry operations. In the autumn of 2004 we ordered two RoPax vessels from a shipyard in Norway for the account of Stena Line. The newbuilding process is managed by us. In August 2004 we ordered two RoPax vessels from a shipyard in St. Petersburg including options for two additional vessels.

Acquisitions and sales.    In March 2006, an agreement to acquire a newbuilt RoPax vessel from the Visentini shipyard in Italy, was made. The vessel is expected to be delivered in January, 2007. In April 2006, the RoPax vessel Svealand was sold.

Competition.    The Roll-on/Roll-off vessel chartering business is very competitive. Competition among companies that charter out Roll-on/Roll-off vessels depends on several factors, such as the availability of suitable vessels, charter rates, customer service and the quality of the vessels. The large number of newbuildings ordered and delivered in the industry in recent years has significantly increased competition in our Roll-on/Roll-off vessel operations and adversely impacted charter rates and the value of older, smaller and slower vessels. Some companies may decide that it is more economical to purchase rather than charter vessels, thereby decreasing demand for our chartering operations. From time to time we sell vessels to such operators. Our competitors include other ship owners and ferry line service operators who may from time to time have an unemployed vessel.

Crude oil and petroleum product transportation

We own, charter in and provide commercial management services for crude oil and product tankers.

We own one Crude oil tanker, lease two Product tankers pursuant to long-term finance leases and have 50% interests in three shuttle tankers. We have one additional tanker on order, which is sold and will be delivered to the new owner upon delivery from the shipyard. All of our owned and finance leased tankers are double hulled. As of April 30, 2006, we also chartered in 38 Product, Aframax, Panamax and Suezmax tankers.

As of April 30, 2006, the average period of the charter contracts for the 38 chartered in tankers was 27 months. Of these 38 tankers, seven were chartered out at an average period of 35 months. The other 31 tankers are currently trading on the spot market.

Our customers are generally large international oil companies, members of the Organization of Petroleum Exporting Countries and shipping companies. Our major customers include Chevron Corporation, the Royal Dutch/Shell Group of Companies, ConocoPhillips, BP plc, Neste Oil and Total.

We have an allocation agreement with Concordia Maritime AB, referred to herein as Concordia, pursuant to which Concordia may elect to participate fully or partially in crude oil and petroleum product tanker and bulk cargo vessel opportunities identified by us.

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The table below sets forth certain information with respect to our owned and financed leased tankers as of April 30, 2006.

Owned and Finance Leased Tankers

Tankers

Flag

Year Delivered

Type

DWT

Stena Caribbean(1)

U.K.

2002

Product

10,000

Stena Calypso(1)

U.K.

2002

Product

10,000

Stena Arctica

Sweden

2005

Ice Aframax

117,000

Nordic Rio(2)

Bahamas

2004

Shuttle

152,000

Stena Alexita(2)

Norway

1998

Shuttle

128,000

Stena Natalita(2)

U.K.

2001

Shuttle

108,000

(1)	Tankers held pursuant to a long term finance lease.

(2)	Our interest in these tankers is through two 50/50 joint ventures with TeeKay Holdings Inc.

Tankers sales and purchases

			2001						2002						2003						2004						2005
Fleet as of January 1					4	(1)					3	(3)					4	(3)					4	(3)					5	(4)
Newbuildings delivered					1	(2)					2												5	(1)					4
Vessels purchased
Vessels sold					2						1												4						1
Fleet as of December 31					2	(3)					4	(3)					4	(3)					5	(4)					8	(4)

(1)	Includes one vessel in which we have a 50% interest

(2)	Includes one vessel in which we have a 50% interest

(3)	Includes two vessels in which we have a 50% interest

(4)	Includes three vessels in which we have a 50% interest

Charters for Owned and Finance Leased Tankers

Tanker			Type of Charter			Charter			Current charter period
Stena Caribbean			Time			Chevron Texaco			2002-2011
Stena Calypso			Time			Chevron Texaco			2002-2007
Stena Arctica			Time			Progetra S.A			2006
Nordic Rio			Bareboat			Transpetro Brazil			2004-2017
Stena Alexita			Time			Esso Norway			1998-2008
Stena Natalita			Time			Teekay Norway			2002-2007

In addition, we have entered into 10-year charter agreements with Progetra S.A. for Stena Atlantica and Stena Antarctica, two ice-class Aframax tankers which are chartered in on a long term bareboat charter by us. The charter term commences on the delivery of the vessels from the shipyard which is currently expected in 2006.

Newbuildings.    In April 2003, we entered into an agreement to build two Panamax tankers, 72,000 dwt, at a shipyard in China for delivery in 2005 and 2006. The vessels were delayed from the shipyard. The first vessel, Stena Compass, was delivered in February 2006 and was sold to a third party upon delivery from the shipyard. The second vessel, Stena Compassion, was delivered in June 2006 and was sold to a third party upon delivery from the shipyard. Both vessels are chartered back to us from the new owner for a period of 30 months.

In June 2003, we entered into an agreement to build two ice-class 1-A 117,000 dwt Aframax tankers at a shipyard in Korea for delivery in 2005 and 2006. Both vessels were delivered in 2005. The first vessel was sold on delivery from the shipyard.

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Two 47,400 dwt Product tankers, Stena Contest and Stena Concept which we agreed to purchase from a shipyard in Croatia were delivered in March and April 2005. Both vessels were sold to Arlington Tankers and delivered to the new owners in January 2006. The vessels were chartered back to us from the new owner for a period of three years.

The aggregate remaining cost for our remaining Panamax tanker, fully equipped, as of April 30, 2006, was approximately $21 million.

Chartering activities.    As of April 30, 2006, 7 of 38 of our chartered in tankers and none of our owned tankers were chartered out on the spot market. The spot market refers to a segment of the shipping market where contracts are made for single voyages. Under our contracts of affreightment, we provide transportation services for crude oil and clean oil products using designated vessels for approximately twelve months over specified routes. Under a charter on the spot market or under contracts of affreightment, the person chartering out the vessel provides the crew, captain, insurance and daily maintenance as well as bunker, harbor dues, channel fees and any other costs in connection with the voyage. As of April 30, 2006, the total volume of contracts of affreightment amounts to 15-17 voyages per month of 30,000 – 40,000 dwt each. As of April 30, 2006, seven of our chartered in tankers are on time charter contracts for period between four months and ten years.

Since January 1, 2006, spot market rates have ranged from $20,000 to $63,000 per day for Aframax tankers, $26,000 to $44,000 per day for Panamax tankers, $19,000 to $48,000 per day for Product tankers and $36,000 to $80,000 for Suezmax tankers. Spot market rates as of April 30, 2006 were $25,000 for Aframax tankers, $28,000 for Panamax tankers, $26,000 for Product tankers and $49,000 for Suezmax tankers.

In March 2005, we entered into a Suezmax pooling agreement with Sonangol Shipping (Sonangol Shipping Girassol Ltd, Sonangol Shipping Luanda Ltd, Sonangol Shipping Kizomba Ltd) in Angola. The revenues from the pool will be split between the pool members in proportion to the number of tankers each delivered to the pool. The pool has been in full operation since July 2005.

For the five years ended December 31, 2005, our average tanker utilization rate was approximately 97% (excluding planned offhire days). The table below sets forth certain information relating to the utilization of our owned and chartered in tankers for the last five years.

Tanker utilization

			Year ended December 31,
			2001						2002						2003						2004						2005
Total tanker days available(1)					5,257						5,572						7,165						10,026						14,083
Tanker days utilized					5,040						5,486						7,047						9,666						13,853
Tanker utilization (percentage)					95.9						98.4						98.4						96.4						98.4
Offhire days(2)					217						86						118						360						230
Offhire days (percentage)					4.1						1.6						1.6						3.6						1.6

(1)	Total tanker days is determined by aggregating the number of days in each year we owned, chartered in or leased such tankers.

(2)	Due to scheduled and unscheduled dry-dockings and damage.

There can be no assurance that our tankers that trade on the spot market will continue to be employed or that rates obtained by us will cover costs associated with the operation of such tankers.

Commercial management services.    We provide commercial management services for Concordia and Sessan. Commercial management includes arranging charters, fuel, documentation and port services, revenue collection and accounting services.

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Competition.    International sea borne crude tanker and product tanker transportation services are provided by two main types of operators: major oil company captive fleets (both private and state owned) and independent ship owner fleets. Many of our customers also operate their own tankers and use such tankers not only to transport their own oil, but also to transport oil for third party charterers in direct competition with operators in the tanker charter market. Chartering tankers is highly competitive and is based upon price, location, vessel quality, size, condition and acceptability of the tanker and its manager to charterers.

Arlington Tankers.    In November 2004 we sold two Product tankers and our 75% interests in two Panamax tankers, to Arlington Tankers Ltd (‘‘Arlington’’), a newly formed public company organized with Concordia. The purchase price for the two Product tankers and our interests in the Panamax tankers was approximately $169.2 million in cash and 690,421 common shares of Arlington, which represent approximately 4.5% of the total outstanding shares of Arlington. The common shares of Arlington trade on the New York Stock Exchange under the symbol ATB. In connection with this sale, we agreed to time charter the four tankers from Arlington for a period of five years with options to extend each charter for three additional years in extension terms of one year each. Under each charter, we pay a fixed charter rate which increases over the term of the charters. We also pay an additional amount equal to 50% of the amount by which the time charter revenue we earn from the operation of these vessels, less certain expenses, exceeds the charterhire we pay to Arlington or 50% of the amount by which agreed upon spot market rates for vessels of these types exceed the rates we pay under our time charters for these vessels, depending on our use of the vessels.

We also agreed with Arlington, in certain circumstances at Arlington's option, to take over the remaining terms of the time charters of two V-Max VLCC tankers which Concordia sold to Arlington concurrently with the sale of tankers, after the end of the third year and prior to commencement of the fourth year of such charters. These vessels are currently time chartered to Concordia for five years, plus an option to extend each charter for three additional years in one year extension terms. Under the agreement, we would pay the same time charter rate (which includes the additional hire referred to above) as is currently provided in Concordia’s time charters with Arlington. Our subsidiary, Northern Marine, has agreed to manage all six of Arlington's tankers during the terms of the charters for a fixed daily fee per vessel which increases 5% annually.

As mentioned above, we sold two additional Product tankers to Arlington for delivery in January 2006. In connection with this sale, we agreed to time charter both vessels from Arlington for a period of three years with options to extend each charter for 54 additional months in extension terms of 30 months and thereafter one year each. Under each charter, we pay a fixed charter rate which increases over the term of the charters. As with the vessels sold in 2004, our subsidiary, Northern Marine, has agreed to manage all six of Arlington's tankers during the terms of the charters for a fixed daily fee per vessel which increases 5% annually.

We also agreed with Arlington to adjust the charter periods for the vessels sold in 2004, from five year each, to four years for two of the vessels and six years for the other two vessels.

Ship management

As part of our ongoing commitment to maintaining a high quality fleet and efficient operations, we own and operate a ship management company, Northern Marine, which provides ship management services from offices in Glasgow, Scotland, Houston, Singapore and India. Ship management includes crewing, inventory control, maintenance and technical management.

As of December 31, 2005, Northern Marine provided services for  112 vessels through approximately 5,200 seafarers for us, Concordia, Chevron, Genmar, Tecnip and several other third parties.

Technical developments & patents

Stena Teknik, our technical division, provides design, construction and other marine technology support to our shipping and offshore drilling activities. We hold several patent

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registrations and applications in the United States and abroad to establish and protect our proprietary rights in the shipbuilding design industry. These patent registrations and applications relate primarily to the design and construction of the HSS ferries.

Real estate

General.    Through our subsidiaries, we are involved in the acquisition, selling, constructing, refurbishment and management of residential and commercial properties. Our real estate operations generated revenues of SEK 2.7 billion, operating income of SEK 1.4 billion and had depreciation and amortization expense of SEK 337 million. The above amounts include gain on sale of properties of SEK 813 million and write-downs of SEK 180 million. For purposes of the Indentures, these subsidiaries are designated unrestricted subsidiaries, except as discussed below. As of April 30, 2006, our real estate portfolio consists of two segments: 344 leasehold and freehold properties in Sweden and 40 freehold and leasehold properties located in The Netherlands, Germany, Luxembourg and France. A substantial majority (85%) of our rental income comes from our properties in Sweden; the majority of our remaining rental income is from properties located in The Netherlands. Our real estate portfolio is managed from offices located in Gothenburg, Malmo, Stockholm, Uppsala, Umea, Halmstad, Amsterdam and Sophia Antipolis in France. We also manage real property owned by the Olsson family. As of December 31, 2005, our management estimates, based on external and internal valuations, that the market value of properties owned by our real estate operations was approximately SEK 19.2 billion.

In 2004, we acquired the public company Bostad AB Drott (publ). We transferred Drott to the unrestricted group as of January 1, 2005.

Each of our real estate subsidiaries finances its acquisitions of real property with individual mortgages from various commercial and mortgage banks on each parcel obtained. On average, approximately 57% of the market value of each property is financed. In the case of the Swedish properties, approximately 37% of our properties (based on value) secure loans which are for a term of less than one year and are subject to floating interest rates and approximately 63% of our properties have secure loans of four to ten years in duration. Our average loan is for a term of 5.4 years. For the non-Swedish properties, the mortgage loans are generally for a minimum period of five years. Interest rates are generally fixed for these properties.

We lease our Swedish residential properties on an evergreen basis with a right for the tenant to give three months termination notice. Under Swedish law, after a residential tenant has leased a property, the landlord cannot evict the tenant except for good cause (e.g., non-payment of rent or failure to take care of the premises or the disturbance of other tenants). Swedish law provides for rent stabilization with respect to residential properties. Residential tenants have the right to renew their leases at rates established as a result of negotiations between voluntary landlord and tenant associations.

Generally, our commercial properties inside and outside Sweden have similar lease arrangements. We lease commercial properties for a term of three to ten years. Under Swedish law, unless the lease provides otherwise, a tenant has no right to renew a commercial lease upon termination, but upon renewal, the landlord cannot charge a rent which is substantially above market rent. Commercial leases may generally be terminated by the landlord if the tenant is delinquent on rent payments or if the tenant fails to maintain the property. In The Netherlands and Germany, our typical commercial lease has a term of five years and often includes an option for the tenant to renew. In France and Luxembourg, our typical commercial lease runs for a period of nine years and tenants are usually given options to terminate the lease in the third and sixth years of the lease. Our commercial leases inside and outside of Sweden generally include annual adjustment clauses to reflect inflation. Except in the case of our leases on properties in Sweden and The Netherlands, tenants generally pay the property tax, insurance and management costs for such properties.

Swedish properties.    Our real estate portfolio in Sweden as of April 30, 2006 consisted of 344 residential and commercial properties totaling approximately 2,220,000 square meters.

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In 2005, we invested SEK 191 million in new properties and improvements to existing properties. As of April 30, 2006, our residential properties consist primarily of multi-family rental properties (approximately 24,000 units) which in terms of square meters comprise approximately 75% of our properties in Sweden or approximately 1,663,000 square meters. Our commercial properties in Sweden consist mainly of office buildings and warehouse properties and comprise the remaining 25% of our property portfolio in Sweden or approximately 557,000 square meters. The occupancy rates for our Swedish properties based on square meters on December 31, 2004 and on December 31, 2005 were 98% and 98%, respectively.

Of our Swedish properties, 37 are leased pursuant to long-term ground leases from local governments. These leases typically run for a 60 years period with the right of renewal every 40 years. Rent is renegotiated after the first 20 years and every 10 years thereafter. In practice the leases are forever.

Other.    Our other properties as of April 30, 2005 consisted of 40 commercial properties, 32 of which were located in The Netherlands. The remaining properties are located in Germany, Luxembourg and southern France. Our non-Swedish properties total approximately 160,000 square meters. The occupancy rates for our non-Swedish properties based on square meters on December 31, 2004 and on December 31, 2005 were 90% and 89%, respectively.

Property management.    In Sweden, we also manage property owned by the Olsson family. We receive a fee for these services equal to 4% of the rents collected with respect to such properties. For the years ended December 31, 2004 and December 31, 2005, such fees aggregated SEK 11 million and SEK 13 million, respectively.

Other businesses

Through our unrestricted subsidiary Stena Adactum AB, we invest in companies outside our traditional lines of business. Stena Adactum invests in listed companies as well as in private companies. In April 2004, Stena Adactum acquired the Swedish chain store ‘‘Blomsterlandet’’ in the garden and flower business. Blomsterlandet was consolidated as from January 1, 2004, and generated revenues of SEK 747 million for the twelve months ended December 31, 2005. In May 2005, Stena Adactum acquired the Swedish company Envac Centralsug AB (‘‘Envac’’), a company in the automated waste collection business that develops and sells underground network systems for transportation of municipal and commercial waste. Envac was consolidated as from June 1, 2005, and generated revenues of SEK 523 million for the seven months ended December 31, 2005. In December 2005, we entered into a contract to acquire five wind power systems (windmills) to be delivered in early 2007. No revenues were generated from this operation during 2005.

Investment activities

We maintain an investment portfolio of marketable debt and equity securities. As of December 31, 2005, the fair value of these investments amounted to SEK 5.2 billion, as compared to SEK 2.4 billion as of December 31, 2004. Our equity investments currently include both publicly traded and private companies. The debt securities currently held by us are primarily bank floating rate notes and high yield government and corporate bonds from emerging markets.

We have also invested in three VIEs, whose purpose is to invest primarily in high yield securities and corporate bank loans. Due to changes in Swedish GAAP in 2005, these VIEs are consolidated as subsidiaries. The accounts for 2004 have been restated. As of December 31, 2005, total assets of these VIEs amounted to SEK 6.2 billion, which partly was financed by bank debt in the VIEs of SEK 4.8 billion.

In addition to our hedging arrangements, we actively trade in currency contracts and options. As of December 31, 2005, the notional amounts of such instruments were SEK 657 million as compared to SEK 33 million as of December 31, 2004.

Results from our portfolio of debt and equity securities, VIEs and our currency/interest rate trading activities for the years ended December 31, 2005, 2004 and 2003 were a gain of SEK

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943 million, a gain of SEK 1,068 million and a gain of SEK 174 million. We seek to maintain a diversified investment portfolio to balance our exposure to various risks and have established a series of procedures and limits we believe are designed to manage the risks of these activities on a day-to-day basis. Investments are subject to various risks and currency rates are highly volatile and, as a result, there can be no assurance that our investment activities will be profitable.

Our policies regarding our investments provide that we may borrow up to 60% of the value of certain equity investments and up to 80% of the value of certain investments in debt securities. In the case of certain of our investments, various of the agreements governing our indebtedness provide that if the value of our investment decreases below an established minimum level, the lender has the right to liquidate the investment.

Classification of vessels

The hull and machinery of each of our vessels have been certified as being ‘‘in class’’ by its respective classification society: American Bureau of Shipping, Det Norske Veritas or Lloyds Register of Shipping. A classification society certifies that a vessel has been built and maintained in accordance with the rules of the society and is in compliance with applicable rules and regulations of the country of registry and the international conventions of which that country is a member.

The aggregate appraised value of our Roll-on/Roll-off vessels (including those used in our ferry operations), crude oil tankers and drilling rigs as of December 31, 2005 was SEK 21.0 billion as compared with the net book value as of December 31, 2005 of SEK 13.6 billion. These appraisals were performed by independent ship appraisers who received customary fees for such services. Our vessel values generally fluctuate over time and there can be no assurance that we would be able to sell our vessels for their appraised values.

Risk of loss and insurance

General.    Our business is subject to a number of risks, including mechanical failure of our vessels, collisions, property loss or damage, cargo loss or damage and business interruption due to political circumstances in foreign countries, international hostilities, terrorism or labor strikes. The operation of any ocean-going vessel or drilling rig is also subject to the inherent possibility of catastrophic marine disaster, including oil spills and other environmental mishaps, and other liabilities arising from owning and chartering out vessels or drilling rigs in international trade. Environmental legislation enacted in the United States, which imposes virtually unlimited liability upon owners, operators and bareboat charterers trading in the U.S. market for certain oil pollution accidents in the United States, has made liability insurance for trading in the U.S. market more expensive and has caused insurers to consider reducing available liability coverage.

We maintain insurance coverage in amounts consistent with industry practice. Our insurance coverage is maintained with underwriters in the insurance markets mainly in Sweden, Norway, the United Kingdom and the United States.

Hull and machinery insurance.    We maintain hull and machinery insurance, which covers the risk of damage to, or total or constructive loss of, a vessel as well as damage to third parties caused by direct contact with an insured vessel. This insurance also covers claims arising from collision with other vessels and salvage, towing, and other related costs. Constructive total loss occurs when the vessel is so damaged due to a casualty that the repair costs amount to at least 80% of the insured value of the vessel. We also maintain war risks insurance, which insures the risk of damage and total or constructive total loss of an insured vessel directly caused by certain warlike situations such as military use of weapons or terrorist activities. Coverage for areas designated from time to time as war zones may be excluded or additional premiums may be required with respect to voyages in such zones. We maintain coverage for the full value of each vessel, the value of which is updated at least annually.

We maintain civil and war risk hull and machinery insurance in respect of all Roll-on/Roll-off vessels, tankers and drilling rigs owned by us and vessels bareboat chartered in or leased by us

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pursuant to a long-term finance lease. The bareboat charterer of a vessel is responsible for obtaining adequate hull and machinery insurance. We obtain ‘‘innocent owner insurance,’’ to insure against the risk that the bareboat charterer's hull and machinery insurance, war risk insurance and protection and indemnity insurance are not valid due to any act or omission of the charterer.

Loss of hire insurance.    We maintain loss of hire insurance to insure against a loss of income due to damage to the hull or machinery of any Roll-on/Roll-off vessels and tankers owned by us. Our drilling rigs are covered by loss of hire insurance and vessels used in our ferry operations have loss of hire insurance at the option of the applicable route director.

Protection and indemnity insurance.    We maintain P&I insurance coverage for our shipping activities, which includes coverage against legal liability and other related expenses incurred due to the injury or death of crew, passengers and other third parties, loss or damage to cargo, damage to third party property, pollution arising from oil or substance. Our P&I insurance coverage is arranged through four P&I mutual insurance clubs in Sweden, Norway and the United Kingdom. As a member of the club, we may be required to pay additional premiums in arrears. Our total premium is based on our own claims record, the total claims record of the members of the club and the aggregate claims record of all clubs which are members of the international association of P&I Clubs and the clubs’ costs for reinsurance.

We maintain P&I insurance in respect of all Roll-on/Roll-off vessels, tankers and drilling rigs owned, chartered in or leased pursuant to a long-term finance lease, except for vessels bareboat chartered out. The charterer of a vessel we bareboat charter-out is responsible for obtaining adequate P&I insurance. We obtain ‘‘subsidiary P&I insurance’’ for vessels bareboat chartered by companies not affiliated with us in order to insure the owner of a vessel bareboat chartered out against claims.

Since February 20, 1996, the maximum exposure of all P&I clubs for liabilities to third parties has been capped at an amount based on a formula specified in the International Convention on Liability for Maritime Claims of 1976. Oil pollution coverage is also limited. Coverage for damages arising from oil pollution for vessels that are owned and bareboat chartered in is limited to $1 billion per vessel per incident. Coverage for our drilling rigs for damages arising from pollution is limited to $150 million per incident, except that coverage for the Stena Clyde is limited to $100 million per incident. We believe we have adequate oil pollution coverage.

Our fleet of tankers is used to transport crude oil and petroleum products. The operation of these vessels, as well as our drilling rigs, could potentially result in an oil spill for which we could be liable. The Roll-on/Roll-off vessels owned and chartered out by us do not transport crude oil or petroleum products, but do carry significant quantities of diesel oil and other heavy oil used for fuel that, if spilled, would cause pollution and liability. In addition, vessels owned and chartered out by us could be involved in a collision with a tanker causing a spill of the tanker's cargo for which we could be liable. See ‘‘Regulation.’’

Claims experience.    We have experienced some immaterial property losses over the past five years. These losses were all covered by insurance and none of these incidents resulted in a material loss or liability for us. In February 2004 one of our ferries was involved in a collision with another vessel. Insurances covered the damages to the vessel but not the loss of business, which was partly transferred to other routes.

Adequacy of insurance.    We believe that our current insurance coverage provides adequate protection against the accident-related risks involved in the conduct of our business and that we maintain appropriate levels of environmental damage and pollution insurance coverage, consistent with industry practice. However, there can be no assurance that all risks are adequately insured against, that any particular claim will be paid or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the future. Consistent with industry practice, our insurance policies are subject to commercially reasonable deductibles.

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Significant Subsidiaries

The following table sets forth significant subsidiaries owned, directly or indirectly as of December 31, 2005:

Name of Company			Domicile			Percentage Owned
Stena Rederi AB			Sweden					100
Stena Bulk AB			Sweden					100
Stena Fastigheter AB			Sweden					100
Bostads AB Drott			Sweden					100
Stena Line Scandinavia AB			Sweden					100
AB Stena Finans			Sweden					100
Stena Adactum AB			Sweden					100
Stena International BV			The Netherlands					100
Stena Line Holding BV			The Netherlands					100
Stena Line Ltd			United Kingdom					100
Stena Drilling (Holdings) Ltd			United Kingdom					100
Stena Ferries Ltd			United Kingdom					100
Stena Ropax Ltd.			United Kingdom					100
Stena Luxembourg SARL			Luxembourg					100
Stena Switzerland AG			Switzerland					100
Stena Maritime AG			Switzerland					100
Stena Finanzverwaltungs AG			Switzerland					100
Stena Tay Cyprus Ltd			Cyprus					100
Stena Don Cyprus Ltd			Cyprus					100

Regulation

General

The shipping industry in general, and our business and the operation of our vessels and drilling rigs in particular, are subject to and affected by a variety of governmental regulations including numerous international conventions, national, state and local laws and national and international regulations in force in the jurisdictions in which such vessels and drilling rigs are registered and operate. Because such conventions, laws and regulations are often revised, we cannot predict the ultimate cost of complying with such revised conventions, laws and regulations or the impact thereof on the resale price or useful life of our vessels and drilling rigs. We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our operations. Subject to the discussion below and to the fact that these kinds of permits, licenses and certificates required for the operation of the vessels and drilling rigs owned or operated by us will depend upon a number of factors, we believe that we have been and will be able to obtain all permits, licenses and certificates material to the conduct of our operations. We believe that the increased environmental and quality concerns of insurance underwriters, regulatory bodies and charterers will result in greater inspection and safety requirements on all vessels.

Environmental

We are subject to the laws of various jurisdictions and international conventions regarding the discharge of materials into the environment. The most onerous of such regulations in the United States are the Oil Pollution Act of 1990, or OPA '90 and the Comprehensive Environmental Response Compensation and Liability Act, or CERCLA.

OPA '90 establishes an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA ‘90 affects all owners and operators whose vessels

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trade in the United States or its territories or possessions or whose vessels operate in United States waters, which include the United States territorial area and the two hundred nautical mile exclusive economic zone of the United States.

Under OPA '90, vessel owners, operators and bareboat charterers are ‘‘responsible parties’’ and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all oil spill containment and clean-up costs and other damages arising from oil spills pertaining to their vessels. OPA '90 limits the liability of responsible parties to the greater of $1,200 per gross ton or $10 million per tanker. These limits of liability do not apply if the incident was proximately caused by a violation of applicable United States Federal safety, construction or operating regulations or by the responsible party's gross negligence or willful misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the oil removal activities.

In order to ensure that the responsible parties will meet the minimum liability amount imposed by OPA '90, responsible parties must establish evidence of financial responsibility to pay. Certificates of financial responsibility have been obtained for all of our owned or bareboat chartered vessels that trade in U.S. waters. We believe that if the need arises, certificates of financial responsibility for our other vessels could be obtained promptly. Guarantees from Shoreline Mutual (Bermuda) Limited and Arvak Ltd. are the primary vehicles through which we have satisfied the requirements under OPA '90.

Owners, bareboat charterers or operators of tankers operating in United States waters are required to file vessel response plans with the Coast Guard, and their tankers are required to be operated in compliance with their Coast Guard approved plans. Such response plans must, among other things, (i) address a ‘‘worst case’’ scenario and identify and ensure, through contract or other approved means, the availability of necessary private response resources to respond to a ‘‘worst case discharge,’’ (ii) describe crew training and drills and (iii) identify a qualified individual with full authority to implement removal actions. We have filed vessel response plans with the Coast Guard for the tankers owned or bareboat chartered by us that trade in United States waters and have received approval for all of such tankers to operate in United States waters.

Under OPA '90, with certain limited exceptions, all newly built or converted tankers operating in United States waters must be built with double-hulls, and existing vessels which do not comply with the double-hull requirement must be phased out over a 25-year period (1990-2015) based on size, age and place of discharge, unless retrofitted with double-hulls. Notwithstanding the phase-out period, OPA ‘90 currently permits existing single-hull tankers to operate until the year 2015 if their operations within United States waters are limited to discharging at the Louisiana Off-Shore Oil Platform, or off-loading by means of lightering activities within authorized lightering zones more than 60 miles offshore. All of our new buildings are compliant with OPA '90.

OPA '90 expressly provides that individual states are entitled to enforce their own pollution liability laws, even if inconsistent with or imposing greater liability than OPA '90. There is no uniform liability scheme among the states. Some states have OPA ‘90-like schemes for limiting liability to various amounts and some rely on common law fault-based remedies, while others impose strict and unlimited liability on an owner or operator. Some states have also established their own requirements for financial responsibility.

CERCLA.    CERCLA applies to discharges of hazardous substances (other than oil), whether on land or at sea. CERCLA applies to owners and operators of vessels and provides for cleanup, removal and natural resource damages. CERCLA's liability regime is similar to that of OPA '90. We believe that we are in substantial compliance with OPA, CERCLA and all other applicable state and federal regulations applying to the waters of the United States and the ports where our vessels call.

IMO.    The International Maritime Organization (IMO), an agency of the United Nations is responsible for measures to improve international shipping and to prevent pollution from ships.

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The IMO has developed international treaties and conventions to regulate the international shipping industry which now apply to over 98% of the world's shipping. The most important of these are mentioned below.

CLC.    Many countries other than the United States have ratified and follow the liability scheme adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage of 1969 and Protocol of 1992 (CLC). Under the CLC, a tanker's registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by a discharge of persistent oil, such as crude oil, fuel oil, heavy diesel oil and lubricating oil, subject to certain complete defenses, including pollution damage resulting from an act of war, caused by a third party, or caused by the negligence or wrongful act of a government responsible for the maintenance of lights or other navigational aids. Liability is currently limited to between approximately $915 and $930 per gross ton plus $6.5 million for the first 5,000 gross tons, an amount that is subject to periodic adjustment. The right to limited liability is forfeited only where pollution damage is caused by the owner's personal act or omission committed with intent to cause such damage or recklessly and with knowledge that the damage would result. Tankers trading in the territorial waters of contracting states must provide evidence of insurance covering the maximum amount for which the owner is strictly liable. In jurisdictions where the CLC has not been adopted, various legislative schemes or common law govern and liability is imposed on the basis of fault or in a manner similar to the CLC.

MARPOL 73/78.    Annex 1 of the International Convention for the Prevention of Pollution from Ships 1973 and Protocol 1978 deals with the prevention of pollution from oil. The Convention provides stringent construction and operating standards to prevent the release of oil into the environment. Under the requirements of the Convention, all new oil tankers built since 1996 are required to have double hulls. MARPOL 73/78 has been modified recently in the light of the Erika and Prestige incidents on the West Coast of Europe. In 2002 new amendments came in to force to Annex 1 of the Convention which set a global timetable for the accelerated the phase out of single hull tankers. These new regulations identify two categories of single hull tankers which are principally distinguished on the basis of whether they have protectively located segregated ballast tanks or not. Vessels fall into these categories if they are over 20,000 tons deadweight carrying heavy oil and over 30,000 tons deadweight carrying other oils. Category 3 tankers are tankers above 5,000 tons but below the tonnage of category 1 and category 2 tankers. These older single hull tankers must undergo a Condition Assessment Scheme (CAS) survey which apply to category 1 vessels continuing to trade up to 2005 and to category 2 vessels trading after 2010. However these amendments have been over taken by the 2003 MARPOL amendments which came into force on 5 April 2005. These amendments accelerate the final phasing out of category 1 tankers to 2005 and category 2 and 3 tankers to 2010 though depending on the age of the ship, these dates can be earlier.

All of our owned and finance leased tankers are double hulled vessels and all of our tankers are fully compliant with MARPOL Annex 1 Rules. This Convention has further annexes including Annex 2 Control of Pollution by Noxious Liquid Substances, Annex 4 Prevention of Pollution by Sewage and Annex 6, Prevention of Air Pollution from Ships. All our vessels are fully compliant with all requirements of the MARPOL Convention and amendments.

Annex VI entered into force on 19 May 2005. This new annex sets limits on sulphur oxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances. The sulphur content of fuel oil is limited to 4.5% m/m globally. The annex also contains provisions allowing for special SOx Emission Control Areas (SECAS) to be established with more stringent controls on sulphur emissions. In these areas, the sulphur content of fuel oil used onboard ships must not exceed 1.5% m/m. Annex VI also sets limits on emissions of nitrogen oxides (NOx) from diesel engines and prohibits deliberate emissions of ozone depleting substances, which include halons and chlorofluorocarbons (CFCs). The Annex also prohibits the incineration onboard ship of certain products, such as contaminated packaging materials and polychlorinated biphenyls (PCBs). Our fleet is well prepared to fulfill these new requirements.

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EU Directive 2005/33/EC amends the Directive 1999/32/EC as regards the sulphur content of marine fuels and entered into force July 6^th of 2005. The 2005/33/EC Directive does to a great extent mirror the Marpol Annex VI regulation on sulphur oxide emissions and sulphur emission control areas and was originally drafted as a means to speed up the ratification of Marpol Annex VI. Given that the Stena fleet is well prepared to meet Annex VI requirements, the amended EU Directive 2005/33/EC does not pose any problem.

ICLL.    The International Convention on Load Lines of 1966 (ICLL), which entered into force on July 21, 1968, establishes principles and rules concerning the limits to which ships may be loaded for international voyages. The provisions take into account the potential for hazards in different maritime regions and seasonal operating conditions, and designate how, where and when assigned load lines are to be marked on each ship. Generally, the ICLL applies to all ships that are greater than 24 meters (79 feet) in length (for ships built since 1966) or greater than 150 tons gross, unless otherwise exempted by the terms of the Convention. Currently each of our ferries, freight vessels, and petroleum tankers, to which the ICLL is applicable, are operating under an International Load Line Certificate demonstrating that the vessel has been surveyed and marked in accordance with the ILCC within the past five years.

SOLAS.    The International Convention for the Safety of Life at Sea (SOLAS) 1974 establishes basic safety standards for the construction and operation of merchant ships engaged on international voyages (including our Roll-on/Roll-off vessels and tankers). SOLAS has been ratified by more than 90 countries. SOLAS '74 provides safety standards for construction, machinery and electrical installations, life-saving appliances, radiotelegraphy and radiotelephony, navigation and the carriage of dangerous goods. SOLAS '74 puts the primary responsibility for compliance on the flag state, but there are provisions which recognize certain rights and obligations of countries where the ships call.

The SOLAS convention of 1990 (SOLAS '90) was adopted in 1990 to set new stability criteria for passenger carrying vessels. RoPax and car/passenger ferry vessels constructed after April 29, 1990 must be built to meet these and other requirements. RoPax and car/passenger ferry vessels that were constructed prior to April 29, 1990 were permitted to be retrofitted to comply with these SOLAS '90 regulations in stages. In accordance with the IMO SOLAS conference held in November 1995, all such vessels must be in full compliance with SOLAS ‘90.

At the 1995 SOLAS Conference, several amendments to SOLAS and IMO resolutions were adopted concerning RoRo passenger vessel stability, arrangements of bow doors, operations, communications, lifesaving and search and rescue. In particular, Resolution No. 14, also known as the Stockholm Agreement, allows for regional agreements to establish specific stability requirements for RoPax and car/passenger ferry vessels. These regulations also require vessels to fulfill the SOLAS '90 damage stability standard, which had applied to all RoRo passenger ships built since 1990 and was extended to existing ships in accordance with an agreed phase-in program. All of our RoPax and car/passenger ferry vessels are currently in full compliance with SOLAS '90 as well as the Stockholm Agreement.

Amendments to SOLAS '74 establish greater fire safety standards for existing RoPax and multi-purpose ferry vessels and newbuildings. Our owned vessels are in full compliance with these fire and safety regulations.

Further amendments adopted to SOLAS '74 in 2000 and 2002 stipulate, among other things, the fitting of an Automatic Identification System (AIS) and a Voyage Data Recorder (VDR) for ships engaged on international voyages. Additional security provisions adopted under SOLAS in December 2002 include mandatory compliance with the new International Ship and Port Facility Security Code (ISPS Code). Our operations are fully compliant with these requirements.

In May 1994, the International Code of Safety for High Speed Craft was added to SOLAS ‘74, and entered into force under tacit acceptance as Chapter X of the Convention on January 1, 1996. These regulations mandate a variety of safety measures including requirements pertaining to structural stability and fire prevention. The rapid pace of development in this sector

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of shipping lead to additional revisions of the Code of Safety for High Speed Craft in 2000, which entered into force on July 1, 2002. High Speed Craft to which these regulations apply are required to obtain a safety certificate and a permit to operate. The HSS ferries have been designed to be in compliance with these regulations and we have obtained applicable permits and certifications during operation of these vessels.

Our drilling units are designed and constructed to meet all applicable rules and regulations for operation world-wide. Three of them are designed to cope with the harsh environment of the North Sea British sector, including the Stena Don and Stena Dee, which are also designed to withstand the North Sea Norwegian sector environment.

Norway has the most demanding rules and regulations in the world. In order to work on the Norwegian Continental Shelf, the Stena Don has been fully certified to meet the regulations of the Norwegian Petroleum Directorate (NPD). The Stena Don also meets all the regulations of the Norwegian Maritime Directorate (NMD) for ‘‘marine’’ equipment, systems and arrangement and is also in compliance with all relevant regulations for operation on the British Continental Shelf. The Stena Don is classed with Det Norske Veritas and has all applicable class notations, including class notations for dynamic positioning and drilling systems.

Finally, all of our ships and our management companies comply with Chapter IX of the SOLAS Convention entitled Management for the Safe Operation of Ships. This made the International Safety Management Code (ISM Code) mandatory and establishes safety management objectives which are to:

	•	provide for safe practices in ship operation in a safe working environment;

	•	establish safeguards against all identified risks; and

	•	continuously improve safety management skills of personnel, including preparing for emergencies.

The code requires a Safety Management System (SMS) to be established by the shipowner or manager who has responsibility for operating the ship and which establishes a policy for achieving the objectives. This includes providing the necessary resources and shore based support and a designated person ashore having direct access to the highest level of management. The code is documented and compiled in a safety management manual which is kept on board the ship. Our vessels and management companies all are compliant with this Code and are audited regularly to ensure that this remains the case.

Athens Convention.    The International Convention relating to the Carriage of Passengers and their Luggage by Sea (PAL) 1974 has governed the liability of carriers for damage suffered by passengers carried on a seagoing vessel. The regime makes the carrier strictly liable for damage or loss suffered by a passenger if the incident causing the damage occurred during the carriage and was due to the fault or neglect of the carrier. However the carrier may limit his liability unless the carrier acted with intent to cause such damage or recklessly and with knowledge that such damage would probably result.

The original convention and the limits have been substantially altered and increased by the 2002 Protocol to the Convention. The carrier is now strictly liable for the death or personal injury to a passenger with limited defenses if the carrier can prove that the incident resulted from an act of war, hostilities, civil war, insurrection or a natural phenomena of an exceptional inevitable and irresistible character or thoroughly caused by an act of omission done with intent to cause the incident by a third party. However if the incident occurred as a result of the fault or neglect of the carrier then the limit is increased from approximately US $360,000 per passenger on each distinct occasion to approximately US $580,000 per passenger, provided that if the carrier is responsible for an act or omission with intent to cause damage or recklessly and with knowledge that damage would result, then the right to the limit is lost. A scheme of compulsory insurance has been introduced by the Convention to ensure that the carrier can meet these potential liabilities.

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HNS Convention.    The International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances (HNS) 1996 is likely to come into force in the medium term. The liability aspects of the Convention are based on the CLC by establishing a regime of strict liability and the registered shipowner's right to limit liability. However, the HNS goes further than the CLC in that it covers not only pollution damage but also the risks of fire and explosion including loss of life or personal injury as well as loss or damage to property. HNS substances include oil, liquefied gases and other dangerous, hazardous or harmful materials. The present limits of liability are between US $500 and US $2,000 per gross ton though it is likely that these limits will increase once the Convention is ratified and comes into force.

Item 4A.    Unresolved Staff Comments

Not Applicable

Item 5.    Operating and Financial Review and Prospects

General

The following discussion and analysis should be read in conjunction with the ‘‘Selected Financial Data’’ section of Item 3 and our Consolidated Financial Statements and the Notes thereto. The Consolidated Financial Statements have been prepared in accordance with Swedish GAAP which differs in certain significant respects from US GAAP. For a discussion of the significant differences between Swedish GAAP and US GAAP and a reconciliation of net income and stockholders’ equity from Swedish GAAP to US GAAP, see Note 31 to the Consolidated Financial Statements.

We generate revenue primarily from our ferry operations, chartering out our Roll-on/Roll-off vessels, tankers and drilling rigs, managing tankers, selling vessels and from real estate rentals. The period from June through September is the peak travel season for passengers in our ferry operations. Chartering activities are not significantly affected by seasonal fluctuations, but variations over the year may occur, among other things, as a consequence of vessel utilization rates, dry-docking and charter rates. Any sale or acquisition of vessels, drilling rigs and real estate also may have an impact on our results in each period.

Significant events

In January 2005, we acquired the RoRo vessel Linda Rosa, built in Italy in 1996. The vessel was renamed the Mont Ventoux in August 2005, after renaming the previous Mont Ventoux the Stena Forwarder. In February 2005, the RoPax vessel Pride of Cherbourg was chartered from P&O Ferries and subsequently renamed the Stena Challenger. This vessel was first used to replace the Stena Baltica on the Stena Line route Karlskrona-Gdynia during spring 2005, while the Stena Baltica was being rebuilt. Beginning in late June 2005, the Stena Challenger was chartered out to a third party.

In March 2005, the product tanker Stena Contest was delivered from the Uljanik shipyard in Croatia. The fourth and final product tanker from this shipyard, the Stena Concept, was delivered in April 2005. Both of these tankers operate on the spot market. Effective from July 2005, we entered into a Suezmax pooling agreement with Sonangol Shipping in Angola.

In May 2005, Stena Adactum acquired Envac, a company in the automated waste collection business that develops and sells underground network systems for the transportation of municipal and commercial waste. The cost of the acquisition was approximately SEK 575 million. Envac operates in 16 countries and had sales in 2004 and 2005 of SEK 727 million and SEK 785 million, respectively.

In August 2005, we ordered a drillship, the Stena DrillMAX, from the Samsung shipyard in Korea for delivery at the end of 2007. The total investment will be approximately USD

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600 million, the biggest single investment in a vessel in our history. An advance payment of USD 79 million was paid to the shipyard at order. The remaining amount is to be paid as interim payments and at delivery and is expected to be financed from a new financing.

During the autumn of 2005, we renegotiated the contract for the drilling rig Stena Tay with its charterer Woodside in order to achieve a redelivery of the rig in early 2006. In November 2005, we signed an agreement with the French oil company TOTAL for a four year contract at a substantially higher charter rate than before.

In August 2005, we ordered two RoPax vessels from a shipyard in St. Petersburg, Russia for delivery in 2008. The order includes an option for two additional RoPax vessels. The newbuildings are of similar design to the vessels currently on order with the Fosen shipyard in Norway, which are scheduled to be delivered from 2006. In October 2005, the RoPax vessel Pride of Acquitaine was sold to a third-party.

In November 2005, we took delivery of the aframax tanker Stena Arctica from the Hyundai shipyard in Korea. After final completion in December 2005, the vessel was chartered to the Russian company Progetra. The sister vessel was delivered in December 2005 and subsequently sold to the Russian shipping company Sovcomflot under the name SCF Baltica.

In 2005, a large number of properties were sold and purchased, mainly in Sweden. In total, properties were sold for a total price of SEK 3,629 million. Total investments in properties were SEK 1.889 million, out of which SEK 1,606 million related to properties acquired.

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Results of Operations

			2003						2004						2005
			SEK in millions
CONSOLIDATED GROUP
Income Statement Data (Swedish GAAP):
Total revenues					13,619						16,721						19,619
Direct operating expenses					(9,333	)					(10,943	)					(12,631	)
Selling and administrative expenses					(1,522	)					(1,761	)					(1,861	)
Depreciation and amortization					(1,742	)					(1,790	)					(2,734	)
Income from operations					1,022						2,227						2,393
BUSINESS SEGMENT DATA
Revenues:
Ferry operations					8,597						9,024						9,045
Net gain on sale of vessels					50						11						—
Total Ferry operations					8,647						9,035						9,045
Drilling					1,601						1,429						1,871
Shipping: Roll-on/Roll-off vessels					298						383						458
Net gain on sale of vessels					64						273						191
Total Roll-on/Roll-off vessels					362						656						649
Crude oil tankers					1,826						2,994						3,804
Net gain on sale of vessels					—						372						124
Total crude oil tankers					1,826						3,366						3,928
Other shipping					118						115						143
Total Shipping					2,306						4,137						4,720
Property: Operations					932						1,357						1,882
Net gain on sale of properties					126						110						813
Total Property					1,058						1,467						2,695
Other					7						653						1,288
Total					13,619						16,721						19,619
Income (Loss) from Operations:
Ferry operations					397						535						(7	)
Net gain on sale of vessels					50						11						—
Total Ferry operations					447						546						(7	)
Drilling					(33	)					(227	)					(2	)
Shipping: Roll-on/Roll-off vessels					(47	)					62						104
Net gain on sale of vessels					64						273						191
Total Roll-on/Roll-off vessels					17						335						295
Crude oil tankers					198						780						742
Net gain on sale of vessels					—						372						124
Total crude oil tankers					198						1,152						866
Other shipping					3						(13	)					(7	)
Total Shipping					218						1,474						1,154
Property operations					399						499						579
Net gain on sale of property					126						110						813
Total Property					525						609						1,392
Other					(135	)					(175	)					(144	)
Total					1,022						2,227						2,393
Depreciation & Amortization:
Ferry operations					811						864						1,578
Drilling					694						575						590
Shipping: Roll-on/Roll-off vessels					121						100						124
Crude oil tankers					27						58						41
Other shipping					6						7						11
Total Shipping					154						165						176
Property					77						153						337
Other					6						33						53
Total					1,742						1,790						2,734

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Comparison of the year ended December 31, 2005 to the year ended December 31, 2004

Currency effects

Our revenues and expenses are significantly affected, as reported in Swedish kronor (SEK), by fluctuations in currency exchange rates, primarily relative to the US dollar, the British pound and the Euro. We seek to mitigate the impact of potential adverse foreign currency exchange fluctuations by matching, to the extent possible, revenue and expenses in the same currency. In addition, we enter into certain derivative financial instruments. Revenues in our ferry operations are mainly generated in SEK, British pounds, Euro, Norwegian kronor and Danish kronor. Approximately 30% of our total revenues are generated in US dollars and approximately 35% of are generated in SEK. Approximately 35% of our total expenses are incurred in US dollars and approximately 30% are incurred in SEK. Although we seek to hedge the net effects of such fluctuations, the reported gross revenues and expenses are influenced by changes in currency exchange rates. The exchange rates as used for consolidation purposes are as follows:

Average rates			January-December 2004						January-December 2005						Change
US $					7.4960						7.4775						—
British pounds					13.4560						13.5782						1	%
Euro					9.1268						9.2849						2	%

Closing rates			December 31, 2004						December 31, 2005						Change
US $					6.6125						7.9525						20	%
British pounds					12.7100						13.7325						8	%
Euro					9.0070						9.4300						5	%

Revenues

Total revenues increased SEK 2,898 million, or 17%, in the year ended December 31, 2005 to SEK 19,619 million from SEK 16,721 million in the year ended December 31, 2004, as a result of increased revenues in all business areas.

Ferry operations.    Ferry revenues are primarily generated from ticket sales, freight haulage and on board spending. Revenues from ferry operations increased SEK 21 million in the year ended December 31, 2005 to SEK 9,045 million from SEK 9,024 million in the year ended December 31, 2004, due to increased volumes in the freight business activity, partly related to the acquisition of the Fleetwood-Larne ferry operation on the Irish Sea acquired from P&O in April 2004, partly offset by decreased volumes in passengers, cars and onboard sales.

Net Gain on Sale of Vessels, Ferry Operations.    In the year ended December 31, 2005, no vessel sales were made. In the year ended December 31, 2004 gains of SEK 11 million were recorded on the sale of the Stena Gothica.

Drilling.    Drilling revenues consist of charter hires for our drilling rigs. Revenues from drilling operations increased SEK 442 million, or 31%, in the year ended December 31, 2005 to SEK 1,871 million from SEK 1,429 million in the year ended December 31, 2004, mainly due to new contracts at higher dayrates for the Stena Dee and the Stena Spey, which had offhire periods in the year ended December 31, 2004, partly offset by lower revenues for the Stena Tay due to an offhire period in 2005 to install new equipment. The change in dayrates reflects new charter contracts and the market conditions in effect at the time a charter is made in the particular geographic area.

Shipping.    Shipping revenues primarily represent charter hires for our owned and chartered in vessels and management fees for vessels managed by us. Revenues from shipping operations increased SEK 913 million, or 26%, in the year ended December 31, 2005 to SEK 4,405 million from SEK 3,492 million in the year ended December 31, 2004. Revenues from chartering out

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Roll-on/Roll-off vessels increased SEK 75 million to SEK 458 million from SEK 383 million, or 20%, mainly due to charter hire received for the Linda Rosa/Mont Ventoux which was delivered in January 2005 and charter hire received for the Stena Challenger which was chartered in from January 2005. Revenues from crude oil tankers increased SEK 810 million, or 27%, in the year ended December 31, 2005 to SEK 3,804 million from SEK 2,994 million in the year ended December 31, 2004, mainly due to charter hire received for the additional tankers chartered in and charter hire received for the six tanker newbuildings delivered in the period January 2004 to April 2005. In the year ended December 31, 2005, 39 tankers were operated (chartered or owned), compared to 33 tankers in the year ended December 31, 2004.

Net Gain on Sale of Vessels, Shipping.    In the year ended December 31, 2005, gains of SEK 191 million were recorded on the sale of the RoRo vessel Pride of Aquitaine and SEK 124 million on the crude oil tanker Stena Antarctica. In the year ended December 31, 2004, gains of SEK 273 million were recorded on the sale of the RoRo vessels Chieftain, Stena Timer and Stena Tender and the RoPax vessels Stena Traveller and European Envoy and gains of SEK 372 million on the sale of four crude oil tankers to Arlington.

Property.    Property revenues consist of rents for properties owned and management fees for properties managed by us. Revenues from property operations increased SEK 525 million, or 39%, in the year ended December 31, 2005 to SEK 1,882 million from SEK 1,357 million in the year ended December 31, 2004, due to the acquisition in August 2004 of Drott, which had revenues for the year ended December 31, 2005 of SEK 952 million as compared to SEK 428 million for the year ended December 31, 2004.

Net Gain on Sale of Properties.    In the year ended December 31, 2005, gains of SEK 813 million were recorded on the sale of properties. Properties sold mainly relate to Drott. In the year ended December 31, 2004, gains of SEK 110 million were recorded.

Other.    Other revenues in the year ended December 31, 2005 were SEK 1,288 million, which includes SEK 747 million related to the garden center and flower business ‘‘Blomsterlandet’’ and SEK 523 million related to Envac, a company in the automated waste collection business acquired in May 2005. Other revenues in the year ended December 31, 2004 were SEK 653 million, which relate almost entirely to Blomsterlandet.

Direct operating expenses

Total direct operating expenses increased SEK 1,688 million in the year ended December 31, 2005 to SEK 12,631 million from SEK 10,943 million in the year ended December 31, 2004, or 15%, as a result of increased operating expenses in all operations except for the Ferry Operations and the RoRo business.

Ferry operations.    Direct operating expenses for ferry operations consist principally of personnel costs, costs of goods sold on the vessels, fuel costs, vessel charter costs, commissions, package tour costs and other related costs. A significant portion of these costs are of a fixed nature and do not vary as a result of changes in our seasonal requirements. Direct operating expenses for ferry operations decreased SEK 142 million, or (2%), in the year ended December 31, 2005 to SEK 6,565 million from SEK 6,707 million in the year ended December 31, 2004, mainly due to decreased expenses for costs of goods sold on the vessels and package tour costs together with lower charter and redundancy costs, partly offset by higher personnel costs. Direct operating expenses for ferry operations for the year ended December 31, 2005 was 73% of revenues, as compared to 74% for the year ended December 31, 2004.

Drilling.    Direct operating expenses for drilling consist primarily of personnel costs, fuel costs, insurance, maintenance and catering costs. Direct operating expenses from drilling operations increased SEK 166 million, or 18%, in the year ended December 31, 2005 to SEK 1,112 million from SEK 946 million in the year ended December 31, 2004, mainly due to increased expenses for the Stena Dee, which was offhire in 2004, and partly due to increased personnel

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costs in Norway for the Stena Don. Direct operating expenses from drilling operations for the year ended December 31, 2005 were 59% of drilling revenues as compared to 66% for the year ended December 31, 2004.

Shipping.    Direct operating expenses for shipping consist primarily of vessel charter costs, fuel costs, personnel costs, insurance and other related vessel costs. Direct operating expenses from shipping operations increased SEK 854 million, or 39%, in the year ended December 31, 2005 to SEK 3,066 million from SEK 2,212 million in the year ended December 31, 2004. Direct operating expenses with respect to Roll-on/Roll-off vessels decreased by SEK 2 million in the year ended December 31, 2005 to SEK 187 million from SEK 189 million in the year ended December 31, 2004, mainly due to reduced charterhire for the Svealand, which previously was chartered in but acquired by us in June 2004, and the sale of the RoRo vessels Stena Tender and Stena Timer in June 2004, partly offset by increased expenses for the Linda Rosa/Mont Ventoux and the Stena Challenger. Direct operating expenses associated with crude oil tankers increased SEK 855 million, or 42%, to SEK 2,871 million from SEK 2,016 million, mainly due to increased expenses resulting from a larger fleet and increased market rates for chartered in vessels. Direct operating expenses for crude oil operations for the year ended December 31, 2005 were 75% of revenues, as compared to 67% for the year ended December 31, 2004. Direct operating expenses for crude oil tankers include time-charter costs, which normally are fixed for periods between 6 months and up to 5 years in advance, while revenues in the spot market vary with each voyage.

Property.    Property expenses consist primarily of maintenance, heating and personnel costs. Direct operating expenses from property operations increased SEK 301 million, or 59%, in the year ended December 31, 2005 to SEK 810 million from SEK 509 million in the year ended December 31, 2004, mainly due to the acquisition in August 2004 of Drott, which had direct operating expenses for the year ended December 31, 2005 of SEK 433 million as compared to SEK 131 million for the year ended December 31, 2004. Total direct operating expenses from property operations in the year ended December 31, 2005 were 43% of property revenues, as compared to 38% for the year ended December 31, 2004.

Other.    Other direct operating expenses in the year ended December 31, 2005 were SEK 1,078 million, which includes SEK 693 million related to the garden center and flower business ‘‘Blomsterlandet’’ and SEK 375 million related to Envac, a company in the automated waste collection business acquired in May 2005. Other direct operating expenses in the year ended December 31, 2004 were SEK 569 million which relates almost entirely to Blomsterlandet.

Selling and administrative expenses

Selling and administrative expenses increased SEK 100 million, or 6%, in the year ended December 31, 2005 to SEK 1,861 million from SEK 1,761 million in the year ended December 31, 2004, mainly due to increased expenses in the drilling and shipping areas due to increased business activities and the acquisition of Envac. Total selling and administrative expenses in the year ended December 31, 2005 were 10% of total revenues, as compared to 11% for the year ended December 31, 2004.

Depreciation and amortization

Depreciation and amortization charges increased SEK 944 million, or 53%, in the year ended December 31, 2005 to SEK 2,734 million from SEK 1,790 million in the year ended December 31, 2004, mainly due to impairment charges related to the HSS vessels of SEK 765 million and impairment charges for real estate of SEK 180 million together with depreciation for Drott and Envac. Depreciation and amortization charges in the year ended December 31, 2004 included impairment charges related to a hotel in the ferry operations of SEK 52 million and a building in the property segment of SEK 21 million.

Share of affiliated companies' results

Share of affiliated companies' results in the year ended December 31, 2005 refer to our portion of the results of Wilh. Sonessons AB (publ) and Ballingslöv AB (publ). Share of affiliated

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companies' results in the year ended December 31, 2004 refer to our portion of Drott's results in the period from May 13 to August 10, 2004, after which Drott is consolidated as a subsidiary, together with our portion of the results of Wilh. Sonessons AB (publ).

Financial income and expense, net

Financial income and expense, net decreased by SEK 164 million in the year ended December 31, 2005 to SEK 48 million from SEK 212 million in the year ended December 31, 2004.

Net gain (loss) on securities in the year ended December 31, 2005 was SEK 921 million, of which SEK 211 million related to realized gains on marketable debt and equity securities and SEK 710 million related to unrealized gains and losses. Net gain (loss) on securities in the year ended December 31, 2004 amounted to SEK 1,060 million, of which SEK 218 million related to realized gains on the sale of shares in the property company Fabege AB, SEK 484 million related to the sale of shares in Song Networks and SEK 131 million related to other realized gains on securities and SEK 227 million related to unrealized gains and losses.

Interest income in the year ended December 31, 2005 increased SEK 185 million to SEK 567 million from SEK 382 million in the year ended December 31, 2004, mainly related to increased interest income in our investments in VIEs.

Interest expense for the year ended December 31, 2005 increased SEK 260 million to SEK (1,395) million from SEK (1,135) million for the year ended December 31, 2004, mainly related to interest expense in the newly acquired companies Drott and Envac as well as interest expense for those acquisitions as such, together with interest expense in our investments in VIEs.

During the year ended December 31, 2005, foreign exchange gains (losses), net amounted to SEK (3) million, of which gains of SEK 22 million from currency trading and losses of SEK (25) million from translation differences. In the year ended December 31, 2004, the Company had foreign exchange gains (losses), net of SEK (107) million, of which SEK 8 million from currency trading and SEK (115) million from translation differences.

Other financial income (expense) of SEK (121) million for the year ended December 31, 2005 includes SEK (57) million related to amortization of the deferred financing charges for senior notes, the $1 billion revolving credit facility, bank loans, capital lease obligations and investments in VIEs. Other financial income (expense) of SEK (24) million for the year ended December 31, 2004 includes SEK (82) million related to amortization of deferred finance charges and SEK 100 million relating to amortization of the excess of SEK 658 million of the acquisition price of the Stena Line 10 5/8% Senior Notes due 2008 acquired in late 2000 over their redemption price.

Income taxes

Income taxes for the year ended December 31, 2005 were SEK (173) million, consisting of current taxes of SEK (88) million and deferred taxes of SEK (85) million. Income taxes for the year ended December 31, 2004 were SEK (20) million, consisting of current taxes of SEK (133) million and deferred taxes of SEK 113 million. The provision for taxes is based upon the applicable tax rates in the various jurisdictions where revenues are generated.

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Comparison of the year ended December 31, 2004 to the year ended December 31, 2003

Currency effects

Our revenues and expenses are significantly affected, as reported in Swedish kronor (SEK), by fluctuations in currency exchange rates, primarily relative to the US dollar, the British pound and the Euro. We seek to mitigate the impact of potential adverse foreign currency exchange fluctuations by matching, to the extent possible, revenue and expenses in the same currency. In addition, we enter into certain derivative financial instruments. Revenues in our ferry operations are mainly generated in SEK, British pounds, Euro, Norwegian kronor and Danish kronor. Approximately 30% of our total revenues are generated in US dollars and approximately 30% of are generated in SEK. Also, approximately 30% of our total expenses are incurred in US dollars and approximately 30% are incurred in SEK. Although we seek to hedge the net effects of such fluctuations, the reported gross revenues and expenses are influenced by changes in currency exchange rates. The exchange rates as used for consolidation purposes are as follows:

Average rates			January-December 2003						January-December 2004						Change
US $					8.0894						7.4960				(7%)
British pounds					13.1946						13.4560				2%
Euro					9.1250						9.1268				—

Closing rates			December 31, 2003						December 31, 2004						Change
US $					7.2750						6.6125				(9%)
British pounds					12.9125						12.7100				(2%)
Euro					9.0940						9.0070				(1%)

Revenues

Total revenues increased SEK 3,102 million, or 23%, in the year ended December 31, 2004 to SEK 16,721 million from SEK 13,619 million in the year ended December 31, 2003, primarily as a result of increased revenues in the crude oil tanker segment, the newly acquired garden center and flower business and the consolidation in August 2004 of Drott, partly offset by reduced revenues from drilling operations. Revenues in the year ended December 31, 2004 were adversely affected by the increase of the average exchange rate of the SEK with respect to the US dollar, partly offset by the decrease of the SEK with respect to the British pound.

Ferry operations.    Ferry revenues are primarily generated from ticket sales, freight haulage and on board spending. Revenues from ferry operations increased SEK 427 million, or 5%, in the year ended December 31, 2004 to SEK 9,024 million from SEK 8,597 million in the year ended December 31, 2003, due to increased volumes in the freight business, in particular from the new route Fleetwood-Larne, partly offset by the weakening of the SEK against the British pound.

Net Gain on Sale of Vessels, Ferry operations.    In the year ended December 31, 2004, gains of SEK 11 million were recorded on the sale of the Stena Gothica. In the year ended December 31, 2003, gains of SEK 50 million were recorded on the sale of the RoRo vessels Stena Freighter and Stena Carrier.

Drilling.    Drilling revenues consist of charter hires for the drilling rigs. Revenues from drilling operations decreased SEK 172 million, or (11)%, in the year ended December 31, 2004 to SEK 1,429 million from SEK 1,601 million in the year ended December 31, 2003, mainly due to the increase of the SEK with respect to the US dollar, the offhire in the first half of 2004 of the Stena Dee and two months for the Stena Spey together with reduced dayrate for the Stena Tay, partly offset by increased revenues for the Stena Clyde due to a short offhire period in the year ended December 31, 2003.

Shipping.    Shipping revenues primarily represent charter hires for the owned and chartered in vessels and management fees for vessels managed by us. Revenues from shipping operations

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increased SEK 1,250 million, or 56%, in the year ended December 31, 2004 to SEK 3,492 million from SEK 2,242 million in the year ended December 31, 2003. Revenues from chartering out Roll-on/Roll-off vessels increased SEK 85 million to SEK 383 million from SEK 298 million, or 29%, principally due to the deliveries of the Stena Forecaster in June 2003 and the Stena Forerunner in October 2003 together with the newly chartered-in vessels the Vasaland and the Svealand in April 2003 (purchased in May 2004), partly offset by the increase of the SEK with respect to the US dollar. Revenues from crude oil tankers increased SEK 1,168 million, or 64%, in the year ended December 31, 2004 to SEK 2,994 million from SEK 1,826 million in the year ended December 31, 2003, mainly due to increased dayrates, deliveries of new tankers and additional tankers chartered in, partly offset by the increase of the SEK with respect to the US dollar.

Net Gain on Sale of Vessels, Shipping.    In the year ended December 31, 2004, we recorded gains of SEK 273 million on the sale of the RoRo vessels Chieftain, Stena Timer and Stena Tender and the RoPax vessels Stena Traveller and Envoy and gains of SEK 372 million on the sale of four crude oil tankers to Arlington Tankers Ltd. In the year ended December 31, 2003, we recorded gains of SEK 64 million on the sale of the RoPax vessel Stena Britannica and the RoRo vessel Vasaland.

Property.    Property revenues consist of rents for properties owned and management fees for properties managed. Revenues from property operations increased SEK 425 million, or 46%, in the year ended December 31, 2004 to SEK 1,357 million from SEK 932 million in the year ended December 31, 2003. The Drott company is included as of August 10, 2004 and had revenues up to end of December 31, 2004 of SEK 428 million.

Net Gain (Loss) on Sale of Properties.    In the year ended December 31, 2004, gains of SEK 110 million were recorded on the sale of properties, out of which SEK 33 million related to sales from Drott. In the year ended December 31, 2003, gains of SEK 126 million were recorded on the sale of properties.

Other.    Other revenues in the year ended December 31, 2004 of SEK 653 million relate almost entirely to the garden center and flower business, acquired as of January 1, 2004.

Direct operating expenses

Total direct operating expenses increased SEK 1,610 million, or 17%, in the year ended December 31, 2004 to SEK 10,943 million from SEK 9,333 million in the year ended December 31, 2003, mainly as a result of costs in the newly acquired garden center and flower business, increased operating expenses in the crude oil tanker segment, the acquisition as of August 10, 2004 of the property company Drott and the effects to the ferry operations of the decrease of the SEK with respect to the British pound, offset partly by the increase of the SEK with respect to the US dollar.

Ferry operations.    Direct operating expenses for ferry operations consist principally of personnel costs, costs of goods sold on the vessels, fuel costs, vessel charter costs, commissions, package tour costs and other related costs. A significant portion of these costs are of a fixed nature and do not vary as a result of changes in the seasonal requirements. Direct operating expenses for ferry operations increased SEK 264 million, or 4%, in the year ended December 31, 2004 to SEK 6,707 million from SEK 6,443 million in the year ended December 31, 2003, mainly due to the new route Fleetwood-Larne and the decrease of the SEK with respect to the British pound. Direct operating expenses for ferry operations for the year ended December 31, 2004 were 74% of revenues, as compared to 75% for the year ended December 31, 2003.

Drilling.    Direct operating expenses for drilling consist primarily of personnel costs, fuel costs, insurance, maintenance and catering costs. Direct operating expenses from drilling operations increased SEK 136 million, or 17%, in the year ended December 31, 2004 to SEK 946 million from SEK 810 million in the year ended December 31, 2003, mainly due to increased costs for repair and maintenance for the Stena Tay, increased personnel costs for the Stena Don,

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mainly relating to prior periods, and the amortization of deferred costs for the Stena Don with respect to the Statoil settlement in late 2003, partly offset by the increase of the SEK with respect to the US dollar. Direct operating expenses from drilling operations for the year ended December 31, 2004 were 66% of drilling revenues as compared to 51% for the year ended December 31, 2003, partly reflecting decreased revenues due to the offhire in the first half of 2004 of the Stena Dee.

Shipping.    Direct operating expenses for shipping consist primarily of vessel charter costs, fuel costs, personnel costs, insurance and other related vessel costs. Direct operating expenses from shipping operations increased SEK 514 million, or 30%, in the year ended December 31, 2004 to SEK 2,212 million from SEK 1,698 million in the year ended December 31, 2003. Direct operating expenses with respect to Roll-on/Roll-off Vessels increased by SEK 2 million, or 1%, in the year ended December 31, 2004 to SEK 189 million from SEK 187 million in the year ended December 31, 2003, mainly due to the newly chartered-in vessels the Vasaland and the Svealand in April 2003 (purchased in May 2004) and the delivery of the Stena Forecaster in June 2003 and the Stena Forerunner in October 2003, partly offset by reduced costs for the Stena Tender and the Stena Timer, sold in June 2004. Direct operating expenses associated with crude oil tankers increased SEK 514 million, or 34%, to SEK 2,016 million from SEK 1,502 million, mainly due to increased costs resulting from a larger fleet, including deliveries of new tankers in the first quarter of 2004, and higher rates for chartered in vessels, partly offset by an increase of the SEK with respect to the US dollar. Direct operating expenses for crude oil operations for the year ended December 31, 2004 were 67% of revenues, as compared to 82% for the year ended December 31, 2003. Direct operating expenses for crude oil tankers include time-charter costs, which normally are fixed for periods between six months and up to five years in advance, while revenues in the spot market vary with each voyage.

Property.    Property expenses consist primarily of maintenance, heating and personnel costs. Direct operating expenses from property operations increased SEK 127 million, or 33%, in the year ended December 31, 2004 to SEK 509 million from SEK 382 million in the year ended December 31, 2003. The Drott company is included as of August 10, 2004 and had direct operating expenses up to end of December 31, 2004 of SEK 131 million. Direct operating expenses from property operations in the year ended December 31, 2004 were 38% of property revenues, as compared to 41% for the year ended December 31.

Other.    Other direct operating expenses in the year ended December 31, 2004 of SEK 569 million relate entirely to the garden center and flower business, acquired as of January 1, 2004.

Selling and administrative expenses

Selling and administrative expenses increased by SEK 239 million, or 16%, in the year ended December 31, 2004 to SEK 1,761 million from SEK 1,522 million in the year ended December 31, 2003, mainly due to additional pension costs, increased expenses in the crude oil and property segments, costs in the garden center and flower business, acquired as of January 1, 2004 and costs in Drott, included as of August 10, 2004.

Depreciation and amortization

We have conducted a review of the estimated useful lives of our vessels. As a result of this review, new useful lives have been established for both existing and future vessels as follows, effective January 1, 2004: RoRo vessels and tankers are depreciated over 20 years instead of over 15 years; and the useful life has been extended for certain ferries and drilling rigs approaching the end of their earlier estimated useful lives. The effect of these revisions has reduced depreciation expense in the year ended December 31, 2004 by approximately SEK 248 million.

Depreciation and amortization charges increased by SEK 48 million, or 3%, in the year ended December 31, 2004 to SEK 1,790 million from SEK 1,742 million in the year ended

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December 31, 2003, mainly due to exceptional depreciation on impairment of a hotel in the ferry operations of SEK 52 million and a building in the property segment of SEK 21 million. Net of these exceptional items, depreciation and amortization charges decreased SEK 25 million, or 1%, in the year ended December 31, 2004 to SEK 1,717 million, due to the change in estimated useful lives as described above and the increase of the SEK with respect to the US dollar, in particular for the drilling rigs which are denominated in US dollars, partly offset by increased depreciation in the ferry operations and the crude oil tanker segment due to the delivery of new vessels and to depreciation related to the property company Drott, included as of August 10, 2004 and the garden center and flower business, acquired as of January 1, 2004.

Result from affiliated companies

Share of affiliated companies' results in the year ended December 31, 2004 refer to our portion of Drott's results in the period from May 13 to August 10, 2004, after which Drott is consolidated as a subsidiary, together with our portion of the results of Wilh. Sonessons AB (publ).

Financial income and expense, net

Financial income and expense, net improved by SEK 739 million in the year ended December 31, 2004 to SEK 212 million from SEK (527) million in the year ended December 31, 2003.

Net gain (loss) on securities in the year ended December 31, 2004 amounted to SEK 1,060 million, of which SEK 218 million related to realized gains on the sale of shares in the property company Fabege AB, SEK 484 million related to the sale of shares in Song Networks, SEK 131 million related to other realized gains on securities and SEK 227 million related to net unrealized gains and losses. Net gain (loss) on securities in the year ended December 31, 2003 was SEK 164 million.

Interest income in the year ended December 31, 2004 increased SEK 297 million to SEK 382 million from SEK 85 million for the year ended December 31, 2003, mainly related to interest income in our investments in VIEs.

Interest expense for the year ended December 31, 2004 increased SEK 311 million to SEK (1,135) million from SEK (824) million for the year ended December 31, 2003. Interest expense for the year ended December 31, 2004 include in total SEK (155) million of interest expense in our investments in VIEs, SEK (132) million of interest expense in the property company Drott, consolidated as a subsidiary from August 10, 2004, together with interest expense of SEK (80) million related to borrowings under the revolving credit facility to finance the acquisition of shares in Drott. Net of the VIEs and the Drott acquisition, interest expense for the year ended December 31, 2004 amounted to SEK (768) million, a decrease of SEK 56 million compared to the year ended December 31, 2003. This decrease relates mainly to the increase of the SEK with respect to the US dollar and reduced interest rates as a result of a decline in interest rates generally, partly offset by increased borrowings as a consequence of investments in vessels, other properties than the Drott acquisition and the garden center and flower business.

During the year ended December 31, 2004, the Company had foreign exchange losses, net of SEK (107) million, out of which gains of SEK 8 million related to gains from currency trading and losses of SEK (115) million related to translation differences. In the year ended December 31, 2003, the Company had foreign exchange gains, net of SEK 27 million consisting of gains of SEK 10 million from currency trading and gains of SEK 17 million from translation differences.

Other financial income (expense) of SEK (24) million for the year ended December 31, 2004 includes SEK 100 million relating to the amortization of the excess of SEK 658 million of the acquisition price of the Stena Line 10 5/8% Senior Notes due 2008 acquired in late 2000 over their redemption price and SEK (51) million related to our investments in VIE's. The remaining other

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financial income (expense) for the year ended December 31, 2004 was SEK (73) million, including bank fees and the amortization of deferred financing charges for the 9 5/8% Senior Notes due 2012, the 7½ % Senior Notes due 2013, the 7% Senior Notes due 2016, the revolving credit facilities, bank loans and capital lease obligations. Other financial income (expense) of SEK (18) million for the year ended December 31, 2003 includes SEK 120 million of released provisions relating to the excess value for Stena Line Senior Notes and SEK (138) million of bank fees and deferred finance charges, including the remaining balance of the deferred costs for the 1995 Senior Notes, which were fully repaid in January 2003.

Income taxes

Income taxes for the year ended December 31, 2004 were SEK (20) million, consisting of current taxes of SEK (133) million and deferred taxes of SEK 113 million. Income taxes for the year ended December 31, 2003 were SEK 13 million, consisting of net current taxes of SEK (58) million and deferred taxes of SEK 71 million. The provision for taxes is based upon the applicable tax rates in the various jurisdictions where revenues are generated.

Liquidity and capital resources

Our liquidity requirements principally relate to servicing debt, financing the purchase of vessels and other assets and funding working capital. We have in prior years met our liquidity requirements with cash on hand, cash flows from operations, borrowings under various credit facilities and financing and refinancing arrangements.

As of December 31, 2005, we had total cash and marketable securities of SEK 9,252 million as compared with SEK 5,088 million at December 31, 2004. We have also invested in three VIEs, whose purpose is to invest primarily in high yield securities and corporate bank loans. Due to changes in Swedish GAAP in 2005, these VIEs are consolidated as subsidiaries. As of December 31, 2005, total assets of these VIEs amounted to SEK 6,213 million.

Cash flows provided by operating activities increased to SEK 2,403 million in 2005 from SEK 1,456 million in 2004. Cash flows used in investing activities in 2005 amounted to SEK (2,948) million including capital expenditure of SEK (5,152) million and purchase of subsidiaries of SEK (518) million. Cash flows used in investing activities in 2004 amounted to SEK (5,331) million, including capital expenditures of SEK (3,343) million and purchase of subsidiaries of SEK (3,917) million, mainly related to Drott. Total investments in vessel newbuildings on order as of December 31, 2005 were SEK 1,280 million as compared to SEK 501 million at December 31, 2004. Cash flows provided by financing activities in 2005 amounted to SEK 1,850 million. In 2004, cash flows provided by financing activities amounted to SEK 4,536 million.

Total interest bearing debt as of December 31, 2005 was SEK 26,793 million excluding the debt in the VIEs as compared with SEK 23,024 million at December 31, 2004. Interest bearing debt in the VIEs as of December 31, 2005 was SEK 4,844 million as compared with SEK 3,925 million at December 31, 2004. Total debt increased partly due to the weakening of the closing rate of the SEK against the US dollar, the British pound and the Euro. As of December 31, 2005, $859 million was utilized under the $1 billion revolving credit facility, of which $10 million was used for issuing of bank guarantees.As of December 31, 2004, a total of $638 million was outstanding under this facility, of which $11 million was used for issuing of bank guarantees. See ‘‘Description of other indebtedness’’ for further description of our credit facilities.

Our remaining capital expenditure commitment for newbuildings on order as of December 31, 2005 was SEK 4,442 million ($559 million), of which SEK 2,767 million ($348 million) is due within the next twelve months and all of which is due by 2007. We plan on financing the unpaid balance, together with additional expenses and financing costs, through cash from operations, the existing revolving credit facility, new capital lease agreements, new bank loans or other financing arrangements.

We believe that, based on current levels of operating performance and anticipated market conditions, our cash flow from operations, together with other available sources of funds,

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including refinancings, will be adequate to make required payments of principal and interest on our debt, including the notes, to permit proposed capital expenditures, including newbuildings and other vessel acquisitions, and to fund anticipated working capital requirements.

Long-Term Financial Obligations and Other Contractual Obligations

Our long-term financial obligations as of December 31, 2005 were as follows:

			Payments due by period
			Total						Less than one year						1-3 years						4-5 years						More than 5 years						Not specified
			(SEK million)
Long-term debt, including current maturities					25,428						834						1,296						854						21,609						835
Debt in VIEs					4,844						—						—						—						4,844						—
Capital leases					1,365						40						81						83						1,161						—
Operating leases					8,766						2,765						3,140						1,295						1,566						—
Purchase obligations					4,442						2,768						1,674						—						—						—
Other non-current liabilities					286						—						186						30						70						—
Total					45,131						6,407						6,377						2,262						29,250						835

Our commercial commitments are listed in Note 25 of our consolidated financial statements and relate mainly to purchase obligations for newbuildings.

Off Balance Sheet Arrangements

One of our subsidiaries and Ugland have each guaranteed the performance by one of the Stena/Ugland joint ventures of its obligations under a charter agreement with Esso Norway. Our liability under this guarantee is limited to 50% of any claim caused by the non-performance of the joint venture. We and Ugland have also guaranteed the repayment by the other Stena/Ugland joint venture of a loan from a group of banks. Our liability under this loan is limited to 50% of the amount outstanding under the loan agreement, including interest, charges, expenses and damages. As of December 31, 2005, the outstanding total loan amount was $42.5 million.

Application of Critical Accounting Policies

Our Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles in Sweden (Swedish GAAP), which differ in certain significant respects from generally accepted accounting principles in the United States (US GAAP). The principal differences between Swedish GAAP and US GAAP are further discussed in Note 31 to our Consolidated Financial Statements.

The preparation of our Consolidated Financial Statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets, liabilities and provisions at the date of the financial statements and the reported amounts of sales and expenses during the periods presented. The accounting principles applied by us that are deemed to be critical are discussed below:

Vessels lives and impairment.    Our vessels represent our most significant assets and we state them at cost less accumulated depreciation. Depreciation of vessels, which includes depreciation of vessels under capital leases, is computed using the straight-line method over estimated service lives of 10 to 25 years. Significant vessel improvement costs are capitalized as additions to the vessel rather than being expensed as a repair and maintenance activity. Should certain factors or circumstances cause us to revise our estimate of vessel service lives, depreciation expense could be materially lower or higher. If circumstances cause us to change our assumptions in making determinations as to whether vessel improvements should be capitalized, the amounts we expense each year as repairs and maintenance costs could increase, partially offset by a decrease in depreciation expense.

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Impairment of long-lived assets.    We review long lived assets used in our business and investments in affiliated companies on an annual basis for impairment, or whenever events or changes in circumstances indicate that the carrying amount of an asset or a group of assets may not be recoverable. An impaired asset is written down to its estimated fair value if the decline is deemed to be permanent. We estimate fair value based on independent appraisals, sales price negotiations, active markets if available and projected future cash flows discounted at a rate determined by management to be commensurate with our business risk. The estimation of fair value using these methods is subject to numerous uncertainties which require our significant judgment when making assumptions of revenues, operating costs, selling and administrative expenses, interest rates and general economic business conditions, among other factors.

Financial instruments.    Under Swedish GAAP, we apply hedge accounting for all transactions that are economically hedged. Such transactions are hedged on-balance sheet or off-balance sheet by transactions with matching principal or notional amounts, interest rates and currencies, such that our exposure to changes in net values of such transactions due to movements in interest or exchange rates is hedged.

Under US GAAP, our hedging relationships do not qualify for hedge accounting Therefore, the application of US GAAP accounting standards increases the volatility of reported earnings under US GAAP. Our ambition is that certain assets, liabilities and designated derivatives will be designed to qualify for hedge accounting in the future and thereby reduce this volatility.

The fair market values for our derivative financial instruments are generally determined based on quoted market prices or market quotes for the same or similar financial instruments.

New Swedish GAAP Accounting Principles in 2005

Swedish GAAP changed for valuation of financial instruments in 2004 to allow not only accounting at cost but also, as an alternative, at market. In order to present the accounts in a true and fair view, the Company has decided to introduce accounting at market in the 2005 accounts. Unrealized results on shares, bonds etc are included in the income statement, except for certain strategic investments, which are revalued directly against stockholders' equity. The accounts for previous years have been restated.

Certain pension liabilities for employees within the UK ferry operations of the Company were accounted for as contingent liabilities in 2004 due to the lack of information on the portion of the liability attributable to the Company. New information was released for these pension plans in 2005. As of October 1, 2005, the liabilities have therefore been recorded as pension liabilities in the balance sheet. The change has been recorded directly against stockholders' equity and deferred tax liabilities, respectively.

Due to a change in Swedish GAAP as of January 1, 2005, the Company has consolidated in full two US financial investments in variable interest entities (‘‘VIE's’’), that in 2004 were consolidated according to the equity method. The accounts for 2004 have been restated.

Revision of Depreciable Lives of Vessels

In 2004, we conducted a review of the estimated useful lives of our vessels. As a result of this review, we established new useful lives for both existing and future vessels as follows, effective January 1, 2004: RoRo vessels and tankers are depreciated over 20 years instead of 15 years; and the useful life of certain old ferries and drilling rigs has been extended. The effect of these revisions reduced depreciation expense in 2004 by approximately SEK 248 million and net income by approximately SEK 191 million.

Recent U.S. Accounting Pronouncements

In December 2004, the FASB issued SFAS 153, ‘‘Exchanges of Nonmonetary Assets — an Amendment of APB Opinion No. 29’’. APB Opinion No. 29 provided an exception to the basic fair value measurement principle for exchanges of similar productive assets. That exception required

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that some nonmonetary exchanges, although commercially substantive, be recorded on a carryover basis. SFAS 153 eliminates the exception to fair value measurement for exchanges of similar productive assets and replaces it with a general exception to fair value measurement for exchange transactions that do not have commercial substance — that is, transactions that are not expected to result in significant changes in the cash flows of the reporting entity. SFAS 153 is effective prospectively for nonmonetary asset exchanges under U.S. GAAP occurring after December 31, 2005.

In February 2006, the FASB issued SFAS No. 155, ‘‘Accounting for Certain Hybrid Financial Instruments’’. SFAS No. 155 amends SFAS No. 133 and SFAS No. 140, and allows financial instruments that have embedded derivatives that otherwise would require bifurcation from the host to be accounted for as a whole, if the holder irrevocably elects to account for the whole instrument on a fair value basis. Subsequent changes in the fair value of the instrument would be recognized in earnings. The standard also:

	-	Clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133;

	-	Establishes a requirement to evaluate interests in securitized financial assets to determine whether interests are freestanding derivatives or are hybrid financial instruments that contain an embedded derivative requiring bifurcation;

	-	Clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives;

	-	Amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest (that is itself a derivative financial instrument).

SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of the first fiscal year that begins after September 15, 2006. We are currently evaluating the impact adoption of SFAS No. 155 will have on our financial position and results of operations.

Reconciliation of Swedish GAAP to US GAAP

The differences in net income and stockholders' equity between Swedish GAAP and US GAAP result primarily from differing accounting treatments for disposal of assets, depreciation of properties, investments in securities, financial instruments, purchase accounting, pensions and other items. See Note 31 of the notes to our Consolidated Financial Statements for a reconciliation of net income and stockholders' equity from Swedish GAAP to US GAAP and a discussion of such differences.

Net income determined in accordance with US GAAP would have been SEK 316 million in 2003, SEK 1,852 million in 2004 and SEK 2,008 million in 2005 as compared to SEK 510 million, SEK 2,359 million and SEK 2,268 million of net income determined under Swedish GAAP for the years ended December 31, 2003, 2004 and 2005, respectively.

Stockholders' equity determined in accordance with US GAAP would have been SEK 11,982 million and SEK 14,913 million at December 31, 2004 and 2005, respectively. Under Swedish GAAP, stockholders' equity was SEK 13,419 and SEK 15,132 million at December 31, 2004 and 2005, respectively.

Item 6.    Directors, Senior Management and Employees

Under the Swedish Companies Act of 2005, our Board of Directors has ultimate responsibility for our organization and the management of our affairs. Our articles of association provide for a Board of Directors elected by our stockholders of not fewer than three nor more than nine directors and not more than three deputy directors. Swedish law provides for the appointment of additional directors by the unions representing our employees. All directors, other than union

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appointees, are elected by resolution of a general meeting of stockholders. The term of office of a director is one year, but a director may serve any number of consecutive terms. Directors may be removed from office by a general meeting of stockholders at any time, and vacancies on the Board, except when filled by a deputy director, may only be filled by stockholder resolution. Each year, one director is elected Chairman of the Board by resolution of a meeting of the Board of Directors. Deputy directors may attend the Board meetings, but may only vote in place of a director who is absent.

The following table sets forth the name, year of birth and position of each of our directors and executive officers as of April 30, 2006.

Name			Year Born						Title
Lennart Jeansson					1941				Chairman of the Board of Directors
Dan Sten Olsson					1947				Chief Executive Officer and Director(1)
Svante Carlsson					1948				Chief Financial Officer, Executive Vice President and Director
Jan Carlstein					1938				Director
Bengt Olof Eriksson					1937				Director
Stefan Lindskog					1951				Director
Jörgen Lorén					1961				Director (Employee Representative)
Jens Ole Hansen					1951				Director (Employee Representative)
Anna-Lena Myhr					1944				Deputy Director (Employee Representative)

(1)    For details of Mr. Dan Sten Olsson's share ownership, see Item 7.

Certain biographical information about each of our directors and executive officers and certain other key employees of Stena AB is set forth below.

Lennart Jeansson was appointed Chairman of the Board of Stena AB in 2000. Mr. Jeansson also serves as a director of the board of Stena Metall. Mr. Jeansson is Chairman of the board of BIL Sweden, the Volvo Pensionsstiftelse, Deputy Chairman of Sixth Swedish National Pension Fund and the Board of Chalmers University of Technology Foundation. He also serves as director in Volvo Lastvagnar AB, Volvo Construction Equipment, Svenskt Näringsliv and Orkla ASA.

Dan Sten Olsson has served as Chief Executive Officer and a director of Stena AB since 1983. Mr. Olsson also serves as member or chairman of the Board of a majority of the significant companies in the Stena Sphere (as defined below) Mr. Olsson is also chairman of the board of directors of the Swedish Ship Owner's Association. Mr. Olsson has been employed by Stena AB since 1972.

Svante Carlsson has served as Chief Financial Officer since 1984, Executive Vice President of Stena AB since 1989 and a director of Stena AB since 1984. Mr. Carlsson also serves as a member of the Board of Directors of many other companies in the Stena Sphere (as defined below). He has been employed by Stena AB since 1975.

Jan Carlstein has served as director of Stena AB since late 1999 and Managing Director of Stena Metall from 1975 to August 31, 1999. Mr. Carlstein also serves as a member of the board of directors of Stena Metall.

Bengt Olof Eriksson has served as director of Stena AB since May 1997 and served as Managing Director of Stena Fastigheter, a subsidiary of Stena AB, from 1980 to 1997. Mr. Eriksson also serves as a member of the Board of Directors of Stena Fastigheter up to June 2006 when he will resign from his position.

Stefan Lindskog has served as a director of Stena AB since 1988. Mr. Lindskog is a partner of Wistrand Advokatbyra Stockholm KB and is also a member of the Board of Directors of Stena Metall.

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Jörgen Lorén has served as a director of Stena AB representing Stena AB employees affiliated with the Swedish Ship Officers' Association since 2006. Mr. Lovén is a Master mariner and has been employed in our ferry operations since 1985.

Jens Ole Hansen has served as a director of Stena AB representing Stena AB employees affiliated with the Swedish Seamens' Union since 1992. Mr. Hansen is a boatswain and has been employed in our ferry operations since 1974.

Anna-Lena Myhr has served as a deputy director of Stena AB representing Stena AB employees affiliated with the Swedish Union of Commercial Employees since 1999. Ms. Myhr is a salary clerk and has been employed in our ferry operations since 1973.

Other Key Employees

Gunnar Blomdahl (born 1955) has served as managing director of Stena Line Holding since January 2003. He has held a number of senior management positions at Stena Line since 1997, including as Area Director in charge of Stena Line's Irish Sea operations from 2001 to 2003 and, prior to that, as head of the Sweden-Germany route and sales and marketing director for Stena Line's Scandinavian operations.

Carl-Otto Dahlberg (born 1949) has served as managing director of Stena RoRo AB, referred to herein as Stena RoRo, a subsidiary of Stena AB since 1989 and as a Director of Stena RoRo since 1989. Mr. Dahlberg has been employed in the Stena Sphere since 1989. Mr. Dahlberg has resigned as managing director of Stena RoRo as of 15 May 2006.

Claes Davidsson (born 1950) has served as Director of Ship Management and HR since 2003. Mr. Davidsson also serves as Chairman of Northern Marine Management Ltd (‘‘NMM’’) in Glasgow, Scotland and of Austen Maritime PTE Ltd., Singapore. He also serves as a director of certain NMM subsidiaries. Mr. Davidsson has been employed in the Stena Sphere since 1983.

John Helgesson (born 1945) has served as managing director of Stena Fastigheter since June 1, 1997 and as a director of Stena Fastigheter since 1997. Mr. Helgesson also serves as director in the Swedish Property Owner’s Association and the Scandinavian International Property Association. Mr. Helgesson has been employed in the Stena Sphere since 1987.

Staffan Hultgren (born 1961) has served as chief controller of Stena AB since July 2004. Mr. Hultgren also serves on the board of directors of many of our companies. Mr. Hultgren has been employed in the Stena Sphere since 2004.

Kenneth MacLeod (born 1943) has served as managing director of Northern Marine since 1991. Mr. MacLeod also serves as a member of the board of directors of Swecal Ltd, one of our subsidiaries, and several other companies. Mr. MacLeod has been employed in the Stena Sphere since 1983.

Harry Robertsson (born 1956) has served as technical director of Stena Rederi since 1999. Mr. Robertsson is a Naval Architect M.Sc. and has worked in the technical department of Stena Rederi since 1996. He has from 1984 to 1996 held positions in a shipyard and in marine consultancy firms.

Ulf Ryder (born 1952) has served as managing director of Stena Bulk since 1983 and as a director of Stena Bulk since 1982. Mr. Ryder also serves as a member of the board of directors of Northern Marine. Mr. Ryder has been employed in the Stena Sphere since 1982. Mr. Ryder has as of 15 May 2005 been appointed deputy manager director of Stena Rederi.

Christer Schoug (born 1956) has served as shipping coordinator in Stena Rederi since 2005 and has as of 15 May been appointed as director and managing director of Stena RoRo AB and deputy managing director of Stena Rederi. Mr Schoug also serves as vice chairman of Northern Marine Management in Glasgow, Scotland, and as chairman of the board of certain of its subsidiaries. Mr Schoug has been employed in the Stena Sphere since 1995.

Martin Svalstedt (born 1963) has served as managing director of Stena Adactum since 2002. Mr. Svalstedt also serves as Chairman of Gislaved Folie AB, S-Invest Trading AB and Willh.

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Sonesson AB, and as Board member in Gunnebo AB, Ballingslöv International AB, Envac Centralsug AB and Stena Adactum.

Tom Welo (born 1947) has served as managing director of Stena Drilling Ltd. since October 1995. Mr. Welo has a Master of Science in Naval Architecture and Marine Engineering.

Compensation of Directors

For the year ended December 31, 2005, the aggregate compensation paid by the Stena AB to its directors (a total of nine persons) amounted to approximately SEK 12 million. For the year ended December 31, 2004, the aggregate compensation paid by the Stena AB to its directors amounted to approximately SEK 11 million.

Employees

The chart below sets forth the average number of employees in each of our principal business areas.

			2003						2004						2005
Ferry Operations					5,623						5,324						5,540
Drilling					533						590						649
Shipping					419						577						569
Property Operations					118						267						264
Other					57						387						656
Total.					6,750						7,145						7,678

For 2004, ‘‘Other’’ in the table above includes 327 persons employed in ‘‘Blomsterlandet’’ which was acquired in 2004. For 2005, ‘‘Other’’ in the table above includes 403 persons employed in ‘‘Blomsterlandet’’ and 183 persons employed in ‘‘Envac’’ which was acquired in 2005. In addition to the employees referred to above, Northern Marine employed 4,172 persons in 2005 in external ship management services, as compared to 3,053 persons in 2004 and 1,942 persons in 2003.

We have good relations with our work force and the labor unions representing them.

Options

No options exist to purchase securities from us.

Item 7.	Major Shareholders and Related Party Transactions

Major Shareholders

All of the issued and outstanding voting shares of Stena AB were owned as follows as of April 30, 2006:

Name of Beneficial Owner			Number of Shares						Percentage Ownership
Dan Sten Olsson					25,500				51.0%
Madeleine Olsson Eriksson					12,250				24.5%
Stefan Sten Olsson Holding Ltd.					12,250				24.5%

The holders listed above have sole voting and investment power over the shares beneficially owned by them. Dan Sten Olsson and Madeleine Olsson Eriksson are brother and sister.

Dan Sten Olsson is the only officer or director of Stena AB who owns any voting shares of Stena AB. All shares of Stena AB have the same voting rights.

Our articles of association contain a restriction on the transfer of our shares. Pursuant to the articles, a person who was not previously a shareholder and to whom shares have been

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transferred (except in the case of a transfer of shares through inheritance, will or gift to lineal descendants of Sten A. Olsson and his wife Birgit Olsson) is obligated to offer such shares to the other shareholders. If any person other than the current shareholders of Stena AB as of December 30, 1993 or lineal descendants of Sten A. Olsson and Birgit Olsson acquires 48% or more of the voting power of Stena AB, then the remaining shareholders have the right to put all or a part of their shares to such shareholder at a price equal to the highest price per share paid by such shareholder. Under the articles, a vote of at least 75% of shares represented at the annual general meeting of our shareholders is required to amend this put provision. In addition, under the Swedish Companies Act, shareholder resolutions in the ordinary course of business require the vote of a majority of shares voting thereon, and extraordinary items (including amendments to the articles other than the amendment to the put option described above) require support by shareholders holding at least two-thirds of the votes cast as well as two-thirds of all shares present or represented at the shareholders meeting. Holders of at least 10% of the outstanding shares have the right to require us to pay dividends within certain statutory parameters.

Related Party Transactions

We have entered into certain transactions with other companies in the Stena Sphere, which includes the companies wholly owned by the Sten Allan Olsson family in Sweden, Stena Sessan AB (‘‘Sessan’’) and Stena Metall AB (‘‘Stena Metall’’) and their subsidiaries. Another significant company within the Stena Sphere is Concordia Maritime AB (‘‘Concordia’’) which is 52% owned by Sessan. Shares in Concordia are listed on the Stockholm Stock Exchange. The significant transactions between the Company and its affiliates are described below.

Concordia

Concordia and the Company, through Stena Bulk AB (‘‘Stena Bulk’’), a wholly owned subsidiary of the Company, are parties to an allocation agreement (the ‘‘Allocation Agreement’’) pursuant to which Concordia may elect to participate 100%, 50% or 0% in business opportunities identified by Stena Bulk relating to the chartering of crude oil tankers. No 50% agreements were made in 2004 or 2005. The net outcome of the agreement including results on forward contracts was a loss of SEK 5 million in 2003, a loss of SEK 1 million in 2004 and a loss of SEK 1 million in 2005.

We provide certain services to Concordia such as administration, marketing, insurance and technical support for Concordia's owned and chartered vessels, including administration of jointly chartered vessels, office and office services for Concordia's personnel and certain financial and other services. We earned fees equal to SEK 19 million, SEK 17 million and SEK 13 million in 2003, 2004 and 2005, respectively, for these services.

Concordia has, through its subsidiary Universe Tankships Ltd, provided ship management services to us. We paid fees equal to SEK 2 million and SEK 3 million in 2003 and 2004, respectively, for these services. In August 2004, we acquired Universe Tankships Ltd from Concordia at market price.

Sessan

Since June 1999, we have served as the business manager for Sessan for its 50% participation in a Norwegian partnership that owns the shuttle tanker Stena Sirita that is chartered pursuant to a 10-year contract to ESSO Norway. In 2003, we also became the business manager for Sessan for its 50% participation in the shuttle tanker Stena Spirit that is chartered pursuant to a 15-year contract to Petrobras in Brazil. We earned total fees of SEK 1 million in each of the years 2003, 2004 and 2005 for these services.

In 2001 and 2002, Sessan acquired all the shares in the shipping company HH Ferries in the south of Sweden. The acquisition was partly financed by an interest bearing credit facility from us. As of December 31, 2005, DKK 211 million was outstanding under this facility, the same as of December 31, 2004.

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In December 2002, we sold to Sessan the remaining 50% of the RoPax vessel Stena Jutlandica. Sessan acquired the first 50% of this vessel from the Company in 1996. The vessel is chartered back as an operating lease, for which we paid charterhires of SEK 61 million for each of the years 2003, 2004 and 2005, respectively.

In 2003, we granted an interest bearing loan of SEK 10 million to Sessan to finance the acquisition of shares in an unrelated company. This loan was still outstanding as of December 31, 2005.

Sessan has invested in shares in the Swedish company Meda AB (‘‘Meda’’). In 2005, a new share issue in Meda was guaranteed by us. In connection with the new issue, we purchased shares in Meda (see note 13). Sessan has the option to buy these shares at a price of 10% above the price paid by us.

Stena Metall

We purchase a substantial part of our bunker fuel from Stena Metall. Such purchases aggregated SEK 749 million, SEK 726 million and SEK 1,127 million in 2003, 2004 and 2005, respectively.

In connection with the delivery from the shipyard in March 2004 of the RoRo vessel Stena Freighter, the vessel was sold to Stena Metall and chartered back on a long-term operating lease. We paid charterhire to Stena Metall for this vessel of SEK 18 million and SEK 22 million in 2004 and 2005, respectively. In May 2004, we also chartered the RoRo vessel Stena Nordica from Stena Metall and paid charterhire of SEK 28 million and SEK 41 million in 2004 and 2005, respectively.

We provide management and other services to Stena Metall. We received SEK 1 million in each of the years 2003, 2004 and 2005 for these services.

Olsson Family

We rent office space from members of the Olsson family. In 2003, 2004 and 2005, we paid SEK 28 million, SEK 28 million and SEK 29 million, respectively, in respect of such properties.

We manage certain properties owned by members of the Olsson family. In 2003, 2004 and 2005, members of the Olsson family paid us SEK 10 million, SEK 11 million and SEK 13 million, respectively, for such management services.

We have agreed to pay Sten A. Olsson and Dan Sten Olsson an annual indexed retirement benefit for life.

In 2004, we acquired properties in Sweden, that were subsequently sold to the Olsson family at a value of SEK 587 million. This transaction did not result in any net gain or loss in our consolidated accounts.

Arlington

In November 2004, we sold four tankers to Arlington Tankers Ltd (‘‘Arlington’’), a newly formed public company. At the same time Concordia sold two VLCC tankers to Arlington. The purchase was partly paid with shares in Arlington representing an ownership of approximately 5% for us and 10% for Concordia. In connection with the sale, we agreed to charter the four sold tankers from Arlington for periods between four and six years. In addition to the contractual charterhire there is also a profitsharing arrangement in place meaning that we will pay 50% of the trading result above the charterhire calculated in accordance with agreed criteria.

We also agreed with Arlington, in certain circumstances at Arlington's option, to take over the remaining terms of the time charters of two V-Max VLCC tankers which Concordia sold to Arlington concurrently with the sale of tankers, after the end of the third year and prior to commencement of the fourth year of such charters. These vessels are currently time chartered to Concordia for five years, plus an option to extend each charter for three additional years in one

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year extension terms. Under the agreement, we would pay the same time charter rate (which includes the additional hire referred to above) as is currently provided in Concordia’s time charters with Arlington. Our subsidiary, Northern Marine, has agreed to manage all six of Arlington's tankers during the terms of the charters for a fixed daily fee per vessel which increases 5% annually.

We sold two additional Product tankers to Arlington for delivery in January 2006. In connection with this sale, we agreed to time charter both vessels from Arlington for a period of three years with options to extend each charter for 54 additional months in extension terms of 30 months and thereafter one year each. Under each charter, we pay a fixed charter rate which increases over the term of the charters. As with the vessels sold in 2004, our subsidiary, Northern Marine, has agreed to manage all six of Arlington's tankers during the terms of the charters for a fixed daily fee per vessel which increases 5% annually.

We also agreed with Arlington to adjust the charter periods for the vessels sold in 2004, from five year each, to four years for two of the vessels and six years for the other two vessels.

Item 8.    Financial Information

Consolidated Financial Statements

See ‘‘Item 18. Financial Statements’’ and pages F-1 through F-59.

Legal Proceedings

We are a party to various routine legal proceedings arising in the ordinary course of business. Such claims are generally covered by insurance, subject to customary deductibles. We do not believe that any liabilities that may result from such legal proceedings will, in the aggregate, have a material adverse effect on our financial condition or results of operations.

On September 3, 2003, the European Commission commenced an investigation of a number of ferry operators operating ferry services in Scandinavia and between Scandinavia and Germany and on ferry services to and from the United Kingdom, including Stena. In Scandinavia and Germany the European Commission was investigating whether there was evidence of alleged market sharing agreements and related illegal practices aimed at foreclosing competition and preventing access to the Nordic ferry market. On January 9, 2006, the European Commission informed us in writing that it had decided not to continue the examination of this case. In the United Kingdom, the European Commission was investigating whether there was evidence of alleged illegal practices concerning fixing of prices and/or trade conditions for cross-Channel transport services and market sharing agreements in relation to the provision of ferry services to and from the United Kingdom. After having requested and received further information from Stena on this case, the European Commission informed in writing on August 4, 2005, that the file would be closed.

Thus, both cases on competition matters have now been closed.

Dividends

We paid a cash dividend of SEK 70 million, SEK 195 million and SEK 215 million for the years ended December 31, 2003, 2004 and 2005, respectively.

Item 9.    The Offer and Listing

We issued $200 million 9 5/8% Senior Notes due 2012 on November 27, 2002, $175 million 7½% Senior Notes due 2013 on December 2, 2003 and $250 million 7% Senior Notes due 2016 on November 18, 2004. In 2004 and 2005 we repurchased $12 million and $6 million principal amount of the 9 5/8% Senior Notes due 2012, respectively. Neither the shares of our common stock nor the Notes are listed on any securities exchange, nor quoted through any automated quotation system. In addition, we do not intend to list shares of our common stock or the Notes on any securities exchange or to seek approval for quotation through any automated quotation system.

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Item 10.    Additional Information

Organization

We are a stock corporation of limited liability organized under the laws of the Kingdom of Sweden and governed by the Swedish Companies Act. Our registered office is in the Commune of Gothenburg, Västra Götaland County, Sweden. We are entered in the Swedish Company Register under number 556001-0802.

Articles of Association

Our Articles of Association in Swedish, together with an English translation have been filed as Exhibit 1.1 to this Annual Report. Section 3 of our Articles of Association states that the object of Stena AB is to conduct shipping operations, ship brokerage and the chartering of vessels as well as trading in ships, metals and scrap iron, the operating of recreational and leisure facilities and other activities consistent with such operations, owning and administering fixed property and owning shares or participating in operating companies that own and administer real or moveable property. Additionally, we may engage in the research and marketing of medical and pharmaceutical products as well as activities consistent with such objectives.

Directors

Under the Swedish Companies Act, a director may not participate in matters regarding agreements between the director and Stena AB and agreements between third parties if the director has a material interest in the matter which conflicts with the interest of Stena AB. In addition, if a director represents, either individually or together with any other person, a legal entity, such director may not participate in discussions with respect to agreements between Stena AB and such legal entity. However, a director's recusal is not required in instances where the company is entirely owned, directly or indirectly, by the director or where the transaction giving rise to the potential conflict of interest involves the company and another entity that is part of a related group of the company.

A director may not vote in matters affecting his or any member of the board of directors' compensation for work related to the board of directors. Compensation related to a director's position as a board member may only be approved by shareholders at a general meeting. With respect to the powers of directors, Swedish law provides that the board of directors represents Stena AB and is therefore authorized to undertake obligations on our behalf. Decisions on for example major borrowings shall thus be taken by the board of directors. The execution of such decisions has been entrusted by the board of directors to the joint exercise of two directors. Neither our Articles of Association nor Swedish law affect a director's retirement or non-retirement based on the age of the director. Additionally, directors are not required to own shares in us in order to qualify as directors of us.

Shareholder Rights

We have only one class of shares. Each share is entitled to one vote per share. There are no cumulative voting rights. Every shareholder is entitled to receive a pro rata share of any dividends declared based on the number of shares owned. If we are liquidated, the proceeds thereof will first be paid to our creditors. Any remaining amount will be distributed among the shareholders, pro rata to the number of shares held by each shareholder. The Articles of Association do not contain any provisions relating to the establishment of a sinking fund nor do they contain any provisions that discriminate against any existing or future shareholder as a result of such shareholder owning a substantial number of our shares.

In order to change the rights of shareholders, our Articles of Association must be amended. Under the Swedish Companies Act, shareholder resolutions in the ordinary course of business require the vote of a majority of shares voting thereon, and extraordinary items (including

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amendments to the Articles other than the amendment to the put option described below) require support by shareholders holding at least two-thirds of the votes cast as well as two-thirds of all shares present or represented at the shareholders meeting. Holders of at least 10% of the outstanding shares have the right to require us to pay dividends within certain statutory parameters.

General Meetings

Our Articles require an ordinary general meeting once a year within six months after the end of the fiscal year. Notice to convene the annual general meeting shall be given by announcement in Post- och Inrikes Tidningar and in Svenska Dagbladet or another national newspaper no earlier than six weeks and at the latest four weeks prior to the meeting. The agenda of the annual general meeting includes, among other things, the election of chairman of the meeting; preparation and confirmation of the electoral register; presentation of the annual financial report, auditors' report and, if applicable, the consolidated financial report and the consolidated auditors' report; and election of the board of directors, auditors and deputy director. Anyone entitled to vote, or such person's representative, may participate and vote at the meeting.

Ownership and Transfer Restrictions

There are no limitations under Swedish law or in our Articles on the right of persons who are not citizens or residents of Sweden to own or vote our stock. However, our Articles of Association contain a restriction on the transfer of our shares. Pursuant to the Articles, a person who was not previously a shareholder and to whom shares have been transferred (except in the case of a transfer of shares through inheritance, will or gift to lineal descendants of Sten A. Olsson and his wife Birgit Olsson) is obligated to offer such shares to the other shareholders. If any person other than the current shareholders of Stena AB as of December 30, 1993 or lineal descendants of Sten A. Olsson and Birgit Olsson acquires 48% or more of the voting power of Stena AB, then the remaining shareholders have the right to put all or a part of their shares to such shareholder at a price equal to the highest price per share paid by such shareholder. Under the Articles, a vote of at least 75% of shares represented at the annual general meeting of our shareholders is required to amend this put provision.

Change in Control

There are no provisions in our Articles that would have an effect of delaying, deferring, or preventing any change in control of us and that would only operate with respect to a merger, acquisition or corporate restructuring involving us or any of our subsidiaries.

Disclosure of Shareholdings

Our Articles of Association do not require shareholders to disclose their shareholdings in us.

Material Financial Contracts

Revolving credit facility.    On December 8, 2004, SIBV and Stena (Switzerland) AG (SSAG) entered into a $1 billion secured revolving credit facility with a syndicate of financial institutions, for which J.P. Morgan plc, Svenska Handelsbanken AB (publ.), Nordea Bank AB (publ.), Citigroup Global Markets LTD., DnB Nor Bank ASA and HSBC Bank plc act as lead arrangers and Svenska Handelsbanken AB (publ.) acts as facility agent. The revolving credit facility was made available for the purposes of refinancing SIBV's existing debt, including the 2002 and 2001 revolving credit facilities together with certain other vessel financings, and to provide financing for general corporate purposes. SIBV's and SSAG's obligations under the revolving credit facility are guaranteed by Stena AB and certain of its subsidiaries.

The final maturity of the revolving credit facility is January 13, 2013. Borrowings under the revolving credit facility bear interest at a rate equal to the aggregate of LIBOR plus an applicable

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margin which ranges from 0.60% to 0.725% depending on the level of utilization of the facility. Interest is payable at the end of the interest period of each advance, although if an advance has a term of more than six months, interest is payable at six-month intervals. The facility gives the option to drawdown advances for periods of one, two, three or six months, or for other periods with the consent of the lenders. Commitment fees and guarantee indemnity fees will be based on the level of utilization of the facility.

The obligations of SIBV and SSAG under the revolving credit facility are secured by among other things, first priority security interests on the Stena Shipper, Stena Spey, Stena Clyde, Stena Tay, Stena Saga, Stena Nautica, Stena Don, Mont Ventoux, Stena Baltica, Stena Carisma, Stena Danica, Stena Discovery, Stena Europe, Stena Forecaster, Stena Forerunner, Stena Foreteller, Stena Germanica, Stena Scandinavica, Stena Scanrail, Stena Searider, Stena Seatrader, Linkspan 1 and Linkspan 2. In the event that an asset securing the revolving credit facility is sold or declared a total loss, availability under the revolving credit facility will, unless appropriate replacement collateral is provided within twelve months, be reduced by the lesser of net sale or net loss proceeds and the amount required to bring the security value of the remaining collateral (net of 115% of debt secured by a first mortgage therein) to 140% of the facility amount.

The revolving credit facility imposes various financial and operating covenants upon us and certain of our subsidiaries. Among other things, the principal financial covenants (i) require us to maintain current assets and committed undrawn facilities in an amount greater than or equal to 125% of consolidated current liabilities, (ii) require us and our subsidiaries to maintain minimum cash and cash equivalents of not less than $50 million, (iii) require our net debt to be no greater than 65% of the capitalisation, and (iv) require us to maintain ownership of the security parties which, at the date of execution of the credit facility agreement, are members of the Stena AB group.

As of December 31, 2005, the amount of indebtedness under the revolving credit facility was $849 million and $10 million used in connection with guarantees and letters of credit.

Stena Adactum secured bank facility.    On October 16, 2003, our subsidiary, Stena Adactum AB, entered into a SEK 500 million secured revolving credit facility with Svenska Handelsbanken AB (publ) and Nordea Bank Sweden AB (publ). The facility was made available for the purposes of refinancing Stena Adactum's debts which were incurred to purchase marketable Swedish securities and to finance or refinance Stena Adactum's future purchases of marketable Swedish securities. The facility matures on October 16, 2006. It bears interests at a rate based on the Stockholm Interbank Offered Rate plus an applicable margin of 1.25%. Stena Adactum may select an interest period of one, three, six or twelve months every time it borrows funds under the facility. Interest is payable at the end of the relevant interest period. The facility includes a cross-default provision which provides that an event of default occurs if we, Stena Adactum, or any present or future subsidiary of Stena AB fails to pay their respective indebtedness when due in respect of such debt that exceeds $15 million. As of December 31, 2005, SEK 500 million was utilized.

The funding of the VIEs.    As of December 31, 2005, the entities Canyon Capital CDO-2002 Ltd and Canyon Capital CLO-2004 Ltd had issued senior secured notes to fund its portfolio investments in the U.S. high yield bond and corporate loan markets. In addition, Canyon Capital CDO-2006 Ltd is in the process of building an additional asset portfolio and is expected to issue senior secured notes later in 2006 to replace existing bank loans. The total outstanding debt for all three VIEs as of December 31, 2005 amounted to SEK 4,844 million, as compared with SEK 3,925 million as of December 31, 2004. The remaining funding for the VIEs has been provided by the Company and other investors as subordinated secured notes and preferred share capital.

Canyon Capital CDO-2002 Ltd issued senior secured notes maturing in May 2014, consisting of $222 million Class A notes, $11.1 million Class B notes and $11.2 million Class C notes. The Class A and B notes bear interest at a variable interest rate of Libor plus a margin of 0.60% and 3.75%, respectively, and the Class C notes bear a fixed interest rate of 12.88%. Interest is payable semiannually. Canyon Capital CLO-2004 Ltd issued notes maturing in October 2016, consisting of

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$200 million Class A1 notes, $68.5 million Class A2 notes, $36 million Class B notes, $29 million Class C notes and $16 million Class D senior secured notes. The Class A, B, and C notes bear interest at a variable interest rate of Libor plus a margin of 0.37%, 1.25% and 2.50%, respectively, and the Class D notes bear a fixed interest rate of 12.88%. All the notes issued by Canyon Capital CLO-2004 Ltd are redeemable without penalty in October 2008. Canyon Capital CLO-2006 Ltd has drawn bank loans with a variable interest rate of Libor plus an applicable margin of 0.35%. All notes are secured by the underlying securities held by each VIE and the notes are rated by Moody’s and Standard & Poor’s with credit rating ranging from AAA to BB. The Managers monitor certain key ratios of the underlying portfolio relating to diversity, average rating quality, minimum yield and other criteria to comply with the rating requirements.

9 5/8% Senior Notes, 7½% Senior Notes and 7% Senior Notes.    As of April 30, 2006, we had $182 million principal amount of 9 5/8% Senior Notes due 2012 outstanding, $175 million principal amount of 7½% Senior Notes outstanding due 2013 and $250 million principal amount of 7% Senior Notes due 2016 outstanding. The 9 5/8% Senior Notes, issued in November 2002, mature on December 1, 2012, and interest is payable semi-annually on June 1st and December 1st of each year. The 9 5/8% Senior Notes are redeemable at our option, in whole or in part, at any time on or after December 1, 2007. The 7 1/2% Senior Notes, issued in November 2003, mature on November 1, 2013, and interest is payable semi-annually on May 1 and November 1 of each year. The 7 5/8% Senior Notes are redeemable at our option, in whole or in part, at any time on or after November 1, 2008. The 7% Senior Notes, issued in November 2004, mature on December 1, 2016, and interest is payable semi-annually on June 1 and December 1 of each year. The 7% Senior Notes are redeemable at our option, in whole or in part, at any time on or after December 1, 2009. The Indentures governing the Notes contain certain covenants with respect to, among others, limitations on consolidated and subsidiary debt and preferred stock, limitations on restricted payments and investments, limitations on restrictions concerning distributions and transfers by subsidiaries, limitations on liens and guarantees, limitations on business activities and limitations on mergers, consolidations and certain sales and purchases of assets. The Notes are unsecured obligations of Stena AB and rank pari passu in right of payment with Stena AB's other unsubordinated indebtedness. Since Stena AB is a holding company and all of our operations are conducted through our subsidiaries, the Notes are structurally subordinated to all existing and future liabilities (including trade payables) of the subsidiaries, including those under the revolving credit facilities.

Change of control

The 2004 revolving credit facility as well as certain vessel financings provide that the failure of immediate members of the Olsson family or their legal representatives to own at least 75% of the voting equity in Stena AB, which failure is not cured within 90 to 120 days, triggers a mandatory prepayment of all outstanding advances and the termination of the facility unless all the lenders under such facility agree otherwise. Also, if Stena AB ceases to own, directly or indirectly, 100% of the equity in SIBV and/or SSAG, then all amounts outstanding under the 2004 revolving credit facility become immediately payable on demand, and upon such demand the facility terminate. In addition, the SEK 500 million Stena Adactum facility will become payable on demand if Stena AB ceases to own, directly or indirectly, 100% of the equity in Stena Adactum.

The Indentures governing our 9 5/8% Senior Notes, our 7½% Senior Notes and our 7% Senior Notes require Stena AB to make an offer to purchase all notes outstanding under such Indenture at 101% of their principal amount if shareholders ultimately controlled by the Olsson family do not directly or indirectly beneficially own or control more than 50% of the voting equity in Stena AB.

Other

Property-related debt.    As of December 31, 2005, we have bank mortgage loans on the real estate, buildings and land in our real estate business segment of approximately SEK 11.2 billion that are denominated in SEK and EUR with maturities through 2011 and onwards.

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Other.    As of December 31, 2005, we were obligated with respect to lease obligations and certain loans used to finance the acquisition of vessels and other assets in the aggregate amount of approximately SEK 1.3 billion. These are denominated in US dollars, British pounds and euros.

Exchange Controls and Other Limitations Affecting Security Holders

None.

Taxation

Not Applicable.

Documents on Display

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, applicable to a foreign private issuer. In accordance with these requirements, we file reports and other information with the SEC. These materials, including the Annual Report and the exhibits thereto, may be inspected and copied at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The SEC also maintains a web site that contains reports and other information regarding issuers that file electronically with the SEC. The web site address is http://www.sec.gov. The public may obtain information on the operation of the SEC's Public Reference Room by calling the SEC in the United States at 202-551-8090.

Item 11.    Quantitative and Qualitative Disclosures about Market Risk

In the course of our operations, we are exposed to various types of market risks. Our primary market risks are foreign exchange risks, interest rate risks, oil price risks, equity price risks and trading risks. We seek to manage our exposure to adverse changes in foreign currency exchange rates, interest rates and oil prices through the use of various derivative financial instruments. We conduct monitoring and control of these risks continuously in each company as well as centrally. Our positions are monitored using a variety of techniques, such as market value and sensitivity analyses. Most of our financial transactions are carried out through the central finance functions located in Gothenburg, Amsterdam, Zug in Switzerland and Luxembourg, which conduct their operations within established risk mandates and limits. The information presented below should be read in conjunction with Note 26 to our Consolidated Financial Statements.

Foreign Exchange Risks

We are exposed to the risk of fluctuations in foreign currency exchange rates due to the international nature and scope of our operations. Our currency risk is related to changes in contracted and projected flows of payments which are denominated in currencies other than the functional currency (transaction exposure), to the translation of our monetary assets and liabilities that are denominated in such currencies (translation exposure), to the translation of net assets of foreign subsidiaries (equity exposure) and financial trading activities. The objective of our foreign exchange risk management program is to seek to manage the risk of adverse foreign exchange movements on our income and financial position.

Transaction Exposure

Our revenues and expenses, as reported in Swedish kronor, are significantly affected by fluctuations in currency exchange rates, primarily in relation to the US dollar and, to a lesser extent, the British pound, the euro and the Norwegian kronor. When the Swedish kronor appreciates against other currencies, our revenues and expenses as reported in kronor may decrease and when the Swedish kronor declines against other currencies, our revenues and expenses as reported in Swedish kronor may increase. Future changes in exchange rates may also impact our reported revenues and expenses.

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We use forward exchange contracts to seek to hedge against the risk of adverse movements in currency exchange rates of future payment flows from firm commitments such as charter vessel contracts. Contracts related to hedging of anticipated sales and purchases of foreign currency normally do not exceed 12 months.

Translation Exposure

Our policy is to hedge our translation exposure risk primarily on our net exposures by currency. Our management regularly reviews our assets and liabilities that are denominated in foreign currency and determines the net amount that is subject to risk of adverse foreign currency fluctuations.

We seek to manage our exposure from the risk of adverse foreign currency fluctuations arising from certain assets and liabilities denominated in foreign currencies. Group companies operate in local currencies or the US dollar. Our financial exposure is managed through us generally maintaining loans and investments in the same currency. In companies which have loans and investments in foreign currencies, hedging is carried out in accordance with our financial policy. We primarily use forward exchange contracts and currency swaps and, to a lesser extent, purchased foreign currency options to manage our foreign currency translation exposure.

After taking into account hedging instruments as above, we recorded net translation exchange gains/(losses) of SEK (115) million and SEK (25) million for the financial years ended December 31, 2004 and 2005, respectively. This equals 0.2% and less than 0.1% of total assets of SEK 46.3 billion and SEK 54.8 billion as of December 31, 2004 and 2005, respectively.

Equity Exposure

When we prepare our consolidated financial statements, the net assets of our foreign subsidiaries and part of affiliated companies are translated to Swedish kronor at the exchange rate in effect at the date of the balance sheet. It is our policy to primarily maintain equity in SEK, USD, Euro, and GBP. We record translation differences arising from net assets of foreign subsidiaries directly to stockholders' equity.

The book value of our net assets of foreign subsidiaries, as of December 31, 2004 and 2005, was approximately SEK 9.4 billion and SEK 9.6 billion, respectively. The net assets are expressed mainly in euros, British pounds and US dollars. A 1% change in the value of the Swedish kronor against each of the functional currencies of our foreign subsidiaries would affect our stockholders' equity as of December 31, 2005 by SEK 96 million. In 2005, our stockholders' equity increased by SEK 442 million due to exchange rate differences (see also Note 18 to our Consolidated Financial Statements).

Bunker Fuel Exposure

Our expenses are also significantly affected by fluctuations in price of bunker fuel oil used for propulsion, primarily in our ferry operations.

We use fixed price swaps and, to a lesser extent, option contracts to seek to hedge against the risk of adverse movements in the oil price. Contracts related to hedging of bunker fuels normally extend to 12 to 18 months but can be for terms of up to three years based on management's assessment of acceptable risk levels and future oil prices (see also Note 27 to our Consolidated Financial Statements).

Financial Trading Activities

We also from time to time buy and sell certain types of derivative financial instruments with the objective of generating profits based on short-term differences in price. We refer to such financial instruments that are not used in our program of interest rate and foreign currency risk management as ‘‘trading’’ for purposes of this disclosure. All trading instruments are subject to market risk; that is, the risk that future changes in market conditions may make an instrument less valuable. We are a party to a variety of interest rate and foreign currency contracts in our trading activities.

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We recorded net gains from currency trading activities of SEK 8 million and SEK 22 million for the years ended December 31, 2004 and 2005, respectively.

Interest Rate Risks

We use several types of financial instruments to seek to manage our interest rate risk such as interest rate swaps, futures, options and collars. The extent of our use of these financial instruments is determined by reference to the net exposure of our debt that is subject to interest rate risk and management's views regarding future interest rates. We use such financial instruments to seek to achieve a desired interest rate on our interest-bearing liabilities. For example, all of our interest rate swaps convert floating rate debt to a fixed rate of interest, and for those instruments changes in interest rates may affect the value of the interest rate swaps and also their cash requirements. However, interest expense in our income statement is recorded at the fixed interest rate swap agreement and, accordingly, is not affected by the change in interest rates.

At the end of 2005, our interest-bearing assets, consisting mainly of cash and cash equivalents and marketable securities, were to a large extent invested in interest-bearing securities with short maturities. Before any effects of hedging contracts, our interest bearing debt consisted of approximately 55% floating rate borrowings and 45% fixed rate bond loans and property loans. The floating rate borrowings are normally fixed for a period of three to six months. A number of financial instruments were in place as of December 31, 2005 to manage these interest rate risks, including interest rate swaps to effectively convert floating rate borrowings to fixed rate borrowings.

Equity Price Risk

At December 31, 2005, fair value of our marketable securities and short-term investments (except restricted cash) amounted to SEK 5.2 billion. The potential change in fair value resulting from a hypothetical 1% change of prices would be SEK 52 million. At December 31, 2005, fair value of our investments in VIE's amounted to SEK 5.8 billion. The potential change in fair value resulting from a hypothetical 1% change of prices would be SEK 58 million.

Item 12.    Description of Securities Other than Equity Securities

Not applicable.

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PART II

Item 13.    Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14.    Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

Item 15.    Controls and Procedures

Evaluation of Controls and Procedures.    An evaluation of our disclosure controls and procedures was conducted as of December 31, 2005 (the ‘‘Evaluation Date’’) under the supervision of our Chief Executive Officer and Chief Financial Officer.

Limitations on Effectiveness of Controls.    Our Chief Executive Officer and Chief Financial Officer do not expect that our disclosure controls or internal controls will prevent all errors and all instances of fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Effectiveness of Disclosure Controls.    Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date and subject to the limitations discussed above, our disclosure controls and procedures are effective.

Changes in Internal Controls.    Since the Evaluation Date, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Item 16.    [Reserved]

Item 16A.    Audit Committee Financial Expert

We do not have a separate audit committee and, consequently, our entire Board of Directors fulfills audit committee functions. On April 23, 2004, the Board of Directors of Stena AB determined that Svante Carlsson qualifies as an ‘‘audit committee financial expert’’ within the meaning of Item 16A of Form 20-F. Mr. Carlsson is our Chief Financial Officer, an Executive Vice President of Stena AB and a member of our Board of Directors and is therefore not ‘‘independent’’.

Item 16B.    Code of Ethics

On April 23, 2004, our Board of Directors adopted a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, Chief Controller and Chief Accounting Officer. A copy of the Code of Ethics is filed as an exhibit to the Annual Report filed June 14, 2004.

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Item 16C.    Principal Accountant Fees and Services

Fees and Services

Aggregate fees for professional services rendered by auditors and advisors for the years ended December 31, 2004 and 2005 were:

			2004						2005
KPMG:
Audit fees					16						25
Audit related fees					2						2
Tax fees					13						18
All other fees					6						6
Total KPMG.					37						51
Other auditors
Tax fees					8						10
All other fees					1						5
Grand total					46						66

The audit fees for the years ended December 31, 2004 and 2005 were for professional services rendered for the annual audits of our Consolidated Financial Statements, statutory audits required by Sweden and foreign jurisdictions, quarterly reviews, issuance of consents and the review of documents filed with the Securities and Exchange Commission. The audit related fees for the years ended December 31, 2004 and 2005 include fees for supporting guidelines concerning accounting practices and standards.

Tax fees for the years ended December 31, 2004 and 2005 were for services performed in connection with income tax compliance, consulting and tax research services and assistance with tax audits.

The all other fees category for the year ended December 31, 2004 and 2005 includes fees primarily related to other general consulting.

Pre-Approval Policies

Our Board of Directors has adopted policies and procedures for the approval of audit and non-audit services rendered by our independent auditors, KPMG Bohlins AB (‘‘KPMG’’). The policies and procedures require that any non-audit related services performed for the Company by KPMG shall be pre-approved by the Board of Directors. Under the policy, at the beginning of each year, the Board of Directors reviews a list of audit and non-audit related services that are subject to general pre-approval, determines limits of estimated fees per project for general pre-approval and the limits of estimated fees for interim pre-approval by a designated member of the Board. All services not within the pre-approved limits require pre-approval by the Board of Directors at their regular Board meetings except if circumstances require, interim pre-approval may be obtained from the designated Board member. The designated Board member is required to report any interim pre-approvals to the entire Board at the next scheduled Board meeting.

During 2005, none of the audit-related fees, tax fees or all other fees paid by us to KPMG were approved pursuant to the de minimis exception to the pre-approval requirement provided by paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

Item 16D.    Exemptions from the Listing Standards for Audit Committees

Not Applicable

Item 16E.    Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not Applicable

75

PART III

Item 17.    Financial Statements

Not applicable.

Item 18.    Financial Statements

The following financial statements and schedules, together with the reports of KPMG thereon, are filed as part of this Annual Report.

			Page
Consolidated Financial Statements — Stena AB
Index to the Consolidated Financial Statements			F-1
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Income Statements for each of the years in the three-year period ended December 31, 2005			F-3
Consolidated Balance Sheets as of December 31, 2004 and 2005			F-4
Consolidated Statements of Changes in Stockholders' Equity for each of the years in the two-year period ended December 31, 2005			F-6
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2005			F-7
Notes to the Consolidated Financial Statements			F-9
Schedules to Stena AB Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Schedules			S-1
Schedule II - Valuation and Qualifying Accounts			S-2
Schedule III - Property and Accumulated Depreciation			S-3

Other Schedules have been omitted because the required information is not applicable or is included in our Consolidated Financial Statements.

Item 19.    Exhibits

The following exhibits are filed as part of this Annual Report.

Exhibit
Number

1.1	Articles of Association of the Company in Swedish, together with an English translation (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form F-4 (file number 333-102110) filed with the SEC on December 20, 2002 (the ‘‘2002 Registration Statement’’)).*

2.1	Indenture dated as of November 27, 2002 between the Registrant and JPMorgan Chase Bank, as trustee, relating to the Company's 9 5/8% Senior Notes due 2012 (incorporated by reference to Exhibit 4.1 to the 2002 Registration Statement).*

2.2	Indenture dated as of December 2, 2003 between the Company and JPMorgan Chase Bank, as trustee, relating to the Company's 7½% Senior Notes due 2013 (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form F-4 (file number 333-111353) filed with the SEC on December 19, 2003 (the ‘‘2003 Registration Statement’’)).*

2.3	Indenture dated as of November 23, 2004 between the Company and JPMorgan Chase Bank, N.A., as trustee relating to the Company’s 7% Senior Notes due 2016 (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form F-4 (file number 333-121464) filed with the SEC on December 20, 2004 (the ‘‘2004 Registration Statement’’)).*

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4.1	Facility Agreement dated December 8, 2004, between Stena International BV and Stena (Switzerland) AG as Borrowers and Citigroup Global Markets Ltd., DnB NOR Bank ASA, HSBC Bank Plc, J.P. Morgan Plc, Nordea Bank Sverige AB publ, and Svenska Handelsbanken AB pul.*

4.2	Registration Rights Agreement, dated November 27, 2002, between the Company, J.P. Morgan Securities Inc., ABN AMRO Incorporated, Deutsche Bank Securities Inc. and Salomon Smith Barney Inc. (incorporated by reference to Exhibit 4.3 to the 2002 Registration Statement).*

4.3	Registration Rights Agreement, dated December 2, 2003, between the Company, J.P. Morgan Securities Inc., ABN AMRO Bank N.V., Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. (incorporated by reference to Exhibit 4.3 to the 2003 Registration Statement).*

4.4	Registration Rights Agreement, dated November 23, 2004 between the Company and J.P.Morgan Securities Inc. and Citigroup Global Markets Inc. (incorporated by reference to Exhibit 4.3 to the 2004 Registration Statement).*

8	List of Subsidiaries of the Company.**

11.	Code of Ethics relating to the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer of Stena AB (publ) (incorporated by reference to Exhibit 11 to the Company’s annual report on Form 20-F filed with the SEC on June 14, 2004.)*

12.1	Certification of Dan Sten Olsson, Chief Executive Officer of Stena AB, dated June 29, 2006.**

12.2	Certification of Svante Carlsson, Chief Financial Officer of Stena AB, dated June 29, 2006.**

13.1	Certification of Chief Executive Officer and Chief Financial Officer of the Company pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

*	Previously filed with the SEC and incorporated herein by reference.

**	Filed herewith.

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

Date: June 29, 2006                                         STENA AB (publ)

			By: /s/ Dan Sten Olsson
			Name: Dan Sten Olsson Title: Chief Executive Officer
			By: /s/ Svante Carlsson
			Name: Svante Carlsson Title: Chief Financial Officer

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Consolidated Financial Statements

Stena AB (publ)

INDEX			Page
Audit report			F-2
Consolidated income statements for each of the years in the three-year period ended     December 31, 2005			F-3
Consolidated balance sheets as of December 31, 2004 and 2005			F-4
Consolidated statements of changes in stockholders' equity for each of the years in the     two-year period ended December 31, 2005			F-6
Consolidated statements of cash flows for each of the years in the three-year period ended     December 31, 2005			F-7
Notes to consolidated financial statements			F-9

F-1

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Report of Independent Registered Public Accounting Firm

The Board of Directors,
Stena AB (publ)

We have audited the consolidated balance sheets of Stena AB (publ) and subsidiaries as of December 31, 2004 and 2005, and the related consolidated statements of income and cash flows for each of the years in the three year period ended December 31, 2005 and the related consolidated statements of changes in stockholders' equity for each of the years in the two year period ended December 31, 2005. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Stena AB (publ) and subsidiaries as of December 31, 2004 and 2005, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2005 in conformity with generally accepted accounting principles in Sweden.

As discussed in Note 1 to the consolidated financial statements, effective January 1, 2005, Stena AB (publ) retroactively adopted a new accounting principle for financial instruments and investment securities whereby these instruments are valued at market value. Furthermore, effective January 1, 2005, Stena AB (publ) decided to retroactively fully consolidate two variable interest entities (‘‘VIE's’’).

Generally accepted accounting principles in Sweden vary in certain significant respects from generally accepted accounting principles in the United States. Information relating to the nature and effect of such differences is summarized in Note 31 to the consolidated financial statements.

Gothenburg, Sweden
April 25, 2006, except for note 31 and note 32
for which the date is June 28, 2006

/s/ Thord Elmersson                
Thord Elmersson
Authorized Public Accountant
KPMG Bohlins AB

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Table of Contents

Stena AB (publ) Consolidated Financial Statements

Consolidated Income Statements

Years ended December 31, 2003, 2004 and 2005

(In millions)			Note			2003 SEK						2004 SEK						2005 SEK						2005 USD (unaudited- Note 1)
Revenues
Ferry operations
Sales								8,597						9,024						9,045						1,140
Net gain on sale of vessels			3					50						11
Total ferry operations								8,647						9,035						9,045						1,140
Drilling								1,601						1,429						1,871						236
Shipping
Operations								2,242						3,492						4,405						555
Net gain on sale of vessels			3					64						645						315						40
Total shipping								2,306						4,137						4,720						595
Property
Operations								932						1,357						1,882						237
Net gain on sale of properties			3					126						110						813						102
Total property								1,058						1,467						2,695						339
Other								7						653						1,288						162
Total revenues			2					13,619						16,721						19,619						2,472
Direct operating expenses:
Ferry operations								(6,443	)					(6,707	)					(6,565	)					(827	)
Drilling								(810	)					(946	)					(1,112	)					(140	)
Shipping								(1,698	)					(2,212	)					(3,066	)					(387	)
Property								(382	)					(509	)					(810	)					(102	)
Other														(569	)					(1,078	)					(136	)
Total direct operating expenses								(9,333	)					(10,943	)					(12,631	)					(1,592	)
Selling and administrative expenses			4					(1,522	)					(1,761	)					(1,861	)					(234	)
Depreciation and amortization			2					(1,742	)					(1,790	)					(2,734	)					(345	)
Total operating expenses								(12,597	)					(14,494	)					(17,226	)					(2,171	)
Income from operations								1,022						2,227						2,393						301
Share of affiliated companies’ results			5											17						21						3
Financial income and expense
Dividends received								39						36						79						10
Gain (loss) on securities, net			6					164						1,060						921						116
Interest income								85						382						567						71
Interest expense								(824	)					(1,135	)					(1,395	)					(176	)
Foreign exchange gains (losses), net			7					27						(107	)					(3	)
Other financial income (expense), net			8					(18	)					(24	)					(121	)					(15	)
Total financial income and expense								(527	)					212						48						6
Minority interest			3,12					2						(77	)					(21	)					(3	)
Income before taxes								497						2,379						2,441						307
Income taxes			9					13						(20	)					(173	)					(21	)
Net income								510						2,359						2,268						286

The accompanying notes form an integral part of these Consolidated Financial Statements.

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Stena AB (publ) Consolidated Financial Statements

Consolidated Balance Sheets

December 31, 2004 and 2005

(In millions)			Note			2004 SEK						2005 SEK						2005 USD (unaudited- Note 1)
ASSETS
Noncurrent assets:
Intangible assets			10					410						806						102
Tangible fixed assets:			11
Vessels								12,747						13,585						1,712
Construction in progress								501						1,280						161
Equipment								587						626						79
Property								18,699						17,275						2,176
Total tangible fixed assets								32,534						32,766						4,128
Financial fixed assets:
Investment in affiliated companies			5					120						332						42
Investment in VIEs			12					4,440						5,753						725
Marketable securities			13					1,375						3,295						415
Other noncurrent assets			14					910						1,440						181
Total financial fixed assets								6,845						10,820						1,363
Total noncurrent assets								39,789						44,392						5,593
Current assets:
Inventories								226						325						41
Short-term receivables
Trade debtors			15					953						2,092						264
Other receivables			15					764						1,156						145
Prepaid expenses and accrued income			15					866						890						112
Total short-term receivables								2,583						4,138						521
Short-term investments			16					1,333						2,213						279
Cash and cash equivalents			17					2,380						3,744						472
Total current assets								6,522						10,420						1,313
Total assets								46,311						54,812						6,906
STOCKHOLDERS’ EQUITY AND LIABILITIES
Stockholders' equity:			18
Capital stock								5						5						1
Restricted reserves								763						926						116
Retained earnings								10,292						11,933						1,503
Net income								2,359						2,268						286
Total stockholders' equity								13,419						15,132						1,906
Minority interest			12					113						131						17
Provisions:			19
Deferred income taxes								2,179						1,517						191
Pension liabilities								399						1,882						237
Other provisions														46						6
Total provisions								2,578						3,445						434

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Stena AB (publ) Consolidated Financial Statements

(In millions)			Note			2004 SEK						2005 SEK						2005 USD (unaudited- Note 1)
Noncurrent liabilities:
Long-term debt			20					17,421						19,773						2,492
Debt in VIEs			20					3,925						4,844						610
Senior Notes			21					4,088						4,821						607
Capitalized lease obligations			22					1,259						1,325						167
Other noncurrent liabilities			23					143						286						36
Total noncurrent liabilities								26,836						31,049						3,912
Current liabilities:
Short-term debt			20					218						834						105
Capitalized lease obligations			22					38						40						5
Trade accounts payable								503						902						114
Income tax payable								120						198						25
Other								482						533						67
Accrued costs and prepaid income			24					2,004						2,548						321
Total current liabilities								3,365						5,055						637
Total stockholders’ equity and liabilities								46,311						54,812						6,906
Pledged assets			25					33,483						36,411						4,588
Commitments and contingent liabilities			25					3,904						2,233						281

The accompanying notes form an integral part of these Consolidated Financial Statements.

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Stena AB (publ) Consolidated Financial Statements

Consolidated Statements of Changes in Stockholders' Equity

(SEK in millions)			Capital stock			Restricted reserves						Unrestricted reserves						Total
Balance as of December 31, 2003			5					583						11,407						11,995
Change of accounting principles in 2004														(257	)					(257	)
Dividend paid														(70	)					(70	)
Transfer to charitable trust														(10	)					(10	)
Revaluation of financial instruments														(387	)					(387	)
Transfers between reserves								201						(201	)
Exchange differences								(21	)					(190	)					(211	)
Total changes in equity before net income								180						(1,115	)					(935	)
Net income														2,359						2,359
Balance as of December 31, 2004			5					763						12,651						13,419
Dividend paid														(195	)					(195	)
Transfer to charitable trust														(30	)					(30	)
Change of accounting principles for pensions														(1,075	)					(1,075	)
Revaluation of financial instruments														303						303
Transfers between reserves								96						(96	)
Exchange differences								67						375						442
Total changes in equity before net income								163						(718	)					(555	)
Net income														2,268						2,268
Balance as of December 31, 2005			5					926						14,201						15,132

The accompanying notes form an integral part of these Consolidated Financial Statements.

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Stena AB (publ) Consolidated Financial Statements

Consolidated Statements of Cash Flows

Years ended December 31, 2003, 2004 and 2005

(In millions)			Note						2003 SEK						2004 SEK						2005 SEK						2005 USD (unaudited- Note 1)
Net cash flows from operating activities:
Net income											510						2,359						2,268						286
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization					2						1,742						1,790						2,734						345
Share of affiliated companies’ results																	(17	)					(21	)					(3	)
(Gain)/loss on sale of tangible fixed assets					3						(241	)					(763	)					(1,128	)					(142	)
(Gain)/loss on securities, net											(164	)					(1,060	)					(921	)					(116	)
Unrealized foreign exchange (gains)/losses											268						(144	)					138						17
Deferred income taxes					9						(71	)					(113	)					85						11
Minority interests											(2	)					78						21						3
Other non cash items											(51	)					141						(8	)					(1	)
Net cash flows from trading securities											11						(605	)					(428	)					(54	)
Cash flow from operations before changes in working capital											2,002						1,666						2,740						346
Changes in working capital:
Receivables											542						2						(821	)					(104	)
Prepaid expenses and accrued income											(36	)					(311	)					43						5
Inventories											(1	)					(43	)					(52	)					(7	)
Trade accounts payable											(101	)					33						219						28
Accrued costs and prepaid income											36						(15	)					246						31
Income tax payable											(38	)					52						55						7
Other current liabilities											(614	)					72						(27	)					(3	)
Net cash provided by operating activities											1,790						1,456						2,403						303
Net cash flows from investing activities:
Purchase of intangible assets																	(174	)					(78	)					(10	)
Cash proceeds from sale of tangible fixed assets					3						1,179						2,565						4,570						576
Capital expenditure on tangible fixed assets					2						(3,148	)					(3,343	)					(5,152	)					(649	)
Purchase of subsidiary, net of cash acquired					26												(3,917	)					(518	)					(65	)
Proceeds from sale of subsidiary					26												587
Investments in affiliated companies																							(67	)					(8	)
Proceeds from sale of securities											1,377						6,108						4,227						532
Purchase of securities											(2,741	)					(7,008	)					(5,777	)					(728	)
Increase of noncurrent assets											(231	)					(255	)					(130	)					(16	)
Decrease of noncurrent assets																	18						14						2
Other investing activities											8						88						(37	)					(5	)
Net cash (used in)/provided by investing activities											(3,556	)					(5,331	)					(2,948	)					(371	)

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Stena AB (publ) Consolidated Financial Statements

(In millions)			Note			2003 SEK						2004 SEK						2005 SEK						2005 USD (unaudited- Note 1)
Net cash flows from financing activities:
Proceeds from issuance of debt								2,260						5,822						1,277				161
Principal payments on debt								(4,502	)					(2,017	)					(1,549	)			(195)
Net change in borrowings on line-of-credit     agreements								1,416						1,401						2,287				288
Proceeds from new capitalized lease     obligations								1,167
Principal payments on capitalized lease     obligations								(64	)					(42	)					(41	)			(5)
Net change in restricted cash accounts								1,695						(51	)					23				3
Dividends paid								(60	)					(70	)					(195	)			(25)
Other financing activities								(468	)					(507	)					48				6
Net cash provided by/(used in) financing     activities								1,444						4,536						1,850				233
Effect of exchange rate changes on cash and cash equivalents								(60	)					1						59				7
Net change in cash and cash equivalents								(382	)					662						1,364				172
Cash and cash equivalents at beginning of     year								2,100						1,718						2,380				300
Cash and cash equivalents at end of year								1,718						2,380						3,744				472

The accompanying notes form an integral part of these Consolidated Financial Statements.

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Stena AB (publ) Consolidated Financial Statements

Note 1    Summary of Significant Accounting Principles

These consolidated financial statements present the financial position and results of operations of Stena AB (publ) and consolidated subsidiaries (the ‘‘Company’’) and are prepared in accordance with generally accepted accounting principles in Sweden (‘‘Swedish GAAP’’).

Solely for the convenience of the reader, the 2005 financial statements have been translated from Swedish kronor (SEK) into United States dollars ($) using the December 31, 2005 Noon Buying Rate of the Federal Reserve Bank of New York of $1.00 = SEK 7.9370.

New accounting principles in 2005

Swedish GAAP changed for valuation of financial instruments in 2004 to allow not only accounting at cost but also, as an alternative, at market. In order to present the accounts in a true and fair view, the Company has decided to introduce accounting at market in the 2005 accounts. Unrealized results on shares, bonds etc are included in the income statement, except for certain strategic investments, which are revalued directly against stockholders’ equity. The accounts for previous years have been restated.

Certain pension liabilities for employees within the UK ferry operations of the Company were accounted for as contingent liabilities in 2004 due to the lack of information on the portion of the liability attributable to the Company. New information was released for these pension plans in 2005. As of October 1, 2005, the liabilities have therefore been recorded as pension liabilities in the balance sheet. The change has been recorded directly against stockholders’ equity and deferred tax liabilities, respectively.

Due to a change in Swedish GAAP as of January 1, 2005, the Company has consolidated in full two US financial investments in variable interest entities (‘‘VIEs’’), that in 2004 were consolidated according to the equity method. The accounts for 2004 have been restated. See also note 12 and 18.

Basis of consolidation

The consolidated financial statements include Stena AB and all subsidiaries, defined as companies in which Stena AB, directly or indirectly, owns shares representing more than 50% of the voting rights or in another way has a controlling influence. Intercompany transactions are eliminated on consolidation. Acquisitions are accounted for in accordance with the acquisition accounting method, whereby any excess values are allocated to the underlying assets up to market value and any further excess value is accounted for as goodwill. These allocations can be adjusted in arrears to reflect the conditions at the time of acquisitions. Such adjustments are to be introduced without delay but no later than in the financial year following the acquisition.

Foreign exchange

Assets and liabilities of foreign subsidiaries are translated at year end exchange rates and income statement items are translated at average exchange rates prevailing during the year. Exchange differences arising on the translation of financial statements of foreign subsidiaries are taken directly to stockholders' equity.

Assets and liabilities in foreign currency in a legal entity are translated at year end exchange rates. Any resulting exchange differences on bank loans etc are accounted for as financial income/expense while any differences from cash paid or received in foreign currencies are included in the operating result.

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Stena AB (publ) Consolidated Financial Statements (Continued)

Note 1    Summary of Significant Accounting Principles — continued

The following exchange rates have been used for consolidation purposes:

			Average rates																		Closing rates
			2004						2005						%						2004						2005						%
USD					7.4960						7.4775						—						6.6125						7.9525						20	%
GBP					13.4560						13.5782						1	%					12.7100						13.7325						8	%
EUR					9.1268						9.2849						2	%					9.0070						9.4300						5	%

Investment in associated companies

The equity method of accounting is used for companies in which the Company owns shares representing between 20% and up to a maximum of 50% of the voting rights and/or has a significant influence. The Company records its proportionate share of the net income (loss) of these associated companies’ results in the consolidated income statement as Share of affiliated companies’ results or in Direct operating expenses. Dividends received are recorded as a reduction of the carrying value.

Estimates and concentrations

The preparation of financial statements in accordance with Swedish GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from such best estimates.

The Company operates in the shipping and offshore drilling industries which historically have been cyclical with corresponding volatility in profitability and vessel values. Vessel values are strongly influenced by charter rates which in turn are influenced by the level and pattern of global economic growth and the world-wide supply and demand for vessels. The spot market for tankers is highly competitive and charter rates are subject to significant fluctuations. Dependence on the spot market may result in lower utilization. In addition, the Company’s ferry operations are highly seasonal. Each of the aforementioned factors are important considerations associated with the Company's determination of the carrying amount of owned vessels. The Company seeks to mitigate the effect of such factors by various means such as by obtaining long-term charter contracts.

Revenue recognition

The Company's shipping and drilling revenues are derived from charter contracts. Revenue is recognized evenly within the charter period. Provision is made in advance for any on-going loss contracts. Revenues from the Company’s ferry operations consist of ticket sales, onboard sales and freight revenues and are recognized in the period services are rendered. Rental income from the Company's real estate operations is derived from leases and is recognized on a straight line basis over the life of the leases. All revenues are accounted for when the economic benefit can be accurately calculated net after any discounts. Sale of vessels and properties are accounted for at delivery, when all main risks and benefits are transferred to the buyer. Net gain (loss) on sale of vessels and properties are included as a component of revenues.

Construction contracts regarding projects for external parties are accounted for according to the percentage of completion method, i e to include a portion of expected results. Any expected losses are expensed.

Dividends on shares are accounted for when received in cash and are included in the financial net in the income statement.

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Stena AB (publ) Consolidated Financial Statements (Continued)

Note 1    Summary of Significant Accounting Principles — continued

Depreciation and amortization

Tangible fixed assets are depreciated over their total estimated economic useful lives using the straight-line method from the date when the asset is ready for use and over the following periods:

Vessels:
Drilling rigs			10-20 years
Crude oil tankers			20 years
RoRo vessels			20 years
RoPax vessels			20 years
HSS vessels and other fast ferries			20 years
Ferries			25 years
Other tangible fixed assets:
Buildings for own use			50 years
Equipment			3-5 years

Properties included in the Company’s real estate operations are depreciated at 1% annually based upon acquisition values.

Intangible assets are normally amortized over 5 years but up to 20 years in cases where the economic life is estimated accordingly. This relates to investments in ferry routes and trademarks, that are entered into on a long term basis, and to special purpose-built software systems, that based on experience have a useful life exceeding 5 years. 20 years relate to amortization of certain goodwill on acquisition only.

Interest expense

Interest expense is accounted for in the period to which it relates. Interest expense related to construction of vessel newbuildings is capitalized as part of the cost of investment. Direct costs for raising new loans or credit facilities are capitalized and amortized over the life of the underlying credit.

Financial instruments

To qualify for deferral hedge accounting of unrealized gains and losses on financial instruments, such instruments must be designated and effective as a hedge of an underlying asset or liability or firm commitment or anticipatory transaction. Management reviews the correlation and effectiveness of financial instruments on a periodic basis. Financial instruments that do not meet the criteria for hedge accounting treatment are marked-to-market. As of 2005, unrealized results are recognized in the income statement except for certain long-term investments, for which the unrealized results are recorded directly to stockholders’ equity. It is the Company’s policy that terms and contractual maturities of financial instruments which are designed to hedge interest rate and foreign currency exposures correspond to the terms, and where appropriate, the maturities of the underlying hedged transactions.

Results from all types of financial derivative instruments, with the exception of those used for financial trading purposes, are either recorded as an adjustment of the value of the underlying asset or liability or as an adjustment of the revenue or expense of such item and in such period the financial instrument is intended to hedge.

Realized gains and losses that result from the early termination of financial instruments are deferred and included in (i) the determination of the carrying value of the underlying asset or

F-11

Table of Contents

Stena AB (publ) Consolidated Financial Statements (Continued)

Note 1    Summary of Significant Accounting Principles — continued

liability in the consolidated balance sheet or (ii) the income statement when the anticipated transaction actually occurs. If an underlying asset or liability is sold or settled, any related financial instrument is then marked-to-market and the resulting unrealized gain or loss is recorded as part of the gain or loss on sale or settlement of the underlying item.

Premiums paid for the purchase of foreign currency and interest rate options are recorded as a prepaid expense in the consolidated balance sheet and are amortized as an adjustment of the underlying revenue or expense over the term of the agreement.

Foreign exchange risk management

Equity exposure — Exchange rate differences arising from the translation of financial statements of foreign subsidiaries are taken directly to stockholders' equity. Exchange differences from borrowings in foreign currency or forward contracts designated as a hedge of such exposure are taken directly to stockholders' equity to match the exchange difference of the related net investment in the foreign subsidiary.

Translation exposure — Monetary assets and liabilities denominated in foreign currencies arising in the normal course of business are translated at the year end exchange rates and any foreign exchange rate forwards, currency swaps or options contracts used as hedges of such items are equally marked to market at the same rate and the results thereto are recorded as an adjustment of the value of the underlying asset or liability. Any premiums or discounts from foreign exchange or swap contracts are recognized as an adjustment of the Company's net interest expense.

Transaction exposure — Realized results from foreign exchange forward contracts or from currency option contracts, including premiums paid or received, that are used to hedge firm commitments or anticipated transactions in foreign currency are deferred and recognized as an adjustment of such transaction when it actually occurs. Any premiums or discounts from foreign exchange or currency swap contracts are included in the operating result.

Interest rate risk management

Interest rate derivative instruments such as interest rate forward contracts, swaps or options are used to hedge future interest payments. The interest receivable and interest payable under the terms of any interest rate derivative contracts are accrued and recorded as an adjustment to the interest expense of the underlying debt obligation.

The Company accounts for the amounts due from or payable to the counterparties of such instruments on an accrual basis at each reporting date based on amounts computed by reference to the respective contracts. Generally, the maturity dates of the hedged debt extends beyond the contractual term of the hedge contracts. Accrual accounting is used over the contractual life of interest rate swaps or options that are used in connection with the Company's overall program of interest rate management as long as such hedge contracts are considered effective in managing the Company's interest rate risk.

Bunker fuel risk management

The Company has exposure to the price of bunker fuels used for the operation of its vessels and uses forward contracts and options to hedge its oil price risk. Hedges are regularly taken out to match the underlying cost of physical bunker fuel supplies. Results from such hedge contracts are deferred and recognized as an adjustment of such cost when it actually occurs.

Taxes

Taxes are divided into current taxes and deferred taxes. Deferred income taxes include the tax effect of unutilized tax losses calculated at current tax rates and other temporary differences

F-12

Table of Contents

Stena AB (publ) Consolidated Financial Statements (Continued)

Note 1    Summary of Significant Accounting Principles — continued

between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. Deferred tax assets are recognized to the extent that it is more likely than not that an asset will be realized.

Accounting for subsidies

Subsidies received in connection with the acquisition of vessels and properties are deducted from the cost of the investment while subsidies related to operations reduce the corresponding costs. Subsidies are recognized in the accounts when they can be properly estimated.

Intangible assets

Goodwill in connection with the acquisition of companies and investments in special administrative software are included as intangible fixed assets and accounted for at cost less accumulated amortization. Internally generated direct costs in connection with such investments are recorded as cost.

Tangible fixed assets

Tangible fixed assets are included in the balance sheet when the economic benefit to the Company can be established and the cost can be properly calculated.

Property, vessels and equipment are recorded at cost less accumulated depreciation. Additional depreciation is recorded on impairment, if deemed to be permanent. Repair and maintenance costs are expensed as incurred. Dry-docking costs for vessels are capitalized and amortized over the time until the next dry-docking. Dry-docking costs for ferries are capitalized as prepaid expenses and amortized as direct operating expenses due to their annual nature, while dry-docking costs for other vessels are capitalized as cost of the vessel and depreciated.

On-going projects include advance payments made as well as other direct and indirect project costs including capitalized interest costs, using the Company's current available rate of borrowing for the applicable project. All other interest costs are expensed in the income statement.

Properties are split into real estate and buildings. Buildings refer to buildings for use by the Company in its own business.

Impairment of tangible fixed assets and intangible assets

The carrying values of tangible fixed assets and intangible assets are reviewed on an on-going basis. For vessels, the Company uses appraisals carried out by independent international brokers for such reviews. For properties, estimates are based on internal and external valuations. If a review indicates that the carrying value of an asset may not be recoverable, discounted cash flows based upon current interest rates and future expected earnings are used as primary indicators of potential impairment. Assets having a direct joint income, e.g. a ferry route, is the smallest cash generating unit used. If, on the balance sheet date, an asset has been impaired, the recoverable amount of the asset is estimated. The asset is written down to its estimated fair value. A similar approach is used for intangible assets.

Leasing

When the Company enters into a lease or other similar arrangement which includes taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a capital lease. Such leased assets are classified in the balance sheet as tangible fixed assets. The present value of the future minimum lease payments is recorded as a capital lease obligation. The assets are depreciated according to plan while rent payments are apportioned between the interest element which is charged to operations and the capital element that is recorded as a reduction of the capital lease obligation.

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Stena AB (publ) Consolidated Financial Statements (Continued)

Note 1    Summary of Significant Accounting Principles — continued

Other leased assets are recorded as operating leases. The lease charges for such leases are expensed in the period to which they relate.

Financial fixed assets

Marketable securities including long-term bonds and equities are valued at market, whereby the current year unrealized results are included in the income statement as gain (loss) on securities, except for certain strategic holdings, where the result in booked directly to stockholders’ equity.

Investments in other noncurrent securities are recorded at cost. Available information is used to review the carrying value. A portfolio of similar assets is written down to its estimated fair value if the decrease in value is deemed to be permanent. Previously recorded write-downs are reversed when no longer appropriate.

Inventories

Inventories are carried at the lower of cost (FIFO) or market value after any obsolescence. Inventories mainly include bunker fuel, spare parts and merchandise for sale on-board as well as products for bars and restaurants on ferries.

Receivables

Trade debtors and other receivables are recorded at cost after reduction for doubtful receivables. Receivables due after more than 12 months are recorded as noncurrent.

Construction contracts regarding projects for external parties are accounted for as accrued income using the percentage of completion method.

Short-term investments

Short-term investments include marketable debt and equity securities and restricted cash blocked for guarantees and other obligations. Valuation is carried at market. Gains and losses are included in the income statement as gain (loss) on securities.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Provisions for pensions

Post-employment benefits, such as pensions and other benefits are mainly settled by means of regular payments to independent authorities or bodies that assume pension obligations and administer pensions through defined contribution plans. The remaining post-employment benefits are defined benefit plans, which means that the obligations remain within the Company. Costs and the obligations at the end of the period for defined benefit plans are calculated based on actuarial assumptions and measured on a discounted basis.

The amount recognized in the balance sheet is the net total of the present value of the obligations and the fair value of plan assets as either a provision or a long-term financial asset. In those circumstances when a surplus in a plan can not be fully used, only the portion of the surplus that the enterprise can recover through decreased future contributions or repayments is recognized. Set-off of a surplus in a plan against a deficit in another plan is only allowed if an enterprise has the right to use a surplus in a plan to settle a deficit in another plan, or if the obligations are to be settled on a net basis.

F-14

Table of Contents

Stena AB (publ) Consolidated Financial Statements (Continued)

Note 1    Summary of Significant Accounting Principles — continued

The pension cost and the pension obligation for defined benefit pension plans is calculated annually by independent actuaries. The obligation consists of the present value of expected future payments. The most important actuarial assumptions are stated in note 19.

Actuarial gains and losses may result upon determination of the present value of the defined benefit obligation and the fair value of plan assets. These result either from differences between the actual return and expected returns, or changes in assumptions. The portion of the accumulated actuarial gains and losses at the end of the prior year that exceeds 10% of the larger of the present value of the defined benefit obligation and the fair value of plan assets is recognized in the result over the expected average remaining service period of the employees participating in the plan. The accounting principle described above is only applied in the consolidated financial statements. The parent company and subsidiaries report defined benefit pension plans in accordance with local rules and guidelines in their respective countries.

Senior notes and bank debt

Nominal amounts are recorded as debt in the balance sheet. Debt due within 12 months is included as current debt and remaining debt as noncurrent. Direct costs for raising new debt are deferred and amortized over the length of the credit.

Any prepayment of debt reduces the nominal amount as recorded. Premiums or discounts are recorded in the income statement.

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Table of Contents

Stena AB (publ) Consolidated Financial Statements

Note 2    Segment Information

The Company is active internationally, primarily in the areas of ferry operations, drilling, shipping, property and finance. Ferry operations are performed through Stena Line in the Scandinavian, the North Sea and the Irish Sea areas and through Scandlines in Öresund and the south of the Baltic Sea. Drilling includes the ownership and operation of a fleet of semi-submersible drilling rigs and is operated from Aberdeen in Scotland. Shipping includes the ownership and chartering of Roll-on/Roll-off vessels and crude oil tankers. To support these activities, the Company is also engaged in the management and crewing as well as the design and rebuilding of such vessels. The property operations relate to investments in residential and commercial real estate, principally in Sweden but partly also in The Netherlands, France and Germany. Other business activities include financial activities and investments in other business areas through the unit Stena Adactum, as well as non-allocated central administration costs. A primary measure of profitability for all these segments is income from operations. There are no significant transactions between the operating segments.

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Income from operations by segment:
Ferry operations					397						587						813
Impairment charges											(52	)					(765	)
Additional operating expenses																	(55	)
Net gain on sale of vessels					50						11
Total ferry operations					447						546						(7	)
Drilling					(33	)					(227	)					(2	)
Shipping:    Roll-on/Roll-off vessels					(47	)					62						104
Net gain on sale of vessels					64						273						191
Total					17						335						295
Crude oil tankers					198						780						742
Net gain on sale of vessels											372						124
Total					198						1,152						866
Other shipping					3						(13	)					(7	)
Total shipping					218						1,474						1,154
Property:    Operations					399						520						759
Impairment charges											(21	)					(180	)
Net gain on sale of properties					126						110						813
Total property					525						609						1,392
Other					(135	)					(175	)					(144	)
Income from operations					1,022						2,227						2,393

As a consequence of the high oil prices in 2005, impairment charges of SEK 765 million were recorded with respect to the HSS vessels together with direct operating expenses of SEK 55 million. In 2005, impairment charges for real estate of EK 180 million were also recorded. In 2004, impairment charges for real estate of SEK 21 million and of buildings in the ferry operations of SEK 52 million were recorded. All impairment charges are accounted for as depreciation.

F-16

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Stena AB (publ) Consolidated Financial Statements  — continued

Note 2    Segment Information — continued

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Depreciation and amortization by segment:
Ferry operations					811						864						1,578
Drilling					694						575						590
Shipping:    Roll-on/Roll-off vessels					121						100						124
Crude oil tankers					27						58						41
Other shipping					6						7						11
Total shipping					154						165						176
Property					77						153						337
Other					6						33						53
Total					1,742						1,790						2,734

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Depreciation and amortization expense consists of the following components:
Vessels					1,513						1,364						2,084
Equipment					65						90						173
Property					162						294						393
Total tangible fixed assets					1,740						1,748						2,650
Intangible assets					2						42						84
Total					1,742						1,790						2,734

Depreciation and amortization expense includes amortization of assets under capitalized leases amounting to SEK 176 million, SEK 91 million and SEK 90 million for the years ended December 31, 2003, 2004, and 2005, respectively.

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Capital expenditure by segment:
Ferry operations					1,577						721						409
Drilling					358						515						1,197
Shipping:    Roll-on/Roll-off vessels					542						616						474
Crude oil tankers					361						1,005						1,067
Other shipping					8						5						24
Total shipping					911						1,626						1,565
Property					288						459						1,889
Other					14						22						92
Total					3,148						3,343						5,152

F-17

Table of Contents

Stena AB (publ) Consolidated Financial Statements  — continued

Note 2    Segment Information — continued

			Year ended December 31,
(SEK in millions)			2004						2005
Total assets by segment:
Ferry operations					9,978						9,645
Drilling					5,146						6,959
Shipping:    Roll-on/Roll-off vessels					1,692						1,995
Crude oil tankers					1,173						2,365
Other shipping					202						273
Total shipping					3,067						4,633
Property					17,375						16,023
Other					10,745						17,552
Total					46,311						54,812

Geographic information:

The Company's shipping operations include the ownership and chartering of vessels as well as the operation and management of crude oil tankers and are performed throughout the world. Accordingly, such revenues and assets are not presented on a country by country basis. The ferry operations and the property operations are conducted in Scandinavia and the rest of Europe. The Company's drilling operations are conducted in the Norwegian sector (Scandinavia) and the UK sector (Europe, other) of the North Sea as well as other markets. The Company’s US investments in VIEs are included in Other markets.

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Revenues:
Scandinavia					7,387						8,839						10,816
Europe, other					3,124						3,068						3,321
Other markets					802						677						762
Shipping					2,306						4,137						4,720
Total					13,619						16,721						19,619

			Year ended December 31,
(SEK in millions)			2004						2005
Total assets:
Scandinavia					26,339						28,062
Europe, other					9,739						7,362
Other markets					7,771						11,885
Shipping operations					2,462						7,503
Total					46,311						54,812

F-18

Table of Contents

Stena AB (publ) Consolidated Financial Statements  — continued

Note 3    Sale of tangible fixed assets

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Vessels    Cash proceeds from sale of vessels					735						2,069						863
Net book value of vessels sold					(621	)					(1,413	)					(548	)
Net gain on sale of vessels					114						656						315
Equipment    Cash proceeds from sale of equipment					3						1						3
Net book value of equipment sold					(2	)					(4	)					(3	)
Net gain (loss) on sale of equipment					1						(3	)
Property    Cash proceeds from sale of property					441						495						3,629
Net book value of property sold					(315	)					(385	)					(2,816	)
Net gain on sale of property					126						110						813
Total    Cash proceeds from sale of vessels, equipment and property					1,179						2,565						4,495
Net book value of assets sold					(938	)					(1,802	)					(3,367	)
Total gain					241						763						1,128

The net gain on sale of vessels in 2004 includes 100% of the results from the sale of two vessels, each owned by companies that are 25% owned by the joint venture partner Fram Shipping. Fram Shipping’s share of the gain is included in the income statement as minority interest.

Net gain (loss) on sale of equipment is included in operating expenses.

Total cash proceeds include sales costs of SEK 75 million, which is not included in the consolidated statement of cash flow for 2005.

Note 4    Selling and administrative expenses

For the year ended December 31, 2005, selling and administrative expenses include SEK 231 million relating to administration expenses. Selling expenses include costs for doubtful receivables of SEK 14 million. For the year ended December 31, 2004, selling and administrative expenses included SEK 226 million of administration expenses and selling expenses included costs for doubtful receivables of SEK 8 million.

Fees and other remuneration to auditors and advisors are set forth below. Audit fees include audit of the financial statements, the accounts and the administration by the Board of Directors and the Managing Director, other activities that the auditor is required to perform and advice that the auditor may give based on the results of the audit.

			Year ended December 31,
(SEK in millions)			2003						2004						2005
KPMG
Audit fees					21						16						25
Audit related fees					6						2						2
Tax fees					11						13						18
Other					2						6						6

F-19

Table of Contents

Stena AB (publ) Consolidated Financial Statements  — continued

Note 4    Selling and administrative expenses — continued

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Other auditors
Tax fees					5						8						10
Other											1						5
Total					45						46						66

Note 5    Affiliated companies

Investments in affiliated companies relate to major strategic investments. Results from other associated companies, having a more direct link to normal operations, are included in direct operating expenses. See note 13.

Bostads AB Drott (‘‘Drott’’) was acquired throughout 2004 and was accounted for as an affiliated company for the period from mid-May to mid-August 2004. For this period, the Company’s share of results amounted to SEK 19 million, which was included as additional investment in real estate. In the middle of August 2004, more than 50% of the shares of Drott had been acquired by the Company and Drott was consolidated as a subsidiary.

In 2004, the Company purchased more than 20% of the shares of the Swedish listed company Wilh. Sonessons AB (publ), which therefore is accounted for as an affiliated company. As of December 31, 2005, the investment represents 23.2% of the capital and 26.7% of the votes. The market value of the investment as of December 31, 2005 was SEK 247 million. The Company’s share of results amounted to SEK 3 million.

In June 2005, the Company purchased additional shares of the Swedish listed company Ballingslöv AB (publ) and it is now accounted for as an affiliated company. As of December 31, 2005, the investment represents 22.5% of the capital and the votes. The market value of the investment as of December 31, 2005 was SEK 386 million. The Company’s share of results amounted to SEK 18 million.

The investments in Sonessons and Ballingslöv are pledged as security for bank debt. The results of these companies are reported with a three month time lag.

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Table of Contents

Stena AB (publ) Consolidated Financial Statements

Note 6    Gain (loss) on securities, net

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Investment in VIEs
Total net gain (loss)											104						26
Marketable securities
Proceeds					1,377						4,239						421
Gross gains					248						1,144						342
Gross losses					(113	)					(307	)					(19	)
Total net gain (loss)					135						837						323
Short-term investments
Proceeds					2,808						4,504						8,396
Gross gains					74						176						671
Gross losses					(45	)					(57	)					(99	)
Total net gain (loss)					29						119						572
Total net gain (loss) on securities					164						1,060						921

As of January 1, 2005, financial instruments are valued at market. Unrealized results on shares, bonds etc are included in the income statement, except for certain strategic investments, which are revalued directly against stockholders’ equity. See note 1 new accounting principles. The accounts for previous years have been restated.

Note 7    Foreign Exchange Gains (Losses)

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Currency trading activities, net					10						8						22
Translation differences					17						(115	)					(25	)
Total					27						(107	)					(3	)

Foreign exchange gains (losses) consist of gains and losses incurred in connection with the Company's foreign currency trading activities (see note 27) and gains and losses arising from the translation of amounts in foreign currencies and transactions denominated in foreign currencies.

Note 8    Other Financial Income (Expense)

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Amortization of deferred financing costs					(50	)					(82	)					(57	)
Bank charges					(21	)					(12	)					(13	)
Release of reserve for ferry operations					120						100
Other items					(67	)					(30	)					(51	)
Total					(18	)					(24	)					(121	)

Deferred financing costs include costs for Senior Notes, revolving credit facilities, finance leases etc. See note 14. All of these costs are amortized over the life of the borrowings.

In 2005, full consolidation of the investments in VIEs has been made. See note 1, new accounting principles, and note 12. In 2004, consolidation was based upon the equity method, whereby the Company’s part of the result was accounted for only.

F-21

Table of Contents

Stena AB (publ) Consolidated Financial Statements

Note 8    Other Financial Income (Expense) — continued

The reserve for ferry operations relates to the excess of the carrying value of the Stena Line $300 million Senior Notes over their redemption price in late 2000. This excess value was released from 2001 to 2004.

Note 9    Income Taxes

Income before taxes was distributed geographically as follows:

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Sweden					57						580						1,167
Rest of the world					440						1,782						1,253
Share of affiliated companies’ results											17						21
Total income before taxes					497						2,379						2,441

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Current:
For the period, Sweden					(8	)					(19	)					(11	)
Adjustments previous years, Sweden											(6	)
For the period, Rest of the world					(56	)					(114	)					(85	)
Adjustments previous years, Rest of the world					6						6						8
Total current tax					(58	)					(133	)					(88	)
Deferred:
For the period, Sweden					31						(393	)					202
Adjustments previous years, Sweden					(12	)					(56	)					(58	)
For the period, Rest of the world					(12	)					101						(54	)
Adjustments previous years, Rest of the world					64						461						(175	)
Total deferred tax					71						113						(85	)
Total income taxes					13						(20	)					(173	)

Cash paid for taxes in 2005 was SEK 74 million, as compared to SEK 32 million in 2004.

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Stena AB (publ) Consolidated Financial Statements

Note 9    Income Taxes — continued

The principal reasons for the difference between the statutory tax rate in Sweden and the effective tax rate are set forth below:

			Year ended December 31,
(Percentages)			2003						2004						2005
Statutory income tax rate					28						28						28
Differences in foreign tax rates					(36	)					(5	)					(2	)
Taxes related to previous years					(2	)					(6	)					(2	)
Losses not currently utilized					12						4						7
Expenses not deductible					7						3						6
Nontaxable income					(11	)					(6	)					(15	)
Utilization of tax loss carryforwards					(2	)					(1	)					(3	)
Restructuring											(17	)					(24	)
Share of affiliated companies’ results					(4	)					(1	)					5
Other					5						2						7
Effective income tax rate					(3	)					1						7

Restructuring in 2005 refer to effects of changes in the legal structure for the drilling operations. Restructuring in 2004 refers to changes in the legal structure outside of Sweden, which made it possible to release previously deferred tax liabilities included above as Adjustments previous years, Rest of the world.

Note 10    Intangible fixed assets

(SEK in millions)			Goodwill						Other intangible assets						Total
Acquisition cost at the beginning of year					183						392						575
Purchase of company					390												390
Additions											78						78
Disposals											(32	)					(32	)
Translation differences					3						4						7
Acquisition cost at the end of year					576						442						1,018
Accumulated amortization at the beginning of year					(18	)					(147	)					(165	)
Disposals											32						32
Translation differences											5						5
Current year amortization					(33	)					(51	)					(84	)
Accumulated amortization at the end of year					(51	)					(161	)					(212	)
Net book value at the beginning of year					165						245						410
Net book value at the end of year					525						281						806

Goodwill regarding purchase of company refers to the acquisition of Envac and is amortized over 20 years. Goodwill regarding the flower business ‘‘Blomsterlandet’’ is amortized over 10 years. Goodwill related to the acquisition of ferry routes in the Irish Sea is amortized over 7 years. Other intangible fixed assets include an on-line reservation system in the ferry operations, which is also amortized over 7 years.

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Table of Contents

Stena AB (publ) Consolidated Financial Statements

Note 11    Tangible fixed assets

The movements during the year ended December 31, 2005 are as follows:

(SEK in millions)			Vessels						Construction in progress						Equipment						Property						Total
Acquisition cost at the beginning of year					18,622						501						598						19,476						39,197
Adjustment of acquisition value																							(524	)					(524	)
Purchase of company																	9												9
Other additions					2,070						963						150						1,969						5,152
Disposals					(735	)											(85	)					(2,977	)					(3,797	)
Transfers					304						(304	)					38						(38	)
Translation differences					1,964						120						94						408						2,586
Acquisition cost at the end of year					22,225						1,280						804						18,314						42,623
whereof capitalized interest					711						40												21						772
Accumulated depreciation at the beginning of year					(5,875	)											(11	)					(777	)					(6,663	)
Disposals					187												82						161						430
Translation differences					(868	)											(54	)					(52	)					(974	)
Transfers																	(22	)					22
Current year depreciation					(2,084	)											(173	)					(393	)					(2,650	)
Accumulated depreciation at the end of year					(8,640	)											(178	)					(1,039	)					(9,857	)
Net book value at the beginning of year					12,747						501						587						18,699						32,534
Net book value at the end of year					13,585						1,280						626						17,275						32,766

The insured value of the whole vessel fleet as of December 31, 2005 was SEK 21,612 million, to be compared to SEK 16,068 million as of December 31, 2004.

As of December 31, 2005, Construction in progress included five newbuildings. The Company has ordered two Panamax tankers from China for delivery in 2006. Two RoRo vessels have been ordered from a shipyard in Norway for delivery also in 2006. Finally, a drillship is under construction in Korea for delivery at the end of 2007. In total, the contract amount with the shipyards amounts to SEK 5,663 million. Yard payments of SEK 1,221 million, interest expense of SEK 40 million and other capitalized costs of SEK 19 million are included in Construction in progress as of December 31, 2005. The amount of interest capitalized on construction in progress was SEK 15 million, SEK 14 million and SEK 34 million for the years ended December 31, 2003, 2004 and 2005, respectively. Additionally, SEK 1 million was capitalized on real estate newbuildings.

Accumulated depreciation for vessels include revaluations as follows:

MSEK			Write-ups vessels						Write-downs												Total
									vessels						properties
Accumulated depreciation at the beginning of year					15						(39	)					(73	)					(97	)
Translation differences					3																		3
Depreciation on write-ups and write-downs from previous years					(3	)					5												2
Current year depreciation											(765	)					(180	)					(945	)
Accumulated depreciation at the end of year					15						(799	)					(253	)					(1,037	)

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Stena AB (publ) Consolidated Financial Statements

Note 11    Tangible fixed assets — continued

Property is specified as follows:

(SEK in millions)			Real estate						Buildings and land						Total
Acquisition cost at the beginning of year					17,802						1,674						19,476
Adjustment of acquisition value					(524	)											(524	)
Other additions					1,889						80						1,969
Disposals					(2,919	)					(58	)					(2,977	)
Transfers											(38	)					(38	)
Translation differences					267						141						408
Acquisition cost at the end of year					16,515						1,799						18,314
Accumulated depreciation at the beginning of year					(475	)					(302	)					(777	)
Disposals					122						39						161
Transfers											22						22
Translation differences					(11	)					(41	)					(52	)
Current year depreciation					(335	)					(58	)					(393	)
Accumulated depreciation at the end of year					(699	)					(340	)					(1,039	)
Net book value at the beginning of year					17,327						1,372						18,699
Net book value at the end of year					15,816						1,459						17,275

Real estate relates to the commercial properties operated by the business area Stena Fastigheter. The total estimated market value for the real estate as of December 31, 2005 exceeds the net book value. Out of the net book value as of December 31, 2005 for real estate, SEK 14,152 million relates to Swedish properties, of which land was SEK 563 million. The tax assessment value for these properties amounted to SEK 13,027 million, out of which land was SEK 4,687 million. Out of the net book value as of December 31, 2004, SEK 15,602 million related to Swedish properties, of which land was SEK 2,164 million. The tax assessment value for these properties last year amounted to SEK 11,685 million, out of which land was SEK 4,166 million.

Buildings and land represent the group’s assets used in its business including office buildings, ferry terminals etc.

Note 12    Investment in VIEs

Since late 2002, the Company has invested in variable interest entities through the US company Canyon Capital. The VIEs have taken up bank loans and invested in various corporate loans and high yield bonds in the US capital market. The bank loans are secured by the purchased securities. As of 2005, Swedish GAAP has changed so that full consolidation of these VIEs has been necessary. The financial statements for 2004 have been restated accordingly. The full consolidation means that total income and cost together with total assets and liabilities are included in the Company’s accounts. The minority share of the results is deducted in the income statement while the minority part of total equity is shown as a liability in the balance sheet. In 2004 the equity method of consolidation was used, whereby the Company’s part of the results of the VIEs was accounted for in the income statement and the net investment as financial fixed assets in the balance sheet. See note 13 and 14.

Investments in a Collateral Debt Obligation (‘‘CDO’’) and a Collateral Loan Obligation (‘‘CLO’’) began in December 2002 and August 2003, respectively. The VIEs were in full operation at the end of 2003 and in June 2004, respectively. Another CLO was set up in October 2005, but is not yet in full operation. The minority shares amount to 13.7%, 15.4% and 5%, respectively.

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Stena AB (publ) Consolidated Financial Statements

Note 12    Investment in VIEs — continued

The full consolidation of the VIEs as of December 31, 2005 has had the following impact:

(SEK in millions)
Interest income					396
Interest expense					(199	)
Other financial income and expense					(35	)
Minority interest					(19	)
Net income					143
Investment in VIEs					5,753
Short-term investments					316
Other assets					144
Total assets					6,213
Retained earnings					694
Net income					143
Total stockholders' equity					837
Minority interest					124
Debt in VIEs					4,844
Other debt					408
Total liabilities					5,252
Total stockholders’ equity and liabilities					6,213

Short-term investments refer to cash and cash equivalents in the VIEs. This cash is not available to the Company and is therefore included as restricted cash.

Debt in VIEs refers to bank debt. These loans are secured by the underlying securities without any additional recourse to the Company.

The underlying bank loans and bonds in the VIEs are recorded at market. Together with other strategic investments, unrealized gains and losses are recorded directly to stockholders’ equity. See note 13.

Note 13    Marketable securities

(SEK in millions)			Bonds						Strategic equity shares						Total
Opening balance					893						646						1,539
Valuation at market					12						272						284
Reclassification of investments in VIEs					(448	)											(448	)
Investment at the beginning of year					457						918						1,375
Additions					578						1,019						1,597
Disposals					(240	)					(49	)					(289	)
Reclassification											(16	)					(16	)
Revaluation of financial instruments					13						462						475
Translation differences					44						109						153
Investment at the end of year					852						2,443						3,295

As of January 1, 2005, financial instruments are valued at market. In 2005, full consolidation of investments in VIEs has been made, that in 2004 partly were accounted for as marketable securities. See note 1, new accounting principles, and note 12 and 14. The accounts for previous years have been restated.

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Stena AB (publ) Consolidated Financial Statements

Note 13    Marketable securities — continued

Shares with a book value of SEK 706 million as of December 31, 2005 have been pledged as security for bank debt. As of December 31, 2004, shares with a book value of SEK 755 million were pledged as security for bank debt.

Reclassification refers to shares in Arlington Tankers, that were included as short-term investments in 2004, and shares in Ballingslöv, that in 2005 have been accounted for as an affiliated company following further purchases of shares.

Strategic equity shares include long-term investments in listed shares as follows:

(SEK in millions)			No. of shares						Book value
Held by parent company
Bioinvent					2,240,000						27
Vitrolife					110,000						3
Total											30
Strategic investments
Gunnebo AB					5,751,320						451
Gunnebo Industrier AB					1,191,327						140
Oriflame					500,000						115
Meda AB					4,545,270						300
Arlington Tankers Ltd					690,421						118
Other investments
Lukoil RUS					131,000						62
Lukoil ADR					1,131,000						527
Neste Oil					343,000						77
Vallourec					27,800						122
Nat Oilwell					170,000						85
Rowan Inc					244,300						69
Schlumberger					90,000						69
Sberbank					4,850						51
HSBC Growth Fund											156
Jardine					470,000						39
Other											32
Total listed shares											2,443

Note 14    Other noncurrent assets

Other Noncurrent Assets

(SEK in millions)			Deferred tax assets						Other receivables						Shares						Deferred costs						Total
At the beginning of year					15						233						709						151						1,108
Reclassification of investments in VIEs																	(275	)					77						(198	)
Investment at the beginning of year					15						233						434						228						910
Additions											39						161						150						350
Disposals					(15	)					(30	)					(4	)											(49	)
Revaluation																	(5	)											(5	)
Amortization through the income statement																							(57	)					(57	)
Re-classification					249						(5	)											(31	)					213
Translation differences											40						14						24						78
At the end of year					249						277						600						314						1,440

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Stena AB (publ) Consolidated Financial Statements

Note 14    Other noncurrent assets — continued

In 2004, investments in VIEs were partly accounted for as other noncurrent assets but are now specified separately. See note 1 change of accounting principles and notes 12 and 13. The financial statements for 2004 have been restated accordingly.

Deferred tax assets relate to unutilized tax losses carried forward. Reclassification of deferred tax assets refers to netting against deferred tax liabilities. See note 19.

Other receivables as of December 31, 2005 include a loan to a related party of SEK 10 million.

Shares include investments in non-listed shares and associated companies.

Deferred costs include financing costs for Senior Notes, revolving credit facilities and capitalized lease obligations. All of these costs are amortized over the life of the borrowings.

Shares are specified as follows:

(SEK in millions)						No. of shares						Book value
Held by parent company:
Alligator								1,004,445						21
Alligator, convertibles								708,889						3
Amplus								883,818						100
Prostalund								913,954						34
Ram one								113,292						108
Univits								3,088,670						2
														268
Held by subsidiaries:						% held
Örgryte Bostads AB & Co KB			Sweden											3
Partrederiet SUST I DA			Norway					50	%					54
Partrederiet SUST III DA			Norway					50	%					62
Ugland Stena Storage A/S (USS)			Norway					50	%
Stena Ugland Shuttle Tanker Ltd (SUST)			Cayman Islands					50	%
Austen Maritime Services Pte Ltd			Singapore					50	%					5
Schiphol Real Estate CV			Holland											173
Chase Private Equity Fund			Cayman Islands											28
RoRo Partners Ltd			Bermuda					49	%
Nordic Rio LLC			Marshall Islands					50	%					7
Other shares
Total non listed shares														600

Companies held between 20% and 50% are accounted for as other associated companies. The share of these companies’ results is included in direct operating expenses. See note 5.

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Stena AB (publ) Consolidated Financial Statements

Note 15    Short-term receivables

			As of December 31,
(SEK in millions)			2004						2005
Trade debtors					953						2,092
Related parties (Note 29)					260						270
Other receivables					504						886
Total					764						1,156
Prepaid expenses					317						497
Accrued income					549						393
Total					866						890
Total short-term receivables					2,583						4,138

The total allowance for doubtful trade receivables was SEK 26 million as of December 31, 2004 and SEK 52 million as of December 31, 2005.

Note 16    Short-term Investments

			As of December 31,
(SEK in millions)			2004						2005
Marketable debt and equity securities					1,008						1,856
Restricted cash					325						357
Total					1,333						2,213

Starting in 2005, marketable debt and equity securities are valued at market. See note 1 new accounting principles. The accounts for 2004 have been restated accordingly, thereby increasing the book value of marketable debt and equity securities by SEK 89 million. Certain marketable debt and equity securities amounting to SEK 819 million as of December 31, 2004 and SEK 1,179 million as of December 31, 2005 have been pledged as security for bank debt. See Note 25.

Restricted cash as of December 31, 2005 includes SEK 315 million of cash and cash equivalents in the VIEs, which is not available to the Company. As of December 31, 2004 such restricted cas amounted to SEK 249 million. Other restricted cash represents bank accounts that have been pledged to cover various long-term liabilities and commitments of the Company.

Note 17    Cash and Cash Equivalents

			As of December 31,
(SEK in millions)			2004						2005
Cash					589						877
Short term deposits					1,791						2,867
Total					2,380						3,744

Short-term deposits are defined as bank deposits that have original maturities of up to three months.

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Stena AB (publ) Consolidated Financial Statements

Note 18    Stockholders' Equity

The authorized share capital of Stena AB consists of 200,000 ordinary shares with a par value of SEK 100 of which 50,000 shares have been issued and fully paid.

The changes in stockholders' equity for the period December 31, 2002 to December 31, 2005 are as follows:

(SEK in millions)			Capital stock						Restricted reserves						Unrestricted reserves						Net income						Total
Balance as of December 31, 2002					5						626						9,927						1,031						11,589
Change of accounting principles for financial instruments																							34						34
Opening balance as of January 1, 2003					5						626						9,927						1,065						11,623
Allocation of last year’s result																	1,065						(1,065	)
Dividend paid																	(60	)											(60	)
Transfer to charitable trust																	(5	)											(5	)
Revaluation of financial instruments																	500												500
Transfers between reserves											(11	)					11
Exchange differences											(32	)					(541	)											(573	)
Net income																							510						510
Balance as of December 31, 2003					5						583						10,897						510						11,995
Allocation of last year’s result																	510						(510	)
Change of accounting principles in 2004																	(257	)											(257	)
Dividend paid																	(70	)											(70	)
Transfer to charitable trust																	(10	)											(10	)
Revaluation of financial instruments																	(387	)											(387	)
Transfers between reserves											201						(201	)
Exchange differences											(21	)					(190	)											(211	)
Net income																							2,359						2,359
Balance as of December 31, 2004					5						763						10,292						2,359						13,419
Allocation of last year’s result																	2,359						(2,359	)
Dividend paid																	(195	)											(195	)
Transfer to charitable trust																	(30	)											(30	)
Change of accounting principles for pensions																	(1,075	)											(1,075	)
Revaluation of financial instruments																	303												303
Transfers between reserves											96						(96	)
Exchange differences											67						375												442
Net income																							2,268						2,268
Balance as of December 31, 2005					5						926						11,933						2,268						15,132

Restricted reserves include the equity part of untaxed reserves (net of applicable deferred taxes) and legal reserves.

Change of accounting principles in 2005 refers to valuation of financial instruments at market, full consolidation of investments in VIEs and accounting for certain pension liabilities, see note 1. Revaluation of financial instruments at market have been made as of December 31, 2002 after which the financial statements of 2003 and 2004 have been restated. Accounting for pension liabilities have been made as of October 1, 2005. See note 19. Change of accounting principles in 2004 refers to pension accounting and equity accounting of VIEs.

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Stena AB (publ) Consolidated Financial Statements

Note 18    Stockholders' Equity — continued

The board of directors of the Company has proposed that the stockholders approve at the forth-coming stockholders’ meeting in 2006 a dividend of SEK 215 million and a transfer of SEK 25 million to the Sten A. Olsson Foundation for Culture and Science, established in October 1996 to make contributions to art and science projects. Since 1996, the Stena Sphere has contributed SEK 160 million to the foundation and further support to this charitable trust is anticipated when needed.

The exchange differences relate to the impact of fluctuations of foreign currencies, in particular EUR, GBP and USD. See note 1. As of December 31, 2005, accumulated exchange differences since January 1, 2002 amount to SEK (842) million. As of December 31, 2004, accumulated exchange differences since January 1, 2002 amounted to SEK (1,284) million.

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Stena AB (publ) Consolidated Financial Statements

Note 19    Provisions

(SEK in millions)			Deferred income taxes						Provisions for pensions						Other provisions						Total
Opening balance					2,097						399												2,496
Change of accounting principles for financial instruments					82																		82
Opening balance as of January 1, 2005					2,179						399												2,578
Change of accounting principles for pensions					(461	)					1,536												1,075
Provisions in companies acquired																	46						46
Adjustment of acquisition value					(524	)																	(524	)
Reclassification					249																		249
Payment of pension fees and benefit paid											(136	)											(136	)
Other provisions											(14	)											(14	)
Changes in noncurrent assets											23												23
Transfers through income statement					85						50												135
Exchange differences					(11	)					24												13
Closing balance					1,517						1,882						46						3,445

Provisions for pensions have increased in connection with a change in accounting principles related to a pension scheme in the United Kingdom. See note 1and below. Deferred taxes related to this as well as to the introduction of new accounting principles for financial instruments have adjusted the opening balance for deferred taxes while changes in the year are included in the income statement. Other provisions relate to companies acquired by Stena Adactum.

The net deferred tax liability of the Company consists of the following:

			As of December 31,
(SEK in millions)			2004						2005
Deferred tax liabilities:
Tangible fixed assets					2,632						2,092
Financial fixed assets					68						206
Provisions					78
Other					114						91
Total deferred tax liabilities					2,892						2,389
Deferred tax assets:
Tangible fixed assets					90						136
Tax loss carryforwards					1,647						1,182
Financial fixed assets					144						77
Provisions					164						306
Less deferred tax assets not recognized					(1,317	)					(580	)
Total deferred tax assets recognized					728						1,121
Net deferred tax liability					2,164						1,268
Out of which:
Deferred tax assets (note 14)					15						249
Deferred tax liabilities					2,179						1,517

Deferred taxes have been calculated net on a country basis. Net deferred tax assets are shown as Other noncurrent assets. Deferred taxes have not been provided on the undistributed earnings of subsidiaries because such earnings are not taxed or expected to be remitted in the foreseeable future.

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 19    Provisions — continued

The Company's tax loss carryforwards are as follows:

			As of December 31,
(SEK in millions)			2004						2005
Sweden					1,655						1,989
Rest of the world					3,967						2,707
Total					5,622						4,696

Most tax loss carryforwards can be carried forward indefinitely. Tax loss carryforwards of SEK 354 million expire between 2006 and 2011.

Provisions for pensions and other provisions

Post-employment benefits, such as pensions, healthcare and other benefits are mainly settled by means of regular payments to independent authorities or bodies that assume pension obligations and administer pensions through defined contribution plans. The remaining post-employment benefits are defined benefit plans; that is, the obligations remain within the Company. Costs and obligations at the end of a period for defined benefit plans are calculated based on actuarial assumptions and measured on a discounted basis. Defined benefits plans relate mainly to subsidiaries in the UK operations. Other large-scale defined benefit plans apply for salaried employees in Sweden (mainly through the Swedish PRI pension plan) and employees in The Netherlands.

Provisions for pensions have increased in connection with a change in accounting principles related to pensions in the United Kingdom. In 2004, these funds were reported as contingent liabilities. See note 1 new accounting principles.

The following tables disclose information about defined benefit plans. The information refers to assumptions applied for actuarial calculations, periodical costs and the value of obligations and plan assets at year-end. The tables also include a reconciliation of obligations and plan assets during the year and the difference between fair values and carrying amounts reported on the balance sheet date.

Assumptions applied for actuarial calculations %			Sweden												Great Britain												Other Europe
			2004						2005						2004						2005						2004						2005
Discount rate					5.00						3.50						4.75						5.00						5.25						4.25
Expected return on plan assets					—						—						4.25						7.50						7.10						4.50
Expected salary increases					3.00						3.25						3.50						3.75						3.75						3.85

Pension costs (SEK in millions)			Total
Current service costs					53
Interest costs					149
Expected return on plan assets					(154	)
Actuarial gains and losses					2
Pension costs for defined benefit plans					50
Pension costs for defined contribution plans					231
Total pension costs					281

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 19    Provisions — continued

Provision for pensions, net (SEK in millions)			Sweden						Great Britain						Other Europe						Total
Closing balance, December 31, 2004					104						295						(12	)					387
Change of accounting principles					(1	)					1,536						1						1,536
Opening balance, October 1, 2005					103						1,831						(11	)					1,923
Current service costs					5						41						7						53
Interest costs					9						135						5						149
Expected return on plan assets					(5	)					(144	)					(5	)					(154	)
Actuarial gains and losses					1						1												2
Exchange differences											23						1						24
Payment of pension fees from the company					(7	)					(90	)					(6	)					(103	)
Benefit paid					(3	)					(29	)					(1	)					(33	)
Other provisions					(13	)					(1	)											(14	)
Provisions for pensions, net, December 31, 2005					90						1,767						(10	)					1,847
Obligations in defined benefit plans					126						9,125						135						9,386
Fair value of plan assets					(36	)					(7,729	)					(135	)					(7,900	)
Net obligation before adjustments					90						1,396												1,486
Unrecognized (gains) and losses											371						(10	)					361
Provision for pensions, net, December 31, 2005					90						1,767						(10	)					1,847
whereof reported as
Other non-current assets					(25	)											(10	)					(35	)
Provision for pensions					115						1,767												1,882

Plan assets consist of equities (54%), bonds (38%) and other assets (8%).

Note 20    Bank debt

(SEK in millions)			2004 Total						2005 Current						2005 Noncurrent						2005 Total
Property loans					11,749						138						11,073						11,211
Other loans					1,301						267						1,381						1,648
Revolving credit facilities					4,143												6,753						6,753
Other utilized bank credit lines					446						429						566						995
					17,639						834						19,773						20,607

Repayment of bank debt:

(SEK in millions)			Property loans						Other loans						Total
2006					138						696						834
2007					144						269						413
2008					399						484						883
2009					160						109						269
2010					477						108						585
2011 and thereafter					9,677						7,111						16,788
Not specified					216						619						835
Total					11,211						9,396						20,607

Property loans consist principally of bank mortgage loans on real estate, buildings and land in the Company's real estate business segment. These loans are denominated in SEK and EUR and with maturities through 2011 and beyond. Other loans consist of long-term bank loans used to finance the acquisition of vessels and other assets. They are denominated in USD, GBP, EUR and SEK and with maturities through 2011 and beyond.

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 20    Bank debt — continued

Since December 2004, the Company has a revolving credit facility of $1 billion. The facility was renegociated in January 2006 and extended to January 2013. Obligations under the facility are secured mainly by mortgages on certain vessels and rigs. Borrowings under the facility bear interest at a rate based on LIBOR plus an applicable margin based on the utilization of the facility. The facility imposes certain covenants regarding levels of working capital, cash and cash equivalents and interest coverage ratio. As of December 31, 2005, the utilized portion of the facility was $859 million, of which $849 million was actually drawn and $10 million used for issuing of bank guarantees. As of December 31, 2004, the utilized portion of the facility was $638 million, of which $627 million was actually drawn and $11 million used for issuing of bank guarantees. As of December 31, 2005 the Company had SEK 700 million in other unutilized, mainly uncommitted overdraft facilities and other similar lines of credit, as compared to SEK 859 million as of December 31, 2004.

‘‘Not specified’’ includes borrowings and utilized credit lines for properties and vessels that have formal repayment dates in 2006. These loans have been classified as long-term because it is the intention of the Company to refinance these loans on a long-term basis.

Regarding pledged assets, see note 25.

Note 21    Senior notes

Since 1995, the Company is partly financed by Senior Notes issued in the US. The notes issued in 1995 and 1997 were redeemed in 2003. In November 2002, the Company issued $200 million of notes at an interest rate of 9.625% with maturity on December 1, 2012. As of December 31, 2005, the Company had repurchased approximately $17.7 million aggregate principal amount of these notes, of which $5.6 million as purchased in 2005. In December 2003, the Company issued $175 million of notes at an interest rate of 7.5% with maturity on November 1, 2013. In November 2004, the Company issued $250 million of notes at an interest rate of 7.0% with maturity on December 1, 2016. As of December 31, 2005, total Senior Notes amounted to $607 million. As of December 31, 2004, total Senior Notes amounted to $613 million.

The Senior Notes are unsecured obligations of Stena AB and rank pari passu in right of payment with the Company's other unsubordinated indebtedness and senior in right of payment to all subordinated indebtedness of the Company. The Senior Notes indentures contain certain covenants with respect to, among others, the following matters: (i) limitations on consolidated and subsidiary debt and preferred stock; (ii) limitations on restricted payments and investments; (iii) limitations on restrictions concerning transfers and distributions by subsidiaries, limitations on certain asset distributions and other items.

Note 22    Leases

Company as lessee:

The operating lease obligations include chartering of crude oil tankers on a timecharter basis, chartering of ferries principally on a bareboat basis, as well as obligations related to rentals of properties and ports.

Rental expense for operating leases were as follows:

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Rental expense					1,358						1,807						2,619

Two RoPax vessels and two tankers are leased under capital leases. The gross amount of vessels under capital leases as of December 31, 2004 and 2005 amounted to SEK 1,680 million and SEK

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 22    Leases — continued

1,832 million, respectively. The net book value related to these capital leases amounted to SEK 1 508 million as of December 31, 2004 and SEK 1,550 million as of December 31, 2005.

As of December 31, 2005 the future minimum lease commitments under noncancellable operating leases and capital leases were as follows:

(SEK in millions)			Operating leases						Capital leases
2006					2,765						40
2007					1,897						40
2008					1,243						41
2009					753						41
2010					542						42
2011 and thereafter					1,566						1,161
Total minimum lease commitments					8,766						1,365

Company as lessor:

The Company leases properties and certain vessels to third parties under operating leases. The cost, accumulated depreciation and net book value of these assets held for lease as of December 31, 2005 was as follows:

(SEK in millions)			Cost						Accumulated depreciation						Net book value
Vessels					12,979						4,876						8,103
Real estate					17,044						699						16,345
Total					30,023						5,575						24,448

As of December 31, 2005 the future minimum rentals to be received under noncancellable operating leases were as follows:

(SEK in millions)			Vessels						Real estate						Total
2006					3,323						837						4,160
2007					1,922						527						2,449
2008					1,418						362						1,780
2009					1,418						212						1,630
2010					291						138						429
2011 and thereafter					892						119						1,011
Total minimum lease rentals					9,264						2,195						11,459

The amounts in the table above exclude amounts from the Company's portfolio of residential rental properties since those lease agreements are generally cancellable within three months.

Note 23    Other noncurrent liabilities

			As of December 31,
(SEK in millions)			2004						2005
Prepaid income					56						52
Other liabilities					87						234
Total					143						286

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Table of Contents

Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 23    Other noncurrent liabilities — continued

Prepaid income as of December 31, 2005 includes SEK 41 million relating to the net proceeds of a financial charter agreement entered into in 1997/1998 and which is amortized over the remaining charter period. As of December 31, 2004, these net proceeds amounted to SEK 44 million.

Repayment of noncurrent liabilities is required according to the following schedule:

(SEK in millions)			1-3 years						3-5 years						More than 5 years						Total
Prepaid income					16						11						25						52
Other liabilities					170						19						45						234
Total					186						30						70						286

Note 24    Accrued costs and prepaid income

			As of December 31,
(SEK in millions)			2004						2005
Accrued costs					1,703						2,188
Prepaid income					301						360
Total					2,004						2,548

Note 25    Pledged Assets, Commitments and Contingent Liabilities

Pledged assets

The following assets have been pledged as securities for bank debt:

			As of December 31,
(SEK in millions)			2004						2005
Mortgages on vessels					13,648						14,472
Mortgages on properties					13,689						13,535
Chattel mortgages					10						412
Investment in affiliated companies					122						302
Marketable securities					755						706
Short term investments					819						1,179
Reservation of title											52
Total assets pledged for normal bank debt					29,043						30,658
Investment in VIEs					4,440						5,753
Total assets pledged for bank debt					33,483						36,411
Normal bank debt and capitalized lease obligations					18,936						21,972
Debt in VIEs					3,925						4,844
Total bank debt and capitalized lease obligations					22,861						26,816

In addition, certain insurance policies have also been pledged to cover various liabilities and commitments.

Commitments

Future minimum lease commitments relating to operating leases of vessels, ports etc amount to SEK 2,765 million for 2006 and SEK 6,001million from 2007. See note 22.

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 25    Pledged Assets, Commitments and Contingent Liabilities — continued

As of December 31, 2005, a total of five vessels are included as newbuildings under Construction in progress. See note 11. The total contract amount for these vessels amounts to SEK 5,663 million. Yard payments of SEK 1,221 million have been made in respect of these contracts.

Contingent liabilities

			As of December 31,
(SEK in millions)			2004						2005
Guarantees					2,559						2,074
Pension liabilities					1,166
Other contingent liabilities					179						159
Total					3,904						2,233

Guarantees mainly refer to newbuilding projects and capital leases.

Certain pension liabilities for employees on board vessels in UK ferry operations were accounted for as contingent liabilities in 2004. New information was released for these defined benefit plans in 2005. As of October 1, 2005, these liabilities have therefore been recorded as pension liabilities in the balance sheet. See note 1, new accounting principles.

Note 26    Consolidated statements of cash flows

Purchase of subsidiaries

			As of December 31,
(SEK in millions)			2004						2005
Assets and liabilities acquired:
Intangible assets					121						390
Tangible fixed assets					11,226						9
Financial fixed assets					10						5
Inventories					75						49
Current receivables					345						344
Cash and cash equivalents					18						59
Total assets					11,795						856
Provisions					1,564						5
Long-term debt					58						3
Current liabilities					6,774						260
Total provisions and liabilities					8,396						268
Minority interest					25						1
Total consideration					3,374						587
Less:    Provision					(26	)					(10	)
Purchase price paid					3,348						577
Less:    Cash acquired					(18	)					(59	)
Reduction of cash and cash equivalents					3,330						518

In 2004, companies were acquired and subsequently sold at a value of SEK 587 million. This has not affected the balance sheet and is therefore not included above.

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 26    Consolidated statements of cash flows — continued

Cash payments

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Interest					840						1,053						1,430

Note 27    Financial Instruments and Risk Management

The Company has operations and assets in a number of countries in and outside of Europe. Consequently, the Company's profits and revenues are affected, when measured in SEK, by fluctuations in currency exchange rates, primarily relative to the US dollar, the Euro and the British pound sterling. When the SEK appreciates against other currencies, the Company's profit from foreign operations, reported in SEK, may decrease. Likewise, when the SEK declines against other currencies, the Company's profit from foreign operations reported in SEK may increase. The Company also has exposure to market risks from changes in interest rates. Certain financial instruments are used by the Company to manage these foreign currency and interest rate risks as summarized below. The Company also maintains trading positions in a variety of financial instruments unrelated to its risk management activities which are also discussed below.

Notional Amounts and Credit Exposure

The notional amounts of derivative financial instruments presented in this Note represent face or contractual amounts and are therefore not a measure of the exposure of the Company through its use of such financial instruments. The actual amounts exchanged are calculated on the basis of the notional amounts and the other terms of the financial instruments which relate to interest rates, exchange rates, oil prices, security prices, or financial and other indexes.

The Company is exposed to credit related losses in the event that counterparties to the derivative financial instruments do not perform according to the terms of the contract. In the opinion of management, the counterparties to the financial instruments are creditworthy financial institutions and other parties and the Company does not expect any significant loss to result from nonperformance. The Company, in the normal course of business, does not demand collateral. The credit exposure of interest rate and foreign exchange contracts is represented by the fair value of contracts with a positive fair value at the end of each period, reduced by the effects of master netting arrangements.

Interest Rate Risk Management

The Group uses various financial instruments to manage its interest rate risk as summarized in the table below:

			As of December 31,
(SEK in millions)			2004 Notional Amount						2004 Credit Exposure						2005 Notional Amount						2005 Credit Exposure
Interest rate swaps					4,548						—						6,412						58
Interest rate options					2,684						2						1,541						5
Total					7,232						2						7,953						63

The extent of the utilization of interest rate products is determined by reference to the Company's net exposure of its debt subject to interest rate risk and management's views regarding future interest rates. The Company uses interest rate instruments in order to achieve a

F-39

Table of Contents

Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 27    Financial Instruments and Risk Management — continued

desired interest rate and risk profile on a portfolio of debt. The interest rate contracts as of December 31, 2005 are part of an interest rate hedge strategy whereby the Company hedges the loan portfolio related to its assets. These contracts run on a consecutive basis to hedge the loan portfolio for a period of between 1 and 5 years. The amount of the loan portfolio hedged was SEK 12,183 million as of December 31, 2005. The borrowings in this debt portfolio are denominated primarily in USD, EUR and SEK and have maturity dates ranging from 2006 to 2011 and onwards. As of December 31, 2005, the interest rates ranged from 2.00% to 9.63%.

Interest rate swap agreements allow the Company to synthetically adjust floating rate receivables or borrowings into fixed rates or vice versa. Under the interest rate swaps, an agreement is made with a counterparty to exchange, at specified intervals, the difference between fixed rate and floating rate interest, (such as the London, Stockholm or Amsterdam Inter-bank Offered Rate or LIBOR, STIBOR and AIBOR respectively), calculated by reference to an agreed notional principal amount.

The Company uses interest rate swaps in order to achieve a desired interest rate on a portfolio of debt. The contractual terms of the interest rate swaps are determined by the management based upon assessment of several factors such as the prediction of future interest rates, the maturity and currency of the underlying debt portfolio, the cost of the interest rate swap and other factors.

The Company also uses interest rate options to reduce the impact of changes in interest rates on its net interest rate exposure. Interest rate futures are commitments to either purchase or sell designated financial instruments at a future date for a specified price and may be settled in cash or through delivery. Interest rate options grant the purchaser, for a premium payment, the right to either purchase from or sell to the writer a financial instrument under agreed terms. The writer of the option receives a premium for bearing the risk of adverse interest rate movements. Interest rate options are used when the rates available to the Company under swap agreements are too high relative to management's views of the level of future interest rates.

The Company has used interest rates swaps and interest rate options to hedge a portion of interest rate risk on debt financing real estate properties and vessels. The following tables summarize the Company's interest rate swaps and options:

Interest rate swaps

As of December 31, 2004:

Notional amount SEK in millions

Currency

Receive rate/Strike rate

Pay rate Strike rate %

Maturity

700

SEK

3 month STIBOR

4.6

June 2006

418

EUR

6 month EURIBOR

6 month EURIBOR+168 bp

August 2005-September 2009

102

EUR

5.52

6 month EURIBOR+1.19 bp

December 2012

573

GBP

3 month LIBOR

5.5 first 7 years

January 2028

441

GBP

3 month LIBOR

3 month LIBOR 1)

May 2028

661

USD

3 month LIBOR

2.83 - KO 6.5

June 2008

992

USD

3 month LIBOR

3.005 -3.09 Knock Out at 6.5

September 2008

661

USD

9.63

3 month LIBOR+4.9925%

December 2012

Total

4,548

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Table of Contents

Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 27    Financial Instruments and Risk Management — continued

As of December 31, 2005:

Notional amount SEK in millions

Currency

Receive rate

Pay rate Strike rate %

Maturity

700

SEK

3 month STIBOR

4.6

June 2006

371

EUR

6 month EURIBOR

6 month EURIBOR+168 bp

August 2005-September 2009

106

EUR

5.52

6 month EURIBOR+1.19 bp

December 2012

604

GBP

3 month LIBOR

5.5 first 7 years

January 2028

448

GBP

3 month LIBOR

3 month LIBOR 1)

May 2028

795

USD

3 month LIBOR

2.83 - KO 6.5

June 2008

1,193

USD

3 month LIBOR

3.005 -3.09 Knock Out at 6.5

September 2008

795

USD

9.63

3 month LIBOR+4.9925%

December 2012

200

SEK

1.72

3.25

November 2010

1,200

SEK

1.70-1.72

3.23-3.63

November 2015

Total

6,412

1)	Swap to convert cashflows of the underlying lease obligations to an annuity profile.

Interest rate options

As of December 31, 2004:

Notional amount SEK in millions

Currency

Receive rate

Pay rate %

Maturity

1,800

SEK

3 month STIBOR

5.60-5.75

October 2005-June 2006

135

EUR

6 month EURIBOR

5.75

September 2005

342

EUR

6 month EURIBOR

5.5

September 2008

90

EUR

3.25

6 month EURIBOR

December 2009

317

USD

3 month LIBOR

payrate 5.0

February 2005-June 2005

Total

2,684

As of December 31, 2005:

Notional amount SEK in millions

Currency

Receive rate

Pay rate Strike rate %

Maturity

700

SEK

3 month STIBOR

5.60

June 2006

94

EUR

6 month EURIBOR

3.25

March 2010

371

EUR

6 month EURIBOR

5.5

September 2008

376

EUR

3.25

6 month EURIBOR

January-October 2010

Total

1,541

The following tables are a summary by major currency of the portfolio of debt in respect of which the Company utilizes interest rate swaps and options:

As of December 31, 2004:

Currency

Amount (SEK in millions)

Maturity

Interest rates %

SEK

2,519

September 2005-October 2005

2.46-6.39

EUR

1,415

September 2005 - May 2028

2.15-5.52

USD

5,357

January 2005 - December 2012

3.14-9.63

GBP

575

January 2028

6.29

Total

9,866

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Table of Contents

Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 27    Financial Instruments and Risk Management — continued

As of December 31, 2005:

Currency

Amount (SEK in millions)

Maturity

Interest rates %

SEK

1,402

January 2006 - June 2006

2.00-4.325

EUR

1,907

January 2006 - May 2028

1.45-2.84

USD

8,271

January 2005 - December 2012

4.89-9.63

GBP

604

January 2028

6.04

Total

12,184

In addition to interest instruments as above, the VIEs investing in different securities, see note 12, have also entered into certain hedging instruments. To reduce the potential negative effects from changes in the USD interest rate level on the value of the underlying bond portfolios, interest rate swaps have been entered into at a volume equal to the underlying fixed rate bonds.

The following table summarizes interest rate swaps entered into for this purpose:

As of December 31, 2005:

Currency

Amount (SEK in millions)

Receive rate

Pay rate %

Maturity

swap

USD

1,455

6m Libor

4.85

May 2010

swap

USD

318

3m Libor

5.03

October 2015

The same contracts were also outstanding as of December 31, 2004.

Foreign Currency Risk Management

The Company is exposed to the risk of fluctuations in foreign currency exchange rates due to the international nature and scope of its operations. A substantial portion of the Company's revenues and expenses are denominated in US dollars. The Company's foreign currency risk arises from:

	•	fluctuations in exchange rates on the value of the Company's sales and purchases in foreign currencies (transaction exposure)

	•	certain financial assets and liabilities when converting such balances to each company’s functional currency (translation exposure)

	•	the Company's investment in foreign subsidiaries' net assets (equity exposure)

The Company's policy is to hedge a substantial part of its transaction exposure from future cash flows from firm commitments such as charter vessel contracts as well as anticipated bunker fuel payment obligations. All realized and unrealized gains and losses of hedges of transaction exposures are deferred and recognized in the period the hedged cash flows are received. Management also regularly reviews the Company's assets and liabilities which are denominated in foreign currencies and determines the net amount that is subject to risk of adverse foreign currency fluctuations. The Company's policy is to hedge its translation risk on its net exposures, using foreign exchange contracts.

The Company primarily uses forward exchange contracts and, to a lesser extent, purchased currency options and currency swaps to manage its foreign currency risk.

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 27    Financial Instruments and Risk Management — continued

The following table presents the notional amounts and credit exposure of financial instruments used for foreign currency risk management as of December 31 each year:

(SEK in millions)			2004 Notional amount						2004 Credit exposure						2005 Notional amount						2005 Credit Exposure
Foreign exchange forward contracts					6,734						—						8,896						59
Foreign exchange options					1,436						96						2,094						86

The following table summarizes by major currency the contractual net amounts of the Company's forward exchange and option contracts in Swedish kronor. Foreign currency amounts are translated at rates current at the reporting date. The 'buy' amounts represent Swedish kronor equivalent of commitments or options to purchase foreign currencies, and the 'sell' amounts represent the Swedish kronor equivalent of commitments or options to sell foreign currencies. The forward exchange contracts and currency swaps described in the table below are used by the Company (i) to manage its foreign currency transaction and translation risk with respect to future cash flows from firm charter vessel contracts and anticipated payments for bunker fuels and (ii) to manage its translation risk from net financial assets and liabilities in foreign currencies. The cash flows from the charter vessel contracts are denominated primarily in USD, EUR and GBP whereas payments for bunker fuels are denominated in USD. The Company’s borrowings are primarily funded in USD but hedged to the desired effective borrowing currency.

(SEK in millions)			2004 Buy						2004 Sell						2005 Buy						2005 Sell
USD					1,907						—						—						1,416
NOK					424						282						512						480
SEK					—						3,052						—						1,919
DKK					—						378						—						384
EUR					2,956						723						4,767						564
GBP					54						906						469						934
JPY					—						—						—						27
OTH					—						—						119						143
Total					5,341						5,341						5,867						5,867

Fuel Risk Management

The Company seeks to reduce its risk from changes in the price of bunker fuel, primarily related to the Ferry operations, through a combination of swaps and options. The vessels of the ferry division have an annual consumption of bunker of 350,000 tons of fueloil and 225,000 tons of gasoil. These amounts summarizes to an annual volume of about 4 millions barrels. A substantial part of this is hedged on a consecutive basis. All contracts are settled monthly with volume corresponding to the underlying consumption. The following table presents the notional amounts and credit exposure of financial instruments used for fuel risk management as of December 31 each year.

(SEK in millions)			2004 Notional amount						2004 Credit exposure						2005 Notional amount						2005 Credit Exposure
Bunker fuel swaps					3,857						684						1,604						1,822
Bunker fuel options					39						62						389						—

Freight rate management

The Company seeks to reduce its risk from changes in the price of tanker freight rates through the use of Freight Forward Agreements. The Company enters into hedge contracts for a portion

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Table of Contents

Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 27    Financial Instruments and Risk Management — continued

of the expected freight volume for a period of up to 12 months. The following table presents the notional amounts and credit exposure of financial instruments used for freight rate management as of December 31 each year:

(SEK in millions)			2004 Notional amount						2004 Credit exposure						2005 Notional amount						2005 Credit Exposure
OTC traded swaps					33						2						10						—

Trading Activities

The Company also buys and sells certain types of derivative financial instruments with the objective of generating profits based on short-term differences in price. Such financial instruments that are not used in the Company's program of interest rate and foreign currency risk management are referred to as 'trading' for purposes of this disclosure. All trading instruments are subject to the market risk; that future changes in market conditions may reduce the value of an investment. The Company is a party to a variety of interest rate and foreign currency contracts in its trading activities. A summary of the results of the Company's trading activities on derivative financial instruments is shown below.

(SEK in millions)			2004 Net gains (losses)						2004 Notional amount						2005 Net gains (losses)						2005 Notional amount
Forward exchange contracts					(1	)					—						1						169
Currency options written					9						—						19						159
Currency options bought					—						33						(5	)					80
Interest swaps					—						—						7						249
Total currency trading					8						33						22						657

Quoted market prices are used as the fair values of financial instruments used or held for trading purposes. If quoted market prices are not available, fair values are estimated on the basis of dealer quotes, pricing models or quoted prices for financial instruments with similar characteristics.

Concentrations of Credit Risk

Credit risk represents the accounting loss that would be recognized at each reporting date if counterparties to contracts failed to perform as agreed. Concentrations of credit risk, whether on or off balance sheet, arise from financial instruments for groups of customers or counterparties when they have similar characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions or other conditions. The Company does not have a significant exposure to any individual customer or counterparty or significant concentrations of credit risk except in the case of positive value relating to the commodity contracts. In these cases the counterparty risk is reduced by received cash collaterals.

Fair value of Financial Instruments

FASB Statement No. 107, 'Disclosures about Fair Value of Financial Instruments,' requires the disclosure of estimated fair values for all financial instruments, both on- and off-balance sheet, for which it is practicable to estimate fair value. The Company has used a variety of methods and assumptions, which were based on market conditions and risks existing at the time, to estimate the fair value of the Company's financial instruments as of December 31, 2004 and 2005. For certain instruments, including cash and cash equivalents, accounts payable and accruals, and short term debt, it was assumed that the carrying amount approximated fair value due to the

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Table of Contents

Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 27    Financial Instruments and Risk Management — continued

short maturity of those instruments. Quoted market prices or dealer quotes for the same or similar financial instruments were used to estimate the fair value for marketable securities, long-term investments and long term debt. Other techniques, such as estimated discounted cash flows or replacement cost have been used to determine fair value for the remaining financial instruments. The estimated fair value of the Company's off-balance sheet financial instruments are primarily based on settlement values. These values represent the estimated amount that would be received or paid in the event of termination of the contract taking into consideration the current interest rates, the credit worthiness of the counterparties, and current foreign currency exchange rates.

(SEK in millions)			2004 Carrying value						2004 Fair value						2005 Carrying value						2005 Fair value
Liabilities
Senior Notes					4,088						4,254						4,821						4,776
Derivative financial instruments Held for trading purposes					—						—						—						(2	)
Held for purposes other than trading:
Interest rate risk management:					(40	)					(40	)					63						63
Foreign currency risk management:					19						19						145						145
Bunker risk management:					—						746						—						1,822

Note 28    Personnel

The following table presents the average number of employees of the Company.

			2004 Total						No. of females						2005 Total						No. of females
Parent Company:
Board, CEO, Executive vice president					3												3
Other employees					10						3						10						3
Subsidiaries in Sweden					3,429						1,366						3,788						1,602
Total Sweden					3,442						1,369						3,801						1,605
Subsidiaries outside of Sweden:
Great Britain					1,621						491						1,612						459
The Netherlands					728						137						743						131
Denmark					188						122						170						109
Ireland					100						33						95						36
Norway					73						39						90						49
Poland					46						31						47						32
Switzerland					5						1						4						1
Spain																	71						16
Russia					2												4						1
China																	20						2
Singapore																	6						1
Korea																	13						1
United States					22						5						23						6
India					35						12						70						36
Other					4												16						3
Shipborne employees					879						5						893						6
Total outside of Sweden					3,703						876						3,877						889
Total group					7,145						2,245						7,678						2,494

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Table of Contents

Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 28    Personnel — continued

Shipborne employees refers to drilling and shipping activities, which are performed world wide. For Ferry operations (Stena Line), such persons have been allocated by country. The total number of shipborne employees in Stena Line in 2005 was 3,508 as compared to 3,528 in 2004.

The following tables present the wages, salaries and other remuneration of the employees of the Company.

			2004																		2005
(SEK in millions)			Board and CEO						Other Employees						Total						Board and CEO						Other employees						Total
Parent Company					6						11						17						7						18						25
Subsidiaries in Sweden					33						886						919						30						1,014						1,044
Total Sweden					39						897						936						37						1,032						1,069
Subsidiaries outside of Sweden:
Great Britain					18						522						540						19						558						577
The Netherlands					5						243						248						8						254						262
Denmark					1						66						67						2						68						70
Ireland											34						34												34						34
Norway											28						28						1						40						41
Poland					1						6						7												6						6
Switzerland					4						6						10						9						2						11
Spain																							1						21						22
Russia											3						3												5						5
China																													5						5
Singapore																							1						1						2
Korea																													3						3
United States					3						27						30						3						24						27
India											1						1												3						3
Other											4						4												11						11
Shipborne employees											376						376												461						461
Total outside of Sweden					32						1,316						1,348						44						1,496						1,540
Total group					71						2,213						2,284						81						2,528						2,609

Total personnel costs			2004																		2005
(SEK in millions)			Parent company						Subsidiaries						Total						Parent company						Subsidiaries						Total
Wages, salaries and other remuneration					17						2,267						2,284						24						2,584						2,608
Pension costs					5						298						303						12						269						281
Other social charges					7						297						304						10						371						381
Total					29						2,862						2,891						46						3,224						3,270

For Swedish-flagged vessels employed in international shipping activities, the Company has received a subsidy equal to all social security costs and income taxes payable by the employers on behalf of employees working on board such vessels. The amount of this subsidy in 2005 was SEK 424 million, out of which SEK 402 million relates to ferry operations. In 2004, the amount of the subsidy was SEK 420 million, out of which SEK 406 million relates to ferry operations. The amounts received have reduced personnel costs.

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Table of Contents

Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 28    Personnel — continued

Remuneration of Chief Executives

Salaries of SEK 10 million were paid to the Chief Executive Officer and the Executive Vice President in 2005 and SEK 9 million in 2004. The corresponding pension charges amounted to SEK 5 million in 2005 and SEK 3 million in 2004. The Chief Executive Officer and the Executive Vice President have retirement conditions allowing retirement from 60 years of age with a salary of 65% of the salary then in effect. The period of notice of termination for the Company is 12 and 24 months, respectively. Severance pay amounts to a maximum of 24 months salary. The board members of Stena AB were paid SEK 0.158 million in 2005, out of which SEK 0.030 million was paid to the Chairman of the board and SEK 0.015 million was paid to each of the Chief Executive Officer and the Executive Vice President. In 2004, the board members of Stena AB were paid SEK 0.150 million, out of which SEK 0.030 million was paid to the Chairman of the board and SEK 0.015 million was paid to each of the Chief Executive Officer and the Executive Vice President.

Note 29	Related Party Transactions

The Company has entered into certain transactions with other companies in the Stena Sphere, which includes the companies wholly owned by the Sten Allan Olsson family in Sweden, Stena Sessan AB (‘‘Sessan’’) and Stena Metall AB (‘‘Stena Metall’’) and their subsidiaries. Another significant company within the Stena Sphere is Concordia Maritime AB (‘‘Concordia’’) which is 52% owned by Sessan. Shares in Concordia are listed on the Stockholm Stock Exchange. The significant transactions between the Company and its affiliates are described below.

Concordia

Concordia and the Company, through Stena Bulk AB (‘‘Stena Bulk’’), a wholly owned subsidiary of the Company, are parties to an allocation agreement (the ‘‘Allocation Agreement’’) pursuant to which Concordia may elect to participate 100%, 50% or 0% in business opportunities identified by Stena Bulk relating to the chartering of crude oil tankers. No 50% agreements were made in 2004 or 2005. The net outcome of the agreement including results on forward contracts was a loss of SEK 5 million in 2003, a loss of SEK 1 million in 2004 and a loss of SEK 1 million in 2005.

The Company provides certain services to Concordia such as administration, marketing, insurance and technical support for Concordia's owned and chartered vessels, including administration of jointly chartered vessels, office and office services for Concordia's personnel and certain financial and other services. The Company earned fees equal to SEK 19 million, SEK 17 million and SEK 13 million in 2003, 2004 and 2005, respectively, for these services.

Concordia has, through its subsidiary Universe Tankships Ltd, provided ship management services to the Company. The Company paid fees equal to SEK 2 million and SEK 3 million in 2003 and 2004, respectively, for these services. In August 2004, the Company acquired Universe Tankships Ltd from Concordia at market price.

Sessan

Since June 1999, the Company has served as the business manager for Sessan for its 50% participation in a Norwegian partnership that owns the shuttle tanker Stena Sirita that is chartered pursuant to a 10-year contract to ESSO Norway. In 2003, the Company also became the business manager for Sessan for its 50% participation in the shuttle tanker Stena Spirit that is chartered pursuant to a 15-year contract to Petrobras in Brazil. The Company earned total fees of SEK 1 million in each of the years 2003, 2004 and 2005 for these services.

In 2001 and 2002, Sessan acquired all the shares in the shipping company HH Ferries in the south of Sweden. The acquisition was partly financed by an interest bearing credit facility from the Company. As of December 31, 2005, DKK 211 million was outstanding under this facility, the same as of December 31, 2004.

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 29	Related Party Transactions — continued

In December 2002, the Company sold to Sessan the remaining 50% of the RoPax vessel Stena Jutlandica. Sessan acquired the first 50% of this vessel from the Company in 1996. The vessel is chartered back as an operating lease, for which the Company paid charterhires of SEK 61 million for each of the years 2003, 2004 and 2005, respectively.

In 2003, the Company granted an interest bearing loan of SEK 10 million to Sessan to finance the acquisition of shares in an unrelated company. This loan was still outstanding as of December 31, 2005.

Sessan has invested in shares in the Swedish company Meda AB (‘‘Meda’’). In 2005, a new share issue in Meda was guaranteed by the Company. In connection with the new issue, the Company purchased shares in Meda (see note 13). Sessan has the option to buy these shares at a price of 10% above the price paid by the Company.

Stena Metall

The Company purchases a substantial part of its bunker fuel from Stena Metall. Such purchases aggregated SEK 749 million, SEK 726 million and SEK 1,127 million in 2003, 2004 and 2005, respectively.

In connection with the delivery from the shipyard in March 2004 of the RoRo vessel Stena Freighter, the vessel was sold to Stena Metall and chartered back on a long-term operating lease. The Company paid charterhire to Stena Metall for this vessel of SEK 18 million and SEK 22 million in 2004 and 2005, respectively. In May 2004, the Company also chartered the RoRo vessel Stena Nordica from Stena Metall and paid charterhire of SEK 28 million and SEK 41 million in 2004 and 2005, respectively.

The Company provides management and other services to Stena Metall. The Company received SEK 1 million in each of the years 2003, 2004 and 2005 for these services.

Olsson Family

The Company rents office space from members of the Olsson family. In 2003, 2004 and 2005, the Company paid SEK 28 million, SEK 28 million and SEK 29 million, respectively, in respect of such properties.

The Company manages certain properties owned by members of the Olsson family. In 2003, 2004 and 2005, members of the Olsson family paid the Company SEK 10 million, SEK 11 million and SEK 13 million, respectively, for such management services.

The Company has agreed to pay Sten A. Olsson and Dan Sten Olsson an annual indexed retirement benefit for life.

In 2004, the Company acquired properties in Sweden, that were subsequently sold to the Olsson family at a value of SEK 587 million. This transaction had no influence on the consolidated accounts for the Company.

Arlington

In November 2004, the Company sold four tankers to Arlington Tankers Ltd (‘‘Arlington’’), a newly formed US public company. At the same time Concordia sold two VLCC tankers to Arlington. The purchase was partly paid with shares in Arlington representing an ownership of approximately 5 % for the Company and 10 % for Concordia. In connection with the sale, the Company agreed to charter the four sold tankers from Arlington for periods between four and six years. In addition to the contractual charterhire there is also a profitsharing arrangement in place meaning that the Company will pay 50 % of the trading result above the charterhire calculated in accordance with agreed criteria.

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 30	Subsequent events

The two product tankers Stena Contest and Stena Concept which were delivered from the shipyard in the spring 2005 were sold to Arlington in January 2006. An agreement to sell two tanker newbuildings under construction at the Dalian shipyard in China were made in late 2005. Delivery to the new owner, a greek shipping company, was made of the Stena Compass in February 2006, while delivery of the Stena Compassion was made in June 2006.

In February 2006 the Company entered into a Memorandum of Agreement to sell and bareboat-charter back Stena Dee with Songa Offshore ASA. The sale was completed in May 2006. The bareboat charter will enable Stena Dee to fulfill its contract with Norsk Hydro.

In March 2006 the Company exercised its option with Samsung Heavy Industries in Korea for the construction of a second deepwater dynamically positioned drillship for delivery in June 2008. At the end of March 2006, a five year leasing agreement was signed for the Stena DrillMAX, the first drillship ordered in 2005.

In March 2006 an agreement was signed to sell the RoPax vessel Svealand to DFDS. The sale was completed at the end of April 2006. An agreement was also signed with the Italian shipyard Visentini to acquire a RoPax vessel under construction at its delivery in 2007.

In the three months ended March 31, 2006, properties were acquired at an amount of approximately SEK 700 million, mainly in Gothenburg and Stockholm. Properties were sold at an amount of approximately SEK 400 million.

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Stena AB (publ) Consolidated Financial Statements

Note 31    US GAAP Information

The accompanying consolidated financial statements have been prepared in accordance with Swedish GAAP which differs in certain significant respects from US GAAP. The following is a summary of the adjustments to net income and stockholders' equity that would have been required if US GAAP had been applied instead of Swedish GAAP in the preparation of the consolidated financial statements.

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Net income under Swedish GAAP					510						2,359						2,268
Adjustments to reconcile to US GAAP:
Disposal of assets(a)					5						(365	)					80
Depreciation of properties(b)					(54	)					(109	)					(34	)
Investments in securities(c)					(97	)					(76	)					(388	)
Investment subsidies(d)					2						16						—
Financial instruments(e)					33						549						1,295
Purchase accounting Stena Line(f)					(86	)					(67	)					34
Business combinations(g)					—						15						33
Pensions(h)					16						(42	)					(1,533	)
Deferred costs(i)					(48	)					15						15
Capital lease transaction(j)					(28	)					(492	)					73
Investments in VIEs(k)					—						132						—
Others					24						15						16
Tax effect of US GAAP adjustments					39						(98	)					149
Net income under US GAAP					316						1,852						2,008

			As of December 31,
(SEK in millions)			2004						2005
Stockholders' equity under Swedish GAAP					13,419						15,132
Adjustments to reconcile to US GAAP:
Disposal of assets(a)					(450	)					(370	)
Depreciation of properties(b)					(481	)					(515	)
Investments in securities(c)					—						—
Investment subsidies(d)					—						—
Financial instruments(e)					674						1,822
Purchase accounting Stena Line(f)					(364	)					(330	)
Business combinations(g)					15						48
Pensions(h)					(343	)					(71	)
Deferred costs(i)					(28	)					(13	)
Capital lease transaction(j)					(839	)					(766	)
Investments in VIEs(k)					112						—
Others					(59	)					(56	)
Tax effect of cumulative US GAAP adjustments					326						32
Stockholders' equity under US GAAP					11,982						14,913

Those differences which have a material effect on consolidated net income and stockholders' equity are described as follows:

(a)	Disposal of assets – Disposed assets may have different carrying values under US GAAP resulting in a different gain or loss on disposal than under Swedish GAAP. After consolidation of Stena Line as of October 31, 2000, this includes gains on sales of certain vessels to Stena Line in 1988 to

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 31    US GAAP Information — continued

1995, which under Swedish GAAP have been eliminated to the extent of the Company's 46% investment. For US GAAP purposes, the Company eliminates all of such gains. A disposal of an asset resulting in a gain in accordance with Swedish GAAP may not qualify as a sale under US GAAP but as a sale-lease back transaction. A gain is deferred under Swedish GAAP when there is a sale-lease back transaction where the lease is determined to be a finance lease, but the gain is recognized if the lease is determined to be an operating lease. Under US GAAP the gain is also deferred when the lease is determined to be an operating lease. The gain is deferred over the life of the lease. For US GAAP purposes, the gain recognized on the Company's sale of tankers to Arlington Tankers Ltd in the amount of SEK 316 million for the year ended December 31, 2004 has been deferred and is being amortized over five years, the life of the lease.

(b)	Depreciation of properties – Under Swedish GAAP, properties in the Company's real estate operations are depreciated at 1%. Under US GAAP, all properties are depreciated over their estimated useful lives. For US GAAP purposes, depreciation for the real estate properties is based on periods of 50 years.

(c)

Investments in securities – Under Swedish GAAP, the Company changed the accounting principles for the valuation of financial instruments at market in 2005. The accounts for 2003 and 2004 have been restated. Changes in the market value of certain marketable securities are revalued through the income statement. Under US GAAP, changes in the market value of these investments are classified as 'available for sale' securities and are recorded as a separate component of equity, net of applicable deferred taxes.

(d)

Investment subsidies – Under Swedish GAAP, government investment subsidies related to the financing of vessels are recorded as income upon receipt of cash. Under US GAAP, investment subsidies are netted against the cost of the vessel effectively reducing depreciation expense over the economic useful life of the vessel. The Company sold the vessel during 2004 and the remaining adjustment to US GAAP was accounted for as an additional gain on sale of vessels during 2004.

(e)

Financial instruments – Under Swedish GAAP, the Company changed the accounting principles for the valuation of financial instruments at market in 2005 and the result is recorded as a separate component in the equity. The accounts for 2003 and 2004 have been restated. Unrealized gains and losses on forward exchange contracts and foreign currency options which hedge future bunker fuel risks are deferred and recognized only when realized. Under US GAAP, unrealized gains and losses on such contracts which do not qualify for hedge accounting treatment would be recognized as income or loss when they occur. Management has concluded that none of the Groups' hedges of financial exposure qualify for hedge accounting under US GAAP. In accordance with US GAAP, all outstanding derivative instruments are therefore valued at fair value. The gains and losses that thereby arise are included when calculating income.

(f)

Purchase accounting Stena Line – For US GAAP purposes, the acquisition of the additional 12% of Stena Line in October 2000 should be accounted for as a step acquisition. Thus, for US GAAP purposes, the Company's carrying value of its prior 46% interest in Stena Line does not change; that is, carryover basis is used for that portion of the investment in Stena Line. Under step acquisition accounting, the additional 12% tranche of Stena Line acquired in 2000 would be recorded at fair value based upon the purchase price paid for shares of Stena Line of SEK 8 per share. The increase in depreciation expense amounted to SEK 11 million, SEK 11 million and SEK 11 million for the years ended December 31, 2003, 2004 and 2005, respectively. In connection with the Company's offer for shares of Stena Line, the Company also agreed to repurchase the outstanding Senior Notes of Stena Line for 80% of their redemption value. The difference between the book value of those Senior Notes and the reacquisition price paid by the Company was SEK 658 million. The price paid by the Company to acquire the Senior Notes is deemed to be

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 31    US GAAP Information — continued

the fair value of the notes due to the proximity of the two transactions. The excess of the carrying value of these notes over their fair value represents negative goodwill resulting from the acquisition of Stena Line by the Company. Under Swedish GAAP, such negative goodwill has been amortized into income over four years. However, For US GAAP purposes, the excess of the fair value of an acquired business over its purchase price (i.e., negative goodwill) is applied as a reduction of the carrying value of acquired long-lived assets. The reduction of the carrying value of the acquired Stena Line long-lived assets results in a lower depreciation expense for US GAAP purposes on the Stena Line long-lived assets, primarily vessels, as compared to Swedish GAAP. The reduction in depreciation expense amounted to SEK 45 million, SEK 45 million and SEK 45 million for the years ended December 31, 2003, 2004 and 2005, respectively.

(g)

Business combinations – Accounting of acquisitions of certain subsidiaries under Swedish GAAP differs from US GAAP. The difference is attributable primarily to reporting and amortization of goodwill. In accordance with SFAS 142 ‘‘Goodwill and Other Intangible Assets’’, goodwill and other intangible assets with indefinite useful lives should not be amortized but rather evaluated for impairment annually. Accordingly, the amortization of goodwill reported under Swedish GAAP has been reversed in the determination of net income and Stockholders' equity under US GAAP. Furthermore, impairment tests have been performed for existing goodwill. No impairment loss has been recognized as a result of these tests.

(h)

Pensions – The Company has certain Swedish and British pension arrangements that are not multiemployer or non-participating insurance arrangements funded through payments to a separate pension foundation. Effective in 2004, provisions for employee benefits in the consolidated financial statements of the Company are accounted for in accordance with RR29 Employee Benefits, which conforms in all significant respects with IAS 19 Employee Benefits. See further Note 1 and Note 19. In accordance with US GAAP, pension benefits should be accounted and disclosed for in accordance with SFAS No. 87 ‘‘Employers Accounting for Pensions’’ and SFAS No. 132 ‘‘Employers Disclosure about Pensions and Other Post-retirement Benefits.’’ The differences between the accounting principles used by the Company (Swedish GAAP) and US GAAP pertain to different transition dates, and recognition of past service cost and minimum liability adjustments. Certain pension liabilities for employees within the UK ferry operations of the company were previously accounted for as contingent liabilities due to the lack of information on the portion of the liability attributable to the Company. New information was released for this pension scheme in 2005 and the portion of the liability and assets attributable to the Company have been recorded in the consolidated balance sheet. Under Swedish GAAP, the change has been recorded directly against stockholders' equity and deferred tax liabilities, respectively. From October 1, 2005 the pension scheme will be accounted for as a multiple-employer plan. For U.S. GAAP purposes, the change in 2005 is viewed as the withdrawal from a multi-employer plan and the establishment of a multiple-employer plan with the unfunded benefit obligation of SEK 1,536 million as of October 1, 2005 (SEK 1,075 million, net of tax) being recognized immediately in net income.

(i)

Deferred costs – The Company was party to litigation regarding a claim by Statoil, the charterer of the Stena Don, pertaining to the delivery of the rig. The Company had initiated a lawsuit against Statoil in May 2003 in relation to the use and payment for additional variable deckload, insurance payments and certain matters in relation to the dayrates and use of certain equipment. In October 2003, the Company reached a settlement with Statoil. The settlement resulted in the resolution of amounts that had been previously invoiced by the Company but had not been paid by Statoil. The Company also agreed to withdraw its legal claims against Statoil. Under Swedish GAAP, costs that are related to long-term contracts of long-lived assets may be capitalized and amortized over the life of the related contract if the costs are related to the maintenance of the

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 31    US GAAP Information — continued

	contract and can be recovered from the cash flow of the contract. For US GAAP purpose, the costs incurred as a result of amounts that were not recoverable in the ultimate settlement with Statoil must be expensed.

(j)

Capital lease transaction – Since 1996, the Company has leased certain vessels from two special purpose leasing entities. The leases were each accounted for as capital leases and accordingly, the Company recorded an asset and a corresponding lease obligation on its balance sheet for both Swedish and US GAAP. In December 2003, the Company acquired the special purpose leasing entities for consideration of GBP 7 million. The leasing entities acquired by the Company had existing bank indebtedness of GBP 105 million which pursuant to the share purchase agreements the Company was obliged to procure repayment, and a deferred tax liability of GBP 45 million. The Company immediately paid the bank indebtedness. Also in December 2003, the Company transferred the vessels to a wholly owned subsidiary which, pursuant to existing law, increased the tax basis of the vessels and reduced the associated deferred tax liability. Accordingly, for US GAAP purposes, the deferred tax liability at December 31, 2003, has been reduced in accordance with the provisions of the relevant tax law in effect at that date. The effect of the reduction of the deferred tax liability is recorded as an adjustment to the carrying value of the vessel for US GAAP purposes which creates a book basis difference in the vessel when compared to Swedish GAAP. The reduction of the carrying value of the vessels will result in lower depreciation expense for US GAAP purposes as compared to Swedish GAAP. Under Swedish GAAP the benefit from the resolvement of the deferred tax liability is recorded as an income tax benefit in 2004. In addition, approximately SEK 28 million of costs associated with the establishment of the post-acquisition structure were capitalized for Swedish GAAP in 2003. Under US GAAP, such costs are considered to be period costs and are expensed as incurred. These costs have been expensed under Swedish GAAP during 2004 and thereby reversing the adjustment under US GAAP.

(k)

Investment in VIEs The company changed the Swedish GAAP accounting principle for consolidation of VIE's in 2005. VIE's are consolidated now for Swedish as well as for US GAAP. The accounts for 2004 have been restated. The difference in 2004 net income was due to the change in accounting principles under Swedish GAAP that allowed the transition to be recorded as a cumulative effect in shareholders equity and under US GAAP to be recorded in net income. The Company choose not to restate the unrealized portion of the gain in securities in Swedish GAAP. This adjustment was made in prior year's for US GAAP purposes.

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 31    US GAAP Information — continued

The condensed consolidated financial statements under US GAAP are presented as follows:

Income statement – US GAAP			Year ended December 31,
(SEK in millions)			2003						2004						2005
Total revenues					13,379						15,955						18,491
Net gain sale of vessels					119						291						395
Net gain sale of property					146						113						935
Direct operating expenses					(9,196	)					(10,447	)					(11,525	)
Selling and administrative expenses					(1,506	)					(1,803	)					(3,393	)
Depreciation and amortization					(1,771	)					(1,769	)					(2,738	)
Total operating expenses					(12,473	)					(14,019	)					(17,656	)
Income from operations					1,171						2,340						2,165
Share of affiliated companies' results											17						21
Interest income					85						382						567
Interest expense					(824	)					(1,135	)					(1,395	)
Other financial items					(157	)					1,015						695
Total financial income and expense					(896	)					262						(133	)
Minority interest					2						(57	)					(21	)
Income taxes					39						(710	)					(24	)
Net income					316						1,852						2,008

Balance sheet – US GAAP			As of December 31,
(SEK in millions)			2004						2005
Intangible fixed assets					410						806
Tangible fixed assets					30,943						31,372
Marketable securities					1,375						3,284
Investment in VIE's					4,552						5,753
Other noncurrent assets					1,517						3,594
Total noncurrent assets					38,797						44,809
Short-term investments					1,333						2,213
Cash and cash equivalents					2,380						3,744
Other current assets					2,809						4,463
Total current assets					6,522						10,420
Total assets					45,319						55,229
Total stockholders' equity					11,982						14,913
Minority Interest					114						131
Deferred income taxes					1,853						1,485
Pension liabilities					742						1,953
Other provisions					0						46
Long-term debt					20,718						29,928
Other noncurrent liabilities					570						883
Total noncurrent liabilities					21,288						30,811
Short-term debt					6,231						1,709
Other current liabilities					3,109						4,181
Total current liabilities					9,340						5,890
Total stockholders' equity and liabilities					45,319						55,229

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Stena AB (publ) Consolidated Financial Statements

Note 32    Additional US GAAP Disclosures

Certain disclosures and financial statement classifications required under US GAAP and the US Securities and Exchange Commission rules and regulations would be different from the amounts disclosed on a Swedish GAAP basis. The following information is presented on a US GAAP basis for US GAAP presentation purposes.

(a) Income Taxes

The net deferred tax liability of the Company computed on a US GAAP basis consists of the following:

			As of December 31,
(SEK in millions)			2004						2005
Deferred tax liabilities:
Property, vessels and equipment					2,632						2,091
Investments					159						666
Provisions					78						—
Other					90						88
Total deferred tax liabilities					2,959						2,845
Deferred tax assets:
Property, vessels and equipment					266						327
Tax loss carryforwards					1,647						1,182
Investments					144						599
Provisions					463						77
Other					—						—
Total deferred tax assets					2,520						2,185
Less deferred tax assets not recognized					(1,317	)					(581	)
Net deferred tax assets					1,203						1,604
Net deferred tax liability under US GAAP					1,756						1,241
Out of which:
Deferred tax assets					97						244
Deferred tax liabilities					1,853						1,485
Net deferred tax liability					1,756						1,241

The valuation allowance (deferred tax assets not recognized) was SEK 1,007 million as of January 1, 2003. The valuation allowance increased/(decreased) by SEK (463) million, SEK 773 million and SEK (736) million during the years ending December 31, 2003, 2004 and 2005, respectively.

The determination of the amount of unrecognized deferred tax liability in respect of the cumulative amount of undistributed earnings of subsidiaries that would be taxed on remittance is not practicable.

(b) Long-term Debt

For Swedish GAAP purposes, certain borrowings have been classified as long-term because the Company intends to refinance those borrowings on a long-term basis. See Note 20. Those borrowings which amount to SEK 5,975 million and SEK 835 million at December 31, 2004 and 2005 respectively would be classified as short-term in a US GAAP consolidated balance sheet.

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 32    Additional US GAAP Disclosures — continued

(c) Net gain on sale of vessels and property

For Swedish GAAP purposes net gain on sale of vessels and property are included as a component of revenues. For US GAAP purposes these net gains would be excluded from revenues and included as a separate component of income from operations.

(d) Comprehensive Income

The Company has adopted SFAS No. 130, ‘‘Reporting Comprehensive Income’’, which establishes standards for the reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income generally encompasses all changes in stockholders equity (except those arising from transactions with the owners) and includes net income, net unrealized capital gains or losses on available for sale securities and foreign currency translation adjustments. Comprehensive income in accordance with US GAAP was as follows:

			Comprehensive Income (Loss)						Accumulated Other Comprehensive Income (Loss)
Balance as of January 1, 2003											(1,332	)
Net income					316
Available for sale securities					51						51
Minimum liability, pensions					88						88
Foreign currency translation adjustment					(607	)					(607	)
Comprehensive income 2003					(152	)
Balance as of December 31, 2003											(1,800	)
Net income					1,852
Available for sale securities					99						99
Minimum liability, pensions					82						82
Foreign currency translation adjustment					(210	)					(210	)
Comprehensive income 2004					1,823
Balance as of December 31, 2004											(1,829	)
Net income					2,008
Available for sale securities					116						116
Minimum liability, pensions					326						326
Foreign currency translation adjustment					441						441
Comprehensive income 2005					2,891
Balance as of December 31, 2005											(946	)

Available for sale securities are presented net of tax of SEK (18) million, SEK (27) million and SEK 2 million for 2003, 2004 and 2005, respectively.

(e) Pensions

Pension cost, on the defined benefit plans, calculated in accordance with US GAAP includes the following:

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 32    Additional US GAAP Disclosures — continued

			Year ended December 31,
(SEK in millions)			2003						2004						2005
Service cost					42						41						53
Interest cost					119						133						149
Change in pension plans					—						—						1,536
Expected return on plan assets					(117	)					(143	)					(199	)
Net amortization and deferral					44						42						122
Net periodic pension cost					88						73						1,661

The changes in benefit obligation are as follows:

			As of December 31,
(SEK in millions)			2004						2005
Benefit obligation at beginning of year					2,323						2,488
Service cost					41						53
Interest cost					133						149
Actuarial gain (loss)					121						126
Change in pension plans					—						6,598
Benefit paid					(99	)					(33	)
Translation difference					(31	)					472
Benefit obligation at end of year					2,488						9,853
Additional minimum liability					461						—
Amounts recognized in the consolidated balance sheets as accrued pension liability					2,949						9,853

The change in fair value of plan assets are as follows:

			As of December 31,
(SEK in millions)			2004						2005
Assets at beginning of year					1,917						2,105
Actual return on plan assets					270						199
Company contributions					46						62
Members contributions					5						4
Change in pension plans					—						5,062
Benefits paid					(100	)					(33	)
Actuarial gain (loss)					—						320
Other					(33	)					181
Assets at end of year					2,105						7,900

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Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 32    Additional US GAAP Disclosures — continued

Minimum liability:

			As of December 31,
(SEK in millions)			2004						2005
Accumulated benefit obligation					2,217						—
Fair value of plan assets					(1,999	)					—
Unfunded accumulated benefit obligation					218						—
Net amount recognized in consolidated balance sheets					243						—
Additional minimum liability					461						—
Unrecognized prior service cost					(135	)					—
Adjustment to stockholders´ equity					326						—

Assumptions used in the calculation of pension obligations are as follows:

			2003			2004			2005
Weighted discount rate			5.4-5.5%			5.25%			4.25-5.00%
Expected long-term rate of return on assets			6.7%			7.1%			4.50-7.50%
Rates of increase in compensation levels			3.75%			3.75%			3.25-3.85%

(f) Recently issued U.S. accounting standards

In December 2004, the FASB issued SFAS 153, ‘‘Exchanges of Nonmonetary Assets — an Amendment of APB Opinion No. 29’’. APB Opinion No. 29 provided an exception to the basic fair value measurement principle for exchanges of similar productive assets. That exception required that some nonmonetary exchanges, although commercially substantive, be recorded on a carryover basis. SFAS 153 eliminates the exception to fair value measurement for exchanges of similar productive assets and replaces it with a general exception to fair value measurement for exchange transactions that do not have commercial substance — that is, transactions that are not expected to result in significant changes in the cash flows of the reporting entity. SFAS 153 is effective for nonmonetary asset exchanges occurring after December 31, 2005.

In February 2006, the FASB issued SFAS No. 155, ‘‘Accounting for Certain Hybrid Financial Instruments’’. SFAS No. 155 amends SFAS No. 133 and SFAS No. 140, and allows financial instruments that have embedded derivatives that otherwise would require bifurcation from the host to be accounted for as a whole, if the holder irrevocably elects to account for the whole instrument on a fair value basis. Subsequent changes in the fair value of the instrument would be recognized in earnings. The standard also:

	–	Clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133;

	–	Establishes a requirement to evaluate interests in securitized financial assets to determine whether interests are freestanding derivatives or are hybrid financial instruments that contain an embedded derivative requiring bifurcation;

	–	Clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives;

	–	Amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest (that is itself a derivative financial instrument).

F-58

Table of Contents

Stena AB (publ) Consolidated Financial Statements  — (continued)

Note 32    Additional US GAAP Disclosures — continued

SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of the first fiscal year that begins after September 15, 2006. The Company is currently evaluating the impact adoption of SFAS No. 155 will have on its financial position and results of operations.

F-59

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON SCHEDULES

The Board of Directors

Stena AB (publ)

Under date of April 25, 2006, we reported on the consolidated balance sheets of Stena AB (publ) and subsidiaries as of December 31, 2004 and 2005, and the related consolidated statements of income and cash flows for each of the years in the three-year period ended December 31, 2005, and the related statement of changes in stockholders' equity for each of the years in the two year period ended December 31, 2005, as contained in the Annual Report on Form 20-F for the year 2005. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audit.

In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

			/s/ Thord Elmersson
Gothenburg, Sweden April 25, 2006			Thord Elmersson Authorized Public Accountant KPMG Bohlins AB

S-1

Table of Contents

Schedule II

Stena AB and Consolidated Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2003, 2004 and 2005

Description			Balance at Beginning of Year						Additions						Companies acquired						Deductions						Balance at End of Year
			(SEK in thousands)
Allowance for Doubtful Accounts:
December 31, 2003					15,148						10,230												(4,553	)					20,825
December 31, 2004					20,825						8,841												(3,656	)					26,010
December 31, 2005					26,010						17,342						19,626						(10,746	)					52,232

Notes:

Additions includes foreign currency translation effect

S-2

Table of Contents

Schedule III

Stena AB and Consolidated Subsidiaries
Property Cost and Accumulated Depreciation
December 31, 2005
(SEK in millions)

Notes:

(1)   Gross amount at which carried at end of the year:

				Year ended December 31,
				2003						2004						2005
				(SEK in millions)
	Balance at beginning of year					8,246						8,158						19,476
	Additions:
	Purchase of companies											11,298						(524	)
	Additions					405						490						1,969
	Foreign currency effect					(162	)					(51	)					408
						8,489						19,895						21,329
	Deductions:
	Disposals					331						423						2,977
	Transfers											(4	)					38
						331						419						3,015
	Balance at end of year					8,158						19,476						18,314

(2)   Accumulated depreciation:

				Year ended December 31,
				2003						2004						2005
				(SEK in millions)
	Balance at beginning of year					425						533						777
	Depreciation charged					162						294						393
	Properties sold					(16	)					(38	)					(161	)
	Transfers																	(22	)
	Foreign currency effect					(38	)					(12	)					52
						533						777						1,039

S-3

Table of Contents

Stena AB and Consolidated Subsidiaries
Property and Accumulated Depreciation
December 31, 2005

Description			Initial cost to company						Costs capitalised						Total						Accumulated Depreciation						Net book value
Property data			Buildings and land						Improvements						[1]						[2]
			TSEK						TSEK						TSEK						TSEK
SRBV, enclosure no 1					1,638,904						62,480						1,701,383						(104,221	)					1,597,162
SPBV, enclosure no 2					487,653						65,208						552,861						(35,553	)					517,308
Adra Kvarn, enclosure no 3					195,273						0						195,273						(21,019	)					174,254
SFAB, enclosure nr 4					2,178,165						627,058						2,805,223						(245,474	)					2,559,749
SFNAB, enclosure no 5					517,435						19,039						536,474						(44,129	)					492,345
SFSAB, enclosure no 6					932,354						32,779						965,133						(38,228	)					926,905
SFHKB, enclosure no 7					351,345						47,805						399,150						(12,809	)					386,341
SFFAB group, enclosure 8					9,319,028												9,319,028						(156,947	)					9,162,081
Stena Line, enclosure no 9					1,607,970						26,196						1,634,166						(362,137	)					1,272,030
Adactum, enclosure 10					113,758												113,758						(3,399	)					110,359
NMM, GLASGOW					39,294						20,566						59,860						(7,663	)					52,197
DRILLING, ABERDEEN					14,450						0						14,450						(7,006	)					7,444
SCANPORT, PUTTGARDEN					15,692												15,692												15,692
EUROPORT, R|$$|ADODBY					1,318												1,318												1,318
Total					17,412,639						901,130						18,313,769						(1,038,586	)					17,275,184

SCHEDULE III

Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances						Initial cost to Company						Costs capitalised						Total						Accumulated Depreciation						Date of Construction						Date acquired			Life on which Depreciation is computed
Property data			(Mortgages)						Buildings and land						Improvements
			TSEK						TSEK						TSEK						TSEK						TSEK
Atoomweg					101,248						85,328						7						85,334						(4,402	)					1979				07/02			100 years
Brain Park 30					42,011						57,778						3,306						61,085						(561	)					1989				11/89			100 years
Brain Park 80					22,070						18,600						1,476						20,075						(4,875	)
Brain Park 120					30,477						25,685						3,264						28,949						(6,794	)
Eisenhowerlaan					21,656						31,436						208						31,644						(2,016	)					1979				01/02			100 years
Haspelslaan					53,298						75,314						432						75,746						(1,724	)					1986				07/01			100 years
Ottho Heldringstraat					49,424						47,370						746						48,115						(3,283	)					1990				01/90			100 years
Keizersgracht					38,227						38,860						5,302						44,162						(3,071	)					1750				10/88			100 years
Kiotoweg					65,664						55,339						(874	)					54,465						(3,342	)					2002				08/02			100 years
Koninginnegracht 10					17,679						17,509						11,923						29,432						(1,206	)					1984				06/98			100 years
Koninginnegracht 12					41,936						28,715						11,350						40,065						(1,209	)					1984				06/98			100 years
Koninginnegracht 13					34,258						31,564						17						31,582						(1,245	)					1990				12/97			100 years
Koninginnegracht 14					36,287						51,150						0						51,150						(1,138	)					1994				09/01			100 years
Koninginnegracht 23					23,608						33,541						0						33,541						(2,128	)					1971				01/02			100 years
Lichtenauerlaan					37,114						52,595						1,267						53,862						(1,841	)					1997				03/04			100 years
Max Euwelaan					42,011						58,079						3,649						61,728						(1,827	)					1988				05/04			100 years
Markthalle					48,215						85,990						(2,644	)					83,346						(37,871	)					1987				12/87			100 years
Nacap					30,988						31,113						1,730						32,843						(2,310	)					1989				07/89			100 years
Nacap01					0						108,130						0						108,130						(326	)
New York, Lijnden					89,081						78,130						206						78,336						(1,413	)					2001				12/01			100 years
Nieuwezijds Kolk					51,812						71,483						0						71,483						(805	)												100 years
Park Voorn					57,782						58,195						0						58,195						(4,391	)					1989				10/89			100 years
Paviljoensgracht					78,094						70,436						992						71,428						(2,136	)					1981				12/99			100 years
Rooseveltweg					30,644						23,600						1,677						25,277						(1,711	)					1995				06/03			100 years
San Francisco, Linjden					34,505						41,399						(9,710	)					31,689						(803	)					2002				03/02			100 years
Scheveningseweg					33,532						69,607						4,824						74,431						(1,265	)					1988				04/04			100 years
Schipolweg					49,170						76,985						(27	)					76,959						(4,045	)					1986				12/02			100 years
Stadhouderskade					82,480						40,566						6,370						46,936						(3,455	)					1928				10/96			100 years
Veraartlaan					27,516						25,031						2,032						27,063						(851	)					1978				08/99			100 years
Volmerlaan					36,801						43,670						14,895						58,565						(3,422	)					1978				02/90			100 years
Wilhelminalaan					73,688						61,617						60						61,676						(2,782	)					1979				05/97			100 years
Zeestraat					55,316						49,381						0						49,381						(1,278	)					1982				10/00			100 years
Other											5												5						6
Elim on consolidation
Dec 31, 2004											(5,296	)											(5,296	)					5,296
Total SRBV					1,436,592						1,638,904						62,480						1,701,383						(104,221	)

SCHEDULE III
encl 1

Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances						Initial cost to Company						Costs Capitalised						Total						Accumulated Depreciation						Date of Construction						Date Acquired			Life on which Depreciation is computed
Property data			(Mortgages)						Buildings and land						Improvements
			TSEK						TSEK						TSEK						TSEK						TSEK
Hogehilweg					47,150						72,265						0						72,265						(473	)					1986				09/05			100 years
Rue Brasseur, Luxemburg					165,582						162,235						(4,215	)					158,020						(17,437	)					1992				04/92			100 years
Sophia Antipolis, Nice					14,962						16,161						3,482						19,642						(2,247	)					1989				03/90			100 years
Schiessstrasse, Duesseldorf					62,438						73,603						9,206						82,809						(4,443	)					1990				06/89			100 years
WTC Sophia Antipolis					97,257						77,855						56,177						134,032						(7,825	)					1990				12/00			100 years
Font de´l orme					23,575						29,313						511						29,824						(551	)					1989				09/03			100 years
Les Deux Arcs					97,129						128,485						47						128,532						(42	)					2003				12/04			100 years
Other					0						2						0						2						(2	)
Total SPBV					460,943						487,653						65,208						552,861						(35,553	)

SCHEDULE III
encl 2

Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances						Initial cost to company						Costs capitalised						Total						Accumulated Depreciation						Date of construction			Date acquired			Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land						Improvements
			TSEK						TSEK						TSEK						TSEK						TSEK
Kålroten 8					123,300						134,725												134,725						0										100 years
Stenkvista 11					19,210						40,891												40,891						0										100 years
Sparven 5					16,000						31,194												31,194						0										100 years
Elim on consolidation											(11,537	)											(11,537	)					(21,019	)
					0												0						0						0
TOTAL |$$|AOAdra Kvarn					158,510						195,273						0						195,273						(21,019	)

SCHEDULE III
encl 3

Table of Contents

Schedule III

Property and Accumulated Depreciation
December 31, 2005

Description			Encum- brances						Initial cost to company						Costs capitalised						Total						Accumulated Depreciation						Date of con- struction						Date acquired						Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land						Improvements
			TSEK						TSEK						TSEK						TSEK						TSEK
Järnbrott 126:4					33,699						3,071						2,888						5,959						(75	)					1961						01/01/81				100 years
Kallebäck 7:8					10,505						4,042						497						4,539						(306	)					1964						01/01/81				100 years
Högsbo 8:9					4,690						3,793						9,775						13,568						(2,731	)					1971						01/01/81				100 years
Kallebäck 12:4					9,000						4,740						585						5,325						(366	)					1960						31/12/83				100 years
Kvillebäcken 12:2					9,200						18,600						3,396						21,996						(2,077	)					1961						30/09/84				100 years
Biskopsgården 46:4					16,680						13,305						14,020						27,325						(2,959	)					1968/73						31/12/85				100 years
Stampen 26:2					116,000						58,549						5,786						64,335						(5,874	)					1988						01/01/94				100 years
Järnbrott 164:22					39,000						26,771						649						27,420						(2,819	)					1966						01/02/94				100 years
Sannegården 15:4					9,759						0						10,913						10,913						(1,087	)					1973						01/01/83				100 years
Sannegården 15:5					18,750						23,450						(14,068	)					9,382						(188	)					1973						01/01/83				100 years
Sannegården 22:19					7,500						0						2,400						2,400						(233	)					1973						01/01/83				100 years
Partille 3:234-5					0						96						1						97						0												01/01/83				100 years
Askim 70:4-6					120,000						159,164						4,922						164,086						(8,491	)					1968/98						01/01/00				100 years
Askim 70:1					0						1						0						1						0						1968/98						01/01/00				100 years
Askim 59:38					0						1,000						56						1,056						(70	)					1968/98						01/01/00				100 years
Kardemumman 1-2					15,000						17,306						335						17,641						(810	)					1990						01/07/00				100 years
Ugglum 14:15					4,000						5,835						2,686						8,521						(760	)					1982						01/04/88				100 years
Linkärven 6					8,300						10,484						(5,038	)					5,446						(918	)					1990						01/04/90				100 years
Järnbrott 144:5					8,625						3,887						263						4,150						(205	)					1963						01/08/83				100 years
Kallebäck 4:1					36,950						4,708						2,711						7,419						(132	)					1963						01/08/83				100 years
Kärra 78:3					16,420						8,444						7,950						16,394						(1,733	)					1973						01/04/86				100 years
Kobbegården 257:3					28,500						7,990						1,584						9,574						(349	)					1970						01/08/81				100 years
Kobbegården 257:1					30,000						16,426						3,091						19,517						(1,972	)					1970						01/08/81				100 years
Kobbegården 257:2					25,000						(1,124	)					0						(1,124	)					1,124						1970						01/08/81				100 years

SCHEDULE III
encl 4

Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encum- brances						Initial cost to company						Costs capitalised						Total						Accumulated Depreciation						Date of con- struction						Date acquired						Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land						Improvements
			TSEK						TSEK						TSEK						TSEK						TSEK
Askim 70:2					27,181						26,435						0						26,435						(2,462	)					1968						01/08/81				100 years
Askim 70:3					48,195						(7,387	)					6,145						(1,242	)					1,242						1968						01/08/81				100 years
Kobbegården 6:139					10,900						7,225						11,345						18,570						(1,746	)					1974						01/03/86				100 years
Högsbo 8:10					550						5,207						(56	)					5,151						(218	)					1960						01/01/90				100 years
Gullbergsvass 5:121					78,000						88,227						15,309						103,536						(11,455	)					1988						01/04/94				100 years
Kobbegården 6:3					195,000						146,028						34,235						180,263						(12,275	)					1970						12/97				100 years
Helsingör 10					39,500						5,350						3,816						9,166						(427	)					1964						01/05/81				100 years
Kockum 20					8,996						2,030						1,516						3,546						18						1960						01/05/81				100 years
Concordia 16					0						(513	)					513						0						0						1929/42						01/05/81				100 years
Kockum 21/22					23,700						4,543						2,907						7,450						(365	)					1962						01/01/82				100 years
Bjurö 9					4,500						4,781						8,770						13,551						(1,295	)					1964						11/82				100 years
Järnet 2					14,050						15,041						4,795						19,836						(13,701	)					1991						12/83				100 years
Bilden 10					21,000						2,773						17,231						20,004						(1,981	)					1963						04/84				100 years
Almen 20					24,375						3,309						9,303						12,612						(713	)					1966						05/81				100 years
Frans Suell 14					135,000						45,932						149,056						194,988						(19,458	)					1906/36						02/91				100 years
Frans Suell 8					0						23,170						(23,170	)					0						0						1900/79						02/94				100 years
Frans Suell 10					0						24,000						(24,000	)					0						0						1900/79						02/95				100 years
Brudbuketten 6					0						6,698						3,197						9,895						(769	)					1991						05/92				100 years
Solbacken 22					10,475						7,418						3,711						11,129						(935	)					1964						05/92				100 years
Mariedal 3					0						5,991						(5,991	)					0						0						1936						10/93				100 years
Viske 8, 9					0						10,856						(10,856	)					0						0						1936						10/93				100 years
Marskalken 7					0						11,927						(11,927	)					0						0						1937						05/94				100 years
Flygfältet 3					3,940						4,566						2,493						7,059						(672	)					1960/70						05/95				100 years

SCHEDULE III
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Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encum- brances						Initial cost to company						Costs capitalised						Total						Accumulated Depreciation						Date of con- struction						Date acquired						Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land						Improvements
			TSEK						TSEK						TSEK						TSEK						TSEK
Pilåkern 1					83,700						14,549						21,487						36,036						(2,177	)					1959						05/81				100 years
Pilåkern 2					125						269						1,399						1,668						(90	)					1960/70						05/81				100 years
Almen 16					5,400						3,383						(1,101	)					2,282						(6	)					1961						05/81				100 years
Leonard 1					194,000						202,039						64,012						266,051						(15,565	)					1970						11/00				100 years
Abel 14					80,000						142,313						15,326						157,639						(8,188	)					1973						11/00				100 years
Abel 15					45,000						0												0						0						1973						11/00				100 years
Korpen 39					9,000						14,631						776						15,407						(504	)					1960/70						01/99				100 years
Laboratorn 4					16,800						29,251						867						30,118						(1,145	)					1960/70						01/99				100 years
Professorn 12					11,900						20,663						1,573						22,236						(979	)					1960/70						01/99				100 years
Frukten 9					790						6,445						0						6,445						(185	)					1960/70						01/99				100 years
Flygfältet 8					0						(187	)					3,067						2,880						(2	)					1961						07/87				100 years
Flygfältet 2					0						4,950						(2,987	)					1,963						(631	)					1961						07/87				100 years
Flygfältet 7					6,000						7,468						0						7,468						(348	)					1989						08/00				100 years
Hilleröd 12					5,250						2,202						536						2,738						(174	)					1962						01/81				100 years
Nyborg 22					32,000						8,070						1,798						9,868						(521	)					1968						08/82				100 years
Solbacken 13					2,700						4,386						4,204						8,590						(1,028	)					1965						06/86				100 years
Bronsyxan 16					0						14,281						4,258						18,539						(1,655	)					1975						10/87				100 years
Hymnen 1					22,400						10,278						14,797						25,075						(2,289	)					1960/70						05/94				100 years
Kantaten 1					42,000						12,618						20,151						32,769						(2,516	)					1960/70						05/94				100 years
Kantaten 2					33,600						8,600						15,298						23,898						(1,977	)					1960/70						05/94				100 years
Kantaten 3					37,800						13,142						17,601						30,743						(2,812	)					1960/70						05/94				100 years
Kantaten 6					27,300						11,313						16,057						27,370						(2,273	)					1960/70						05/94				100 years

SCHEDULE III
encl 4

Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encum- brances						Initial cost to company						Costs capitalised						Total						Accumulated Depreciation						Date of con- struction						Date acquired						Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land						Improvements
			TSEK						TSEK						TSEK						TSEK						TSEK
Docenten 6					13,500						10,039						10,193						20,232						(1,785	)					1960/70						01/97				100 years
Laboratorn 2					20,700						13,550						12,375						25,925						(2,146	)					1960/70						01/97				100 years
Professorn 9					19,400						14,272						11,467						25,739						(2,313	)					1960/70						01/97				100 years
Professorn 11					21,800						18,486						10,353						28,839						(2,557	)					1960/70						01/97				100 years
Laboratorn 3					21,800						18,811						12,274						31,085						(2,678	)					1960/70						01/97				100 years
Altona 20 & 21					113,000						92,661						77,785						170,446						(29,281	)					1966						09/98				100 years
Pontus 20					97,225						127,844						1,619						129,463						(5,480	)					1935						04/01				100 years
Sporren 4					49,000						85,995						513						86,508						(44,505	)					1958						04/01				100 years
Luggude 8					20,000						27,500						0						27,500						(969	)					1967						04/01				100 years
Hämplingen 15					12,750						17,015						399						17,414						(877	)					1964						04/01				100 years
Utanverket 13					48,750						70,107						629						70,736						(2,872	)					1958						04/01				100 years
Kolga 6					55,000						75,428						2,989						78,417						(2,920	)					1935						04/01				100 years
Ryttmästaren 17					0						32,874						0						32,874						(836	)					1970						02/04				100 years
Fältspaten 1					60,000						83,032						0						83,032						(2,195	)					1982						02/04				100 years
Masthugget 712:30											17,000						0						17,000						(1,062	)															100 years
Ongoing project											(33,601	)					33,601						0						0																100 years
Other											447						2,073						2,520						328																100 years
Other																	(2,073	)					(2,073	)					2,073																100 years
Hjälten 1					0						88,095												88,095						(60	)															100 years
Hjälmen 1					0						27,476												27,476						(12	)															100 years
Gropen 1					0						13,048												13,048						(10	)															100 years
Grottan 14					0						4,482												4,482						(3	)															100 years
Gnistan 10					0						4,060												4,060						(3	)															100 years
Gästgivaren 1					0						4,648												4,648						(3	)															100 years
Halmstad 6:4 mfl					0						85												85						0																100 years
Summa SFAB					2,421,630						2,178,165						627,058						2,805,223						(245,474	)

SCHEDULE III
encl 4

Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description						Encumbrances						Initial cost to company						Costs capitalised						Total						Accumulated Depreciation						Date of construction						Date acquired						Life on which depreciation is computed
Property data						(Mortgages)						Buildings and land						Improvements
						TSEK						TSEK						TSEK						TSEK						TSEK
Erstavik			26:    8					20,800						16,032						688						16,720						(1,441	)					1971-75						12/96				100 years
Erstavik			26:    9					21,078						17,149						700						17,849						(1,528	)					1971-75						12/96				100 years
Erstavik			26:  10					20,500						16,552						785						17,337						(1,497	)					1971-75						12/96				100 years
Erstavik			26:  11					47,500						32,632						730						33,362						(2,789	)					1971-75						12/96				100 years
Erstavik			26:  12					44,900						31,121						164						31,285						(2,550	)					1971-75						12/96				100 years
Erstavik			26:  13					42,100						27,907						156						28,063						(2,288	)					1971-75						12/96				100 years
Erstavik			26:  14					37,200						24,969						160						25,129						(2,050	)					1971-75						12/96				100 years
Erstavik			26:  15					36,208						24,594						97						24,691						(2,016	)					1971-75						12/96				100 years
Erstavik			26:  16					36,700						24,541						138						24,679						(2,014	)					1971-75						12/96				100 years
Erstavik			26:  17					36,800						25,221						546						25,767						(2,078	)					1971-75						12/96				100 years
Erstavik			26:  18					41,200						30,169						105						30,274						(2,471	)					1971-75						12/96				100 years
Erstavik			26:  20					7,000						4,311						81						4,392						(360	)					1971-75						12/96				100 years
Erstavik			26:  28					14,700						16,128						627						16,755						(1,439	)					1971-75						12/96				100 years
Erstavik			26:  29					15,225						16,264						678						16,942						(1,454	)					1971-75						12/96				100 years
Erstavik			26:  30					14,800						16,212						878						17,090						(1,494	)					1971-75						12/96				100 years
Erstavik			26:109					40,600						27,675						121						27,796						(2,268	)					1971-75						12/96				100 years
Erstavik			26:110					40,800						28,578						445						29,023						(2,399	)					1971-75						12/96				100 years
Erstavik			26:111					37,600						24,571						163						24,734						(2,016	)					1971-75						12/96				100 years
Erstavik			26:113					38,900						26,058						116						26,174						(2,135	)					1971-75						12/96				100 years
Erstavik			26:115					38,900						26,618						167						26,785						(2,184	)					1971-75						12/96				100 years
Erstavik			26:117					41,500						27,035						180						27,215						(2,217	)					1971-75						12/96				100 years
Erstavik			26:118					41,200						26,924						158						27,082						(2,206	)					1971-75						12/96				100 years
Erstavik			26:434											6,174						3,197						9,371						(1,235	)					1971-75						12/96				100 years
Erstavik			26:488											0												0						0						1971-75						12/96				100 years
Pågående projekt																				7,959						7,959						0
TOTAL SFNAB								716,211						517,435						19,039						536,474						(44,129	)

SCHEDULE III
encl 5

Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances						Initial cost to company						Costs capitalised						Total						Accumulated Depreciation						Date of construction						Date acquired						Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land						Improvements
			TSEK						TSEK						TSEK						TSEK						TSEK
Blackebergs Gård 1					41,475						20,920						509						21,429						(873	)					1,902						04/00				100 years
Hägern Större 16					350,000						400,516						1,982						402,498						(21,420	)					1,990						04/00				100 years
Tempelriddareorden 1					17,500						26,144						0						26,144						(1,067	)					1,964						12/01				100 years
Tempelriddareorden 2					12,110						17,482						0						17,482						(714	)					1,964						12/01				100 years
Tempelriddareorden 3					32,900						49,556						0						49,556						(2,024	)					1,964						12/01				100 years
Tempelriddareorden 4					26,600						38,642						0						38,642						(1,577	)					1,964						12/01				100 years
Tempelriddareorden 6					12,950						19,326						(1	)					19,325						(789	)					1,964						12/01				100 years
Tempelriddareorden 7					32,900						48,879						0						48,879						(1,996	)					1,964						12/01				100 years
Tempelriddareorden 8					16,450						25,177						0						25,177						(1,028	)					1,964						12/01				100 years
Tempelriddareorden 9					19,950						31,505						0						31,505						(1,286	)					1,964						12/01				100 years
Söderbymalm 3:468					177,910						155,000						23,542						178,542						(5,243	)											12/02				100 years
Gröna rutan 1					1,750						3,218						0						3,218						(131	)					1,964						12/01				100 years
Skansen 18					0						95,989												95,989						(80	)											09/05				100 years
Pågående projekt																	6,747						6,747						0
TOTAL SFSAB					742,495						932,354						32,779						965,133						(38,228	)

SCHEDULE III
encl 6

Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances						Initial cost to company						Costs capitalised						Total						Accumulated Depreciation						Date of construction						Date acquired						Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land						Improvements
			TSEK						TSEK						TSEK						TSEK						TSEK
Haninge Söderbymalm 6:9					15,000						13,390						253						13,643						(434	)					1,955						07/01				100 years
Haninge Söderbymalm 6:10					28,000						24,720						2,682						27,402						(874	)					1,956						07/01				100 years
Haninge Söderbymalm 3:328					9,000						9,270						1,657						10,927						(339	)					1,956						07/01				100 years
Haninge Söderbymalm 3:329					10,000						11,330						2,035						13,365						(409	)					1,956						07/01				100 years
Haninge Söderbymalm 3:333					9,000						9,270						933						10,203						(326	)					1,957						07/01				100 years
Haninge Söderbymalm 3:372					9,000						10,300						1,667						11,967						(378	)					1,964						07/01				100 years
Haninge Söderbymalm 3:337					49,250						44,290						7,182						51,472						(1,662	)					1,964						07/01				100 years
Haninge Söderbymalm 9:1					29,000						29,870						4,949						34,819						(1,107	)					1,964						07/01				100 years
Haninge Söderbymalm 9:2					26,000						28,840						4,886						33,726						(1,072	)					1,964						07/01				100 years
Haninge Söderbymalm 6:13					10,500						14,573						2,554						17,127						(534	)					1,964						07/01				100 years
Haninge Söderbymalm 6:14					33,750						26,030						4,430						30,460						(983	)					1,964						07/01				100 years
Haninge Söderbymalm 6:15					18,250						15,624						2,449						18,073						(577	)					1,962						07/01				100 years
Haninge Söderbymalm 6:16					6,000						8,331						1,235						9,566						(303	)					1,962						07/01				100 years
Haninge Söderbymalm 7:16					56,500						47,694						8,057						55,751						(1,750	)					1,963						07/01				100 years
Haninge Söderbymalm 3:395					14,750						13,523						2,175						15,698						(503	)					1,967						07/01				100 years
Haninge Söderbymalm 3:476					45,250						44,290						649						44,939						(1,558	)					1,985						07/01				100 years
Pågående projekt																	12						12						0
Totalt SFHKB					369,250						351,345						47,805						399,150						(12,809	)

SCHEDULE III
encl 7

Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances						Initial cost to company						Accumulated Depreciation						Date of construction						Date acquired						Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land
			TSEK						TSEK						TSEK
Humle 24, Malmö					39,126						60,969						(2,082	)					1,981						2004				100 years
Höken 56, 57, Malmö					78,370						122,123						(4,700	)					1,984						2004				100 years
Jerusalem 69, 70 Malmö					38,250						76,393						(2,075	)					1,966						2004				100 years
Möllebacken 23, Malmö					81,106						126,386						(4,963	)					1,983						2004				100 years
Stralsund 33, Malmö					90,102						140,404						(2,997	)					1,974						2004				100 years
Björnen 4, Malmö					25,715						40,071						(646	)					1,986						2004				100 years
Gabriel 9, Malmö					74,573						116,205						(1,923	)					1,985						2004				100 years
Mården 3, Malmö					56,361						87,827						(1,404	)					1,988						2004				100 years
Axel 33, Malmö					177,181						276,098						(4,572	)					1,988						2004				100 years
Bornholm 6, Malmö					77,337						120,513						(1,821	)					1,975						2004				100 years
Granen 14, Malmö					28,293						44,089						(4,318	)					1,979						2004				100 years
Fretten 11, 13 Malmö					88,167						137,389						(3,551	)					1,979						2004				100 years
Nötskrikan 17, Malmö					43,669						68,048						(2,449	)					1,900						2004				100 years
Jägaren 1, Nöbb. 2:15					12,981						19,041						(3,907	)					1,980						2004				100 years
Jägaren 2-3,villebrådet 1 Lund					94,843						139,113						(9,936	)					1,973						2004				100 years
Kilen 18, Lund					108,976						159,842						(8,096	)					1,990						2004				100 years
Kilen 19, Lund					66,385						100,066						(6,400	)					1,992						2004				100 years
Cedern 17					99,240						48,906						(2,236	)					1,970						2004				100 years
Danzig 22					15,975						26,559						(927	)					1,961						2004				100 years
Elefanten 41					72,000						109,068						(7,436	)					1,989						2004				100 years
Heimdal 12					11,900						24,045						(5,894	)					1,927						2004				100 years
Hermodsdal 2					21,675						32,739						(1,488	)					1,963						2004				100 years
Lars 4					14,790						28,436						(973	)					1,958						2004				100 years
Mjödet 11					75,225						107,644						(6,493	)					1,968						2004				100 years
Stacken 11					21,420						31,507						(1,397	)					1,960						2004				100 years
Vårdkasen 2					11,050						15,949						(817	)					1,968						2004				100 years
Hörby Häggenäs 9:62					0						221						(1	)					Other						2004				100 years
Tolered 129:25 mfl.					80,750						225,051						(14,538	)					1,960						2004				100 years
Järnbrott 117:5 mfl.					282,200						407,191						(29,282	)					1,962						2004				100 years

SCHEDULE III
encl 8

Table of Contents

Schedule III

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances						Initial cost to company						Accumulated Depreciation						Date of construction			Date acquired						Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land
			TSEK						TSEK						TSEK
Kortedala 92:5 mfl.					70,550						126,288						(20,155	)			1,958					2004				100 years
Kortedala 105:5					41,752						64,142						(3,817	)			1,957					2004				100 years
Kortedala 105:3 mfl					157,998						242,728						(12,137	)			1,956					2004				100 years
Johanneberg 39:15					140,269						208,482						(3,415	)			1,981					2004				100 years
Backa 7:12 mfl					142,450						184,517						(3,267	)			1,965					2004				100 years
Backa 886:694-695					0						328						(1	)			Other					2004				100 years
tynnered					557,600						730,446						(20,458	)			1,967					2004				100 years
Prästhult 1:6					0						210						0				Land					2004				100 years
tolered					183,600						270,075						(20,493	)			1,960					2004				100 years
Jursta 3:5 och Jursta 3:6					0						22,996						(27	)			Other					2004				100 years
Jursta 3:6					0						34						0				Other					2004				100 years
Kungsängen 7:6, Uppsala					32,400						53,673						(10,673	)			1,961					2004				100 years
Luthagen 80:1, Uppsala					125,600						221,437						(15,374	)			1,991					2004				100 years
N Kvarngärdet, Uppsala					233,555						302,481						(15,940	)			1,963					2,004				100 years
Brahehus 1, Malmö					59,450						114,220						(7,361	)			1,957					2004				100 years
Holmen 1, Malmö					90,400						149,777						(12,831	)			1,982					2004				100 years
Stora Björnen 11					7,604						12,223						(206	)			Other					2004				100 years
Vittran 1					57,000						83,034						(1,429	)			Other					2004				100 years
Lantbon 15					1,500						30,648						(528	)			Other					2004				100 years
Handlaren 24					22,262						28,577						(480	)			Other					2004				100 years
Bätsmannen 1-2					13,989						20,202						(329	)			Other					2004				100 years
Geväret 3-5 & 7					18,407						22,276						(371	)			Other					2004				100 years
Gärdet 16 & 18					7,712						8,675						(143	)			Other					2004				100 years
Ingenjören 6					7,129						9,366						(156	)			Other					2004				100 years
Laxen 23					3,956						4,435						(73	)			Other					2004				100 years
Nämndemannen 1					4,113						5,616						(92	)			Other					2004				100 years
Snickaren 1					6,432						7,887						(131	)			Other					2004				100 years
Tegen 2-4					15,368						17,646						(295	)			Other					2004				100 years
Täfteå 10:202					0						8,769						(152	)			Other					2004				100 years
Aspgärdan 19					13,300						19,992						(325	)			Other					2004				100 years

SCHEDULE III
encl 8

Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances						Initial cost to company						Accumulated Depreciation						Date of construction						Date acquired						Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land
			TSEK						TSEK						TSEK
Flyttfågeln 2					56,600						82,914						(1,306	)					Other						2004				100 years
Hygget 1					31,100						47,704						(12,704	)					Other						2004				100 years
Jägaren 4					7,000						3,777						(60	)					Other						2004				100 years
Jägaren 5					16,400						27,825						(445	)					Other						2004				100 years
Järven 18					10,000						7,961						(127	)					Other						2004				100 years
Järven 19					10,300						28,228						(6,228	)					Other						2004				100 years
Krukan 15					23,000						29,142						(568	)					Other						2004				100 years
Leoparden 2					12,100						11,975						(197	)					Other						2004				100 years
Leoparden 4					10,300						19,539						(325	)					Other						2004				100 years
Spetsen 15					5,700						8,081						(128	)					Other						2004				100 years
Spetsen 16					10,300						14,367						(231	)					Other						2004				100 years
Tranan 2-3					11,500						20,353						(305	)					Other						2004				100 years
Masen 9					1,516						18,656						(300	)					Other						2004				100 years
Sofiehem 2:156					19,000						9,676						(135	)					Other						2004				100 years
Flyttfågeln 11					27,500						28,000						(165	)					Other						2,004				100 years
Hygget 11					10,000						17,000						(101	)					1,951						2004				100 years
Martallen, Sthlm					16,292						28,444						(833	)					1,931						2004				100 years
Källsmora 1:92 (ryttarfastighet)					0						350						(1	)					1,929						2004				100 years
Wahrenberg 11					155,200						232,906						(15,220	)					1,939						2004				100 years
Sjukhuset 3					222,510						300,781						(25,860	)					1,950						2004				100 years
Tornet 10 - 12					81,940						135,772						(17,711	)					1,969						2004				100 years
Lillkalmar 6 - 9					12,900						24,583						(1,530	)					1,929						2004				100 years
Vale 9					20,000						44,638						(4,220	)					1,961						2004				100 years
Lillkalmar 10					48,535						101,388						(6,999	)					Other						2004				100 years
Menglöd 1					0						5,871						(3,985	)					1,965						2004				100 years
Odinslund 6					62,900						85,819						(5,057	)					1,925						2004				100 years
Danderyd 3 : 95					0						3,471						(1,589	)					1,965						2004				100 years
Dalkarlshugget 2					127,500						177,383						(2,647	)					1,967						2004				100 years
Gjutformen 2					43,095						35,975						(471	)					1,910						2004				100 years
Rosenbrödet 1					0						21,903						(335	)					1,963						2004				100 years

SCHEDULE III
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Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances						Initial cost to company						Accumulated Depreciation						Date of construction						Date acquired						Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land
			TSEK						TSEK						TSEK
Smörrutan 1					26,500						34,652						(535	)					1,964						2004				100 years
Wienerbrödet 1					79,500						112,215						(1,770	)					1,907						2004				100 years
Wienerkransen 3					52,105						79,267						(1,185	)					1,889						2004				100 years
Wienerkransen 1					0						37,934						(635	)					1,888						2004				100 years
Stativet 4					138,000						261,220						(11,220	)					1,942						2004				100 years
Tylöskog 3					1,048						16,063						(324	)					1,958						2004				100 years
Jakobsberg 2:1164					36,000						53,739						(5,740	)					1,989						2004				100 years
Järvakrogen 2					9,500						15,343						(224	)					Other						2004				100 years
Sikreno 8					6,205						4,216						(67	)					1,924						2004				100 years
Stockshem 10					0						89,450						(14,450	)					1,903						2004				100 years
Skansen 18					0						632,965						0						1,970						2005				100 years
Tåckeråker 1:8, 1:9, 2:11					85						1,557						(21	)					1,991						2004				100 years
Tåckeråker 2:14					36						4,548						(12	)					Other						2,004				100 years
Pelaren - Uppdelad i Pylonen 1 och Tornet 1					0						45,514						0						1,972						2004				100 years
Näsbypark 73:5					0						345						0						1,990						2004				100 years
Sfären 1-9, Solna					235,000						381,866						(104,269	)					1,938						2004				100 years
Tvälflingan 5					0						214,591						(34,591	)					1,973						2004				100 years
Autopiloten 5,9, Stockholm					21,996						46,416						(20,103	)					Other						2,004				100 years
Stockhem 11					76,415						123,263						(66,263	)					Other						2,004				100 years
Wahrenberg 9-10					132,700						308,483						(129,483	)					Other						2,004				100 years
Other											80,611						(31,076	)
Elim on consolidation
Dec 31, 2004											(662,785	)					662,785
					5,770,334						9,319,028						(156,947	)

SCHEDULE III
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Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances			Initial cost to company						Costs capitalised						Total						Accumulated Depreciation						Date of construction			Date acquired			Life on which depreciation is computed
Property data			(Mortgages)			Buildings and land
			TSEK			TSEK						TSEK
Hotel Fredrikshavn								257,978						14,934						272,913						(164,128	)									50 years
Hotel Grenå								53,980												53,980						(36,968	)									50 years
Other buildings, Denmark								77,800												77,800						(60,027	)									50 years
Land improvements								28,123												28,123						(9,692	)									20 years
Port of Stranraer								151,215												151,215						(42,382	)									20 years
Port of Holyhead								1,032,476						10,049						1,042,525						(259,270	)									20 years
Port of Fishguard								220,878												220,878						(77,531	)									20 years
Other								0						1,213						1,213						(1,126	)									20 years
Hook of Holland								56,050												56,050						(41,090	)									20 years
Port of Helsingborg								57,579												57,579						(40,336	)									20 years
Port of Trelleborg								76,879						0						76,879						(76,879	)									20 years
Port of Gothenburg								36,608												36,608						(17,799	)									20 years
Elim on consolidation
Oct 31, 2000								(387,919	)											(387,919	)					387,919
Elim on consolidation
Dec 31, 2002								(54,000	)											(54,000	)					54,000
Other								324												324						23,171
Total Stena Line								1,607,970						26,196						1,634,166						(362,137	)

SCHEDULE III
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Table of Contents

Property and Accumulated Depreciation
December 31, 2005

Description			Encumbrances						Total						Accumulated Depreciation						Date of construction			Date acquired			Life on which depreciation is computed
Property data			(Mortgages)						Buildings and land
			TSEK						TSEK						TSEK
Backa 170:2					22,400						26,507						(1,473	)									100 years
Olskroken 35:5					14,000						9,488						(888	)									100 years
Arendal Rud 2:6					0						8,459						(637	)									100 years
Strand Norum 33:4					6,300						9,196						(235	)									100 years
Ryda 9:13					3,354						1,428						(114	)									100 years
Galeasen 1					4,000						5,693						(397	)									100 years
Investment in rented property					0						19,782						726										100 years
Surplus value Olskroken					0						1,382						0										100 years
Energy											31,140						0										100 years
Envac											683						(381	)									100 years
Total Adactum					50,054						113,758						(3,399	)

SCHEDULE III
encl 10