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

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
9.625% Senior Notes due 2012, 7.5% 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:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

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.

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:

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):

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).

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.

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.

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, 2007 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 shareholders’ equity as of December 31, 2006 and 2007 and net income for the years ended December 31, 2005, 2006 and 2007 is set forth in Note 31 to our Consolidated Financial Statements.

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’’, ‘‘Euro’’ or ‘‘€’’ 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, references to ‘‘NOK’’ are to Norwegian Kronor and references to ‘‘pounds sterling’’, ‘‘GBP’’ or ‘‘£’’ 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 6.4568, 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, 2007. 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, 2007. 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.

The following are abbreviations and definitions of certain terms used in this Annual Report.

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. The 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 that 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.

Conventional, day and night ferries. 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 also provide cabin accommodation for passengers.

Drillship. A 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 semi-submersible drilling rigs.

Drydock. A large basin where 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.

Dynamic positioning (DP). An advanced satellite navigation system that controls thrusters to maintain a vessel’s position in most weather without anchors.

High speed vessel (HSS ). A ship, usually built from aluminium and often multi-hull, designed to have excellent motion characteristics in heavy seas. HSS vessels operate at speeds of over 30 knots and primarily target the passenger market.

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

Lane meter. The 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.

Offhire. The period an offshore drilling rig or 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.

Protection and Indemnity (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.

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.

Roll-on/Roll-off (RoRo) vessels. Vessels designed primarily to transport freight trailers and a limited number of passengers. Designed to permit trucks, freight trailers, buses, cars, and, to a certain extent, containers on chassis to drive directly onto and off the vessel.

RoPax vessels. Vessels designed to transport trucks, freight trailers, buses and cars and which also provide cabin accommodations for passengers. RoPax vessels are flexible and can adapt their capacity in line with seasonal variations in freight and passenger traffic.

Semi-submersible rig. Floating platforms that, 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. 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 six 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 or upgraded between 1973 and 1981, third generation drilling rigs are drilling rigs that were delivered or upgraded between 1982 and 1985 and fourth generation drilling rigs are drilling rigs that have been delivered or upgraded since 1986. Fifth generation drilling rigs are drilling rigs that have been delivered or upgraded since 1997. Sixth generation drilling rigs are drilling rigs that have been delivered or upgraded after 2005.

Senior Notes. Collectively, the Senior Notes due 2012, the Senior Notes due 2013, the Senior Notes due 2016, the Senior Notes due 2017 and the Senior Notes due 2019.

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.

Utilization rate. The total number of days an offshore drilling rig or vessel is in operation during a given period, divided by the total number of days in the period that the offshore drilling rig or vessel is owned or chartered in.

Variable interest entities (VIEs). Our investments in companies whose purpose is to make investments, primarily in high yield securities and corporate bank loans.


	YEAR ENDED DECEMBER 31,
	2003			2004			2005			2006			2007			2007
	SEK			SEK			SEK			SEK			SEK			USD⁽¹⁾
	(in millions)
CONSOLIDATED GROUP⁽²⁾
INCOME STATEMENT DATA (SWEDISH GAAP):
Total revenues		13,619			16,721			19,619			22,895			22,005			3,408
Direct operating expenses		(9,333	)		(10,943	)		(12,631	)		(13,547	)		(14,372	)		(2,226	)
Selling and administrative expenses		(1,522	)		(1,761	)		(1,861	)		(2,127	)		(2,177	)		(337	)
Depreciation and amortization		(1,742	)		(1,790	)		(2,734	)		(2,634	)		(1,703	)		(264	)
Total operating expenses		(12,597	)		(14,494	)		(17,226	)		(18,308	)		(18,252	)		(2,827	)
Income from operations		1,022			2,227			2,393			4,587			3,753			581
Share of affiliated companies’ result		—			17			21			27			(61	)		(9	)
Interest income		85			382			567			737			919			142
Interest expense		(824	)		(1,135	)		(1,395	)		(1,649	)		(1,670	)		(259	)
Other financial items⁽³⁾		212			965			876			1,027			959			147
Minority interest		2			(77	)		(21	)		(23	)		(21	)		(3	)
Income before taxes		497			2,379			2,441			4,707			3,879			601
Net income		510			2,359			2,268			4,339			3,389			525
BALANCE SHEET DATA (SWEDISH GAAP):
Cash and marketable securities⁽⁴⁾		4,568			5,088			9,252			9,148			11,562			1,791
Investments in VIEs⁽⁵⁾		—			4,440			5,753			7,341			9,251			1,433
Total assets		30,127			46,311			54,812			60,417			75,180			11,644
Debt in VIEs⁽⁵⁾		—			3,925			4,844			6,302			8,021			1,242
Other debt⁽⁶⁾		14,826			23,024			26,793			24,469			32,793			5,079
Shareholders’ equity		11,470			13,419			15,132			18,587			21,306			3,300
OTHER FINANCIAL DATA (SWEDISH GAAP):
Capital expenditures		(3,148	)		(3,343	)		(5,152	)		(8,148	)		(8,315	)		(1,288	)
Cash dividends paid		(60	)		(70	)		(195	)		(215	)		(550	)		(85	)
Cash flow from operating activities		1,790			1,456			2,405			3,579			4,586			710
Cash flow from investing activities		(3,556	)		(5,331	)		(2,950	)		(7,299	)		(12,862	)		(1,992	)
Cash flow from financing activites		1,444			4,536			1,850			1,092			7,654			1,185
CONSOLIDATED AMOUNTS (US GAAP):
Income from operations		1,171			2,340			2,165			3,635			4,103			635
Net income		316			1,852			1,990			2,979			3,342			518
Total assets		30,761			45,319			55,229			60,196			75,108			11,632
Shareholders’ equity		10,954			11,982			14,913			17,465			20,475			3,171

We issued $200 million Senior Notes due 2012 in November, 2002, $175 million Senior Notes due 2013 in December, 2003 and $250 million Senior Notes due 2016 in November, 2004. In 2005 and 2006 we repurchased $6 million and $5 million principal amount of the Senior Notes due 2012, respectively. For the year ended December 31, 2007, Restricted Group Data represents our selected consolidated financial information, excluding the real estate operations (other than one small property) and four subsidiaries, Stena Finanzverwaltungs AG, Stena Investment Luxembourg S.á.r.l. (‘‘Stena Investment’’), Stena Royal S.á.r.l. (‘‘Stena Royal’’), and Stena Adactum AB (‘‘Adactum’’), 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 Senior Notes were issued, the subsidiaries through which the property operations are conducted (other than one small property), together with Stena Finanzverwaltungs AG, Stena Investment, Stena Royal and Adactum, are designated unrestricted subsidiaries and, as a result, are not bound by the restrictive provisions of these indentures.

In February 2007, we purchased approximately $177 million of our Senior Notes due 2012 pursuant to a tender offer and consent solicitation. Also in February 2007, we completed an offering of €300 million of Senior Notes due 2017 and €102 million of Senior Notes due 2019. For purposes of the indentures pursuant to which these notes where issued, the subsidiaries mentioned above are also designated as unrestricted subsidiaries and, as a result, are not bound by the provisions of these indentures.

As of December 31, 2007, we had outstanding, $170.8 million principal amount of Senior Notes due 2013 and $172.0 million principal amount of Senior Notes due 2016. During 2007, we repurchased $ 4.2 million of our Senior Notes due 2013 and $78 million of our Senior Notes due 2016. In the first quarter of 2008, we repurchased $18 million of our Senior Notes due 2013 and $43 million of our Senior Notes due 2016. As of March 31, 2008, there were $152.8 million of our Senior Notes due 2013 outstanding and $129 million of our Senior Notes due 2016 outstanding.

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


	YEAR ENDED DECEMBER 31,
	2005			2006			2007			2007⁽¹⁾
	SEK			SEK			SEK			USD
	(in millions)
RESTRICTED GROUP
INCOME STATEMENT DATA (SWEDISH GAAP):
Revenues from operations		15,352			16,731			17,550			2,717
Net gain on sale of vessel		316			2,313			253			40
Net gain on sale of properties		145			63			—			—
Total revenues		15,813			19,107			17,803			2,757
Direct operating expenses		(10,761	)		(11,289	)		(11,735	)		(1,817	)
Selling and administrative expenses		(1,586	)		(1,776	)		(1,773	)		(275	)
Depreciation and amortization		(2,357	)		(2,401	)		(1,458	)		(226	)
Total operating expenses		(14,704	)		(15,455	)		(14,966	)		(2,318	)
Income from operations		1,109			3,641			2,837			439
Interest income		224			292			543			84
Interest expense		(690	)		(753	)		(591	)		(92	)
Other financial items⁽²⁾		658			371			(129	)		(20	)
Total financial income and expense		192			(90	)		(177	)		(27	)
Minority interest		(1	)		(2	)		(2	)		0
Income before taxes		1,300			3,549			2,658			412
Net income		1,298			3,332			2,206			342


	YEAR ENDED DECEMBER 31,
	2006		2007		2007⁽¹⁾
	SEK		SEK		USD
	(in millions)
RESTRICTED GROUP
BALANCE SHEET DATA (SWEDISH GAAP):
Intangible fixed assets		222		177		27
Tangible fixed assets		17,569		22,641		3,507
Marketable securities		456		610		94
Other noncurrent assets		11,396		13,932		2,158
Total noncurrent assets		29,643		37,360		5,786
Short-term investments		1,243		2,559		397
Cash and cash equivalents		657		505		78
Other current assets		3,885		6,560		1,016
Total current assets		5,785		9,624		1,491
Total assets		35,428		46,984		7,277
Total shareholders’ equity		15,689		18,830		2,917
Deferred income taxes		420		973		151
Other provisions		3,822		4,536		703
Long-term debt		9,796		17,246		2,671
Other noncurrent liabilities		881		828		128
Total noncurrent liabilities		10,677		18,074		2,799
Short-term debt		1,798		935		145
Other current liabilities		3,022		3,634		562
Total current liabilities		4,820		4,569		707
Total shareholders’ equity and liabilities		35,428		46,984		7,277


	2005	2006			2007			2007
	SEK	SEK			SEK			USD⁽¹⁾
	(in millions)
RESTRICTED GROUP
CONSOLIDATED STATEMENT OF CASH FLOW:
Net income	1,298		3,332			2,206			341
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,357		2,401			1,458			226
(Gain)/loss on sale of property, vessels and equipment	(461)		(2,376	)		(261	)		(40	)
(Gain)/loss on securities, net	(682)		(289	)		58			9
Unrealized foreign exchange (gains) losses	112		(124	)		(149	)		(23	)
Deferred income taxes	2		49			341			53
Minority interest	1		2			3			0
Other non cash items	(36)		(196	)		125			19
Provision for pensions	(81)		(115	)		(221	)		(34	)
Net cash flows from trading securities	86		645			(699	)		(108	)
Changes in working capital	(212)		299			1,377			213
Net cash provided by/(used in) operating activities	2,384		3,628			4,238			656
Net cash flows from investing activities:
Purchase of intangible assets	(78)		(20	)		(37	)		(6	)
Cash proceeds from sale of property, vessels and equipment	1,406		4,585			821			127
Capital expenditure on property, vessels and equipment	(3,176)		(6,367	)		(7,299	)		(1,130	)
Purchase of subsidiary net of cash acquired	(756)		3			—			—
Sale of subsidiary	325		—			—			—
Proceeds from sale of securities	591		6			95			15
Purchase of securities	(456)		(94	)		(233	)		(36	)
Increase of non-current assets	(130)		(148	)		(38	)		(6	)
Decrease of non-current assets	14		12			10			2
Other investing activities	32		32			(18	)		(3	)
Net cash used in investing activities	(2,228)		(1,992	)		(6,699	)		(1,037	)
Net cash flows from financing activities:
Proceeds from issuance of debt	148		2,220			6,915			1,071
Principal payments on debt	(222)		(245	)		(2,352	)		(364	)
Net change in borrowings on line-of-credit agreements	3,243		(4,024	)		55			8
Principal payments capital lease obligations	(41)		(39	)		(38	)		(6	)
Net change in restricted cash accounts	37		(382	)		(692	)		(107	)
Intercompany accounts	(1,634)		(1,553	)		(1,123	)		(174	)
Dividends paid	(195)		(215	)		(550	)		(85	)
Other financing activities	(245)		(122	)		(313	)		(49	)
Net cash provided by financing activities	1,091		(4,360	)		1,902			294
Effect of exchange rate changes on cash and cash equivalents	57		(228	)		407			63
Net change in cash and cash equivalents	1,304		(2,952	)		(152	)		(24	)
Cash and cash equivalents at beginning of year	2,304		3,609			657			102
Cash and cash equivalents at end of year	3,608		657			505			78

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.

On April 25, 2008, the Noon Buying Rate for the Swedish kronor, expressed as Swedish kronor per U.S. dollar, was $1.00 = SEK 5.9758.

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, 2007, we had outstanding consolidated indebtedness (excluding VIEs) of SEK 32.8 billion, of which SEK 14.6 billion was the obligation of unrestricted subsidiaries (as defined in the indentures governing our indebtedness). Our total debt (excluding VIEs) as a percentage of our total capitalization was approximately 61%. For the Restricted Group, the debt as a percentage of total capitalization was approximately 49%.

Our indebtedness could restrict our operations and make it more difficult for us to fulfill our obligations under our Senior Notes. Among other things, our indebtedness may:

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

our Senior Notes, we and our subsidiaries may incur additional indebtedness from time to time, including to finance the purchase or completion of newbuildings and other vessels. As of March 31, 2008, the remaining unpaid cost for the two Super Ferries we ordered from a shipyard in Germany in November 2006 was approximately €340 million, the total remaining cost for the two RoPax vessels we ordered from a shipyard in Korea in August 2007 was approximately $168 million and the aggregate remaining cost for our two DrillMAX drillships on order from a shipyard in Korea, fully equipped, was approximately $568 million.

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, which 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:

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 Senior Notes impose restrictions on our business.

Our revolving credit facilities, the indentures governing our Senior Notes due 2013 and 2016 and the instruments governing certain of 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:

The indentures governing our Senior Notes due 2017 and 2019 also contain covenants with respect to, among other things, limitations on consolidated and subsidiary debt and limitations on liens in respect of capital market indebtedness.

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 and these other loans 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 could 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.

Since 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 governing our Senior Notes due 2013 and 2016 contain covenants that restrict the ability of our subsidiaries to enter into agreements limiting distributions and transfers, including dividends; the indentures governing our Senior Notes due 2017 and 2019 do not contain these covenants. However, our real estate operations and certain of our investment activities are conducted through unrestricted subsidiaries which are not bound by restrictive provisions of these 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 our Senior 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 governing our Senior Notes, the subsidiaries that conduct our real estate operations (other than one small property) and the subsidiaries that conduct a large portion of our investment activities are designated as unrestricted subsidiaries. As a result, these unrestricted subsidiaries are not bound by the restrictive provisions of our indentures. As of December 31, 2007, these unrestricted subsidiaries had outstanding indebtedness (including VIEs) of approximately SEK 22.6 billion, all of which was non-recourse to Stena AB and its restricted subsidiaries. Such debt of the real estate subsidiaries is secured by their

real property interests, the debt of Adactum is secured by its investments in listed shares, and the credit facility of Stena Royal is secured by its medium and long-term investment portfolios. Neither we nor any of our restricted subsidiaries have guaranteed payment of any of this indebtedness. There is no limitation in the indentures on the amount of indebtedness our 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 governing our Senior Notes due 2013 and 2016 contain certain limitations on our ability to make investments in unrestricted subsidiaries. As a result of these limitations, we may be unable to finance our real estate operations or our other businesses conducted through unrestricted subsidiaries in the event that these businesses require capital. Such businesses may not be able to obtain alternate sources of financing on reasonable terms or at all, particularly as any debt financing must be non-recourse to Stena AB.

In addition, because the covenant of the indentures governing our Senior Notes due 2013 and 2016 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. All our indentures also provide for designating other of our subsidiaries as unrestricted subsidiaries. The indentures governing our other Senior Notes do not contain any prohibitions on the creation of limitations on the ability of our subsidiaries to pay dividends.

We compete with other ferry operators and 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 and/or less expensive 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, be 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 we are.

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

Fuel represents a significant cost incurred by us in the operation of our fleet. Fuel prices increased substantially in 2007 and in the first quarter of 2008 and may continue to increase. In addition, HSS vessels consume significantly more fuel than conventional ferries. 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, prices for fuel have increased substantially and have been volatile. Further 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. 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, and at times our bunker fuel requirements are not fully hedged. Increases in fuel prices have required us to take impairment charges with respect to our three HSS 1500 vessels, one of which was taken out of service in January 2007 because it is unprofitable to operate that vessel on its route at then and current bunker fuel prices. The depreciation and amortization charges in the year ended December 31, 2006 included an impairment charge of SEK 710 million and SEK 765 million in the year ended December 31, 2005 related to the HSS vessels. There were no impairment charges in 2007.

In addition, as a substantial portion of our existing bunker hedges will expire in the next three years, if bunker prices remain at current levels or increase, our bunker expenses will be significantly higher in future years.

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 drilling units is unpredictable.

The offshore drilling rig market is highly competitive. All our drilling units are currently under contract, with expiration dates ranging from 2008 to 2014. The level of demand for offshore drilling rigs has historically fluctuated significantly in connection with oil price changes. No assurances can be given with respect to future demand for such rigs or the prices at which they may be contracted after the existing contracts expire.

Drilling contracts generally are 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 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 suitability of equipment, quality of service, safety and suitability of equipment and price being 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.

In the case of our RoRo, and RoPax vessels, a substantial portion of our vessel utilization has been through long-term charters. For the five years ended December 31, 2007, the RoRo and RoPax vessels have averaged a utilization rate of approximately 97.5%. As of March 31, 2008, all of the vessels in our fleet of nine owned and chartered in RoRo and RoPax vessels (including one RoRo vessel in which we have a 50% ownership interest, one RoRo vessel in which we have a

50% ownership interest and one finance leased RoPax vessel) were under charter, with expiration dates ranging from October 2008 to December 2012. In addition we owned the laid up HSS vessel, Stena Discovery, which was taken out of operation by Stena Line in January 2007. 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, 2007, our drilling rig utilization rate has averaged approximately 85%. All our drilling units are currently under contract with expiration dates ranging from 2008 to 2014. There can be no assurance that we will be able to enter into future rig charter contracts after our current contracts expire. 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, 2007, the utilization for our fleet of chartered in, owned and finance leased tankers has averaged approximately 98%. Although we have long-term time charters in place for five of our ten owned and finance leased tankers (including five tankers in which we have a 50% ownership interest), 26 of our 33 chartered in tankers were trading on the spot market as of March 31, 2008. 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 2011 and 2013. We expect a significant number of new tankers to be delivered in the coming years, which could have a negative effect on charter rates.

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.

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:

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 and our subsidiaries 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 upheaval risks.

We are 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 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 effect 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 receive any cash flow or income generated by the investment, and 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 are appointed by the trade unions representing our employees.

An inability to attract or retain qualified crew members, or a loss of key members of our management team, could materially adversely affect our revenues, results of operations and prospects.

There is a limited supply of qualified crew members for our vessels and rigs. If we are unable to attract and retain sufficient qualified crew, our operations could be adversely affected.

In addition, we rely, and expect to continue to rely, upon Dan Sten Olsson, our Chief Executive Officer, Svante Carlsson, our Executive Vice President and Head of Strategy, and Staffan Hultgren, our Director of Business Administration, 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, Carlsson or Hultgren.

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 are 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. Although we have not experienced any major strike or work stoppage in the last ten 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 position 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 and offshore drilling operations, and as of December 31, 2007, approximately SEK 10.9 billion of our debt was denominated in US dollars, excluding the debt of our VIEs. 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 have been 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 results and/or our operating margins.

We utilize various financial instruments, including hedging arrangements, to manage financial risks, that 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 position and our financial results.

As of December 31, 2007, the fair value of our marketable securities and short-term investments (including restricted cash of SEK 1.2 billion) amounted to SEK 10.9 billion, as compared to SEK 8.3 billion (including restricted cash of SEK 882 million) as of December 31, 2006. Our investments in equities 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. We have also invested in VIEs, which we consolidate, whose purpose is to make investments, primarily in high yield securities and bank loans. As of December 31, 2007, we had investments in four VIEs whose total assets amounted to SEK 9.8 billion, which was financed in part by US dollar-denominated notes issued by the VIEs in an aggregate amount of SEK 8.0 billion (which is non-recourse to Stena AB). We seek to maintain a diversified investment portfolio to balance our exposure to various risks. However, investments 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.

We maintain a significant portfolio of debt and equity securities, and our experience in investments in businesses outside our traditional ferry operations, shipping, drilling and other lines of business is limited. If our investment portfolio is not successful, our financial position and results of operations could be materially and adversely affected, even if our core business is performing well.

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:

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.

Additional laws and regulations, both international and national, may be adopted as a result of oil spills from single-hull tankers and due to heightened security concerns, which could limit our ability to do business or increase our cost of doing business and 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 vessels to keep them in compliance.

Catastrophic loss and other events in 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 that 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 our assets could be subject to attachment and other judicial process.

We cannot assure you that a judgment of a United States court for liabilities under United States securities laws would be enforceable in Sweden, or that an original action can be brought in Sweden against us for liabilities under United States securities laws.

We are a Swedish company, all our directors and officers are residents of Sweden and elsewhere outside the United States and most of our assets and the assets of our directors and officers are located outside the United States. As a result, it may be difficult for you to:

We have been advised by our Swedish counsel, Wistrand Advokatbyra Goteborg KB, that:

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 Olsson family’s businesses. 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, a Swedish Company (‘‘Concordia’’), which is 52% owned by Sessan, comprise the ‘‘Stena Sphere’’ of companies. The Stena Sphere of companies is engaged in shipping, ferry operations, offshore drilling, metal and paper recycling, sales of bunker fuel, real estate, financial activities and 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, 2007, we generated revenues of SEK 22.0 billion including net gains on sale of assets of SEK 350 million. Cash flows from operating activities for the same period were SEK 4.6 billion.

Since January 1, 2005, our principal capital expenditures and divestitures have consisted of the purchase and sale of vessels, the purchase and sale of real property. From January 1, 2005 through December 31, 2007, we have invested approximately SEK 16.9 billion for the purchase of vessels and SEK 4.8 billion for the purchase of real estate. During the same period, we have sold vessels for total consideration of SEK 3.8 billion and real estate for total consideration of SEK 4.7 billion. As of the date of this Annual Report, April 29, 2008, our capital expenditures in progress consist of two drillships under construction in Korea, two Super Ferries under construction in Germany and two RoPax vessels under construction in Korea. We expect that the substantial portion of the purchase price of our newbuildings will be financed by the existing revolving credit facilities, new capital lease agreements, new bank loans or other financing arrangements.

We currently operate 18 routes with a fleet of 35 vessels in Scandinavia, the United Kingdom, Poland, The Netherlands and the Republic of Ireland 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 our Norway-Denmark route, duty and tax free sales; and (iii) freight, which consists primarily of trailer and truck transportation. For the year ended December 31, 2007, we carried a total of 11.4 million passengers, 2.2 million private cars and 1.6 million freight units on our routes. For the year ended December 31, 2007, our ferry operations generated revenues of SEK 10.0 billion, including net gain on sale of vessels of SEK 146 million, generated

operating income of SEK 1.4 billion and had depreciation and amortization expense of SEK 820 million. For the year ended December 31, 2007, ferry operation revenues were generated from travel revenues (34%), onboard sales (19%), freight/other (46%) and net gain on sale of vessels (1%).

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 onboard Swedish-flagged vessels. The amount of this subsidy was SEK 430 million for the year ended December 31, 2007.

We generate revenue from our ferry operations from three principal business activities: travel, onboard sales and freight. The following table sets forth the revenue for each of our business areas for the three years ended December 31, 2005, 2006 and 2007.

Set forth below is certain operating data for our ferry operations for the years ended December 31, 2005, 2006 and 2007.

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 21%, 12% and 39% share of the volume of passengers, private cars and freight units, respectively, transported between Sweden and Denmark for the year ended December 31, 2007.

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

Sweden-Germany. We operate ferry services on five routes, including two routes operated in cooperation with Scandlines Deutschland GmbH. We estimate that we had an approximate 42%, 48% and 28% 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, 2007.

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

Norway-Denmark/Germany. We operate ferry services on one route. We estimate that we had an approximate 12%, 8% and 10% share of the volume of passengers, private cars and freight units, respectively, transported on Roll-on/Roll-off vessels between Norway and Denmark/Germany for the year ended December 31, 2007. Because Norway is not part of the European Union, we continue to offer duty and tax free retail sales on this route.

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

Sweden-Poland. We operate ferry services on one route. We estimate that we had an approximate 41%, 30% and 30% share of the volume of passengers, private cars and freight units, respectively, transported on Roll-on/Roll-off vessels between Sweden and Poland for the year ended December 31, 2007.

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

During the second quarter of 2007, the RoPax vessel Finnarrow was chartered in to meet the increased demand for freight capacity on the route.

Wales/England-Republic of Ireland. We operate ferry services on three routes. We estimate that we had an approximate 54%, 53% and 27% share of the volume of passengers, private cars and freight units, respectively, transported on Roll-on/Roll-off vessels between Wales/England and the Republic of Ireland for the year ended December 31, 2007.

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.

Scotland/England-Northern Ireland. We operate ferry services on two routes. We estimate that we had an approximate 55%, 49% and 28% 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, 2007.

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

England-The Netherlands. We operate ferry services on three routes. We estimate that we had an approximate 21%, 23% and 16% 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, 2007.

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

As of March 31, 2008 our ferry fleet consisted of 35 vessels in operation. The table below sets forth certain information about our ferries as of March 31, 2008.

Newbuildings. In the third quarter of 2004, we ordered two RoPax vessels. The first vessel was delivered in August 2006, and the second vessel was delivered in June 2007. In November 2006, we ordered two Super Ferries of 5,500 lane meters each, currently the world’s largest in route traffic. The first is scheduled for delivery in the beginning of 2010 and the second during the second half of 2010. In August 2007, we ordered two RoPax vessels scheduled for delivery during the first and third quarter of 2011.

HSS vessels. We currently operate two HSS 1500s and one HSS 900. We own another HSS 1500 vessel which was taken out of service in January 2007 due to an increase in fuel prices and a decline in passenger traffic volumes. HSS vessels are designed to travel with significantly less vertical motion than other fast ferries at service speeds 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.

In August 2007, we sold the RoRo vessel Stena Carrier to Stena Metall, realizing a net gain of SEK 116 million. The vessel is bareboat chartered back for a period of 10 years.

In November 2007, we sold the RoPax vessel Stena Searider to an Italian operator, realizing a net gain of SEK 30 million.

On January 1, 2008, Stena Line acquired 100% of the shares in Sembo, a Swedish package holiday company, for SEK 61 million. We expect that this acquisition will enable Stena Line to offer Northern Europe´s widest range of destinations for package holidays with cars.

On January 15, 2008, we exercised our option to acquire the day ferry Aurora, operating on our Helsingborg-Helsingör route.

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 (only the ferry ticket). 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 whom we maintain various 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 sales organization is divided into three sales regions. The 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.

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 owning the ports of Fishguard and Rosslare, and we operate the port of Fishguard in Wales. We are currently looking at a number of options to enhance the long term future of our Scotland-Northern Ireland route. In the case of our other routes, we use port facilities owned by third parties and pay applicable port and harbor fees.

Hotels. In July 2005, we sold one of the two hotels we owned in Denmark. 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.

We currently own and operate two third generation and two fifth generation semi-submersible drilling rigs and one sixth generation drillship. We sold Stena Dee (renamed Songa Dee), a fourth generation rig, in May 2006 to Songa Offshore ASA and currently bareboat-charter the rig to enable us to fulfill our contract with StatoilHydro. We believe our quality of service, excellent safety record and fleet provide us with a significant competitive advantage. For the year ended December 31, 2007, our drilling operations generated revenues of SEK 3.8 billion, operating income of SEK 1.4 billion, and had depreciation and amortization expenses of SEK 493 million.

The table below sets forth selected information with respect to our drilling rigs as of March 31, 2008.

Our headquarters is in Aberdeen, Scotland with offices in Norway, Luxembourg, Cyprus and Hungary. We also have base offices in Australia, Norway, West Africa, the United States and Brazil. All of the drilling rigs are equipped to drill high pressure wells. As of December 31, 2007, the average age of our owned and chartered fleet was approximately 16 years.

For the five years ended December 31, 2007, our average rig utilization rate was approximately 85%. The table below sets forth the average utilization rates for our drilling rigs for each of the past five years.

The table below sets forth selected information with respect to the drilling contracts for our rigs in operation as of March 31, 2008.

The contracts for our drilling rigs typically provide for compensation on a ‘‘day rate’’ basis, under which we receive a 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. As at March 31, 2008, the daily charter rates for our drilling rigs were as follows: Stena Clyde: $185,000; Stena Spey: $355,000; Stena Tay: $535,000 to $585,000 depending on the incentive earned; Stena Don: $445,000 ; Songa Dee: $185,000 ; Stena DrillMAX: $495,000 to $545,000, depending on the incentive earned.

Newbuildings. We have ordered three DrillMAX drillships, one of which was delivered in December 2007, with the other two scheduled for delivery in the third quarter of 2008 and mid 2009, respectively. Our DrillMAX drillships can move more quickly between drilling locations than semi-submersible rigs and include a second mast that enables them to perform exploration and development work more efficiently.

Financing is in place for 80% of the total investment in our remaining two DrillMAX drillships on order by way of a combination of Export Credit Agency financings, bank financing and mezzanine debt.

We have a contract with Chevron for our second DrillMAX drillship, to be named Stena Carron, for a period of five years firm, with an option for three additional years at a dayrate of $450,000 for the five year firm period and $390,000 for the three year option period. The third DrillMAX drillship, to be named Stena Forth, has been chartered to Hess Corporation for a five year period at a day rate of $498,500 to $538,500, subject to achievement of certain performance incentives.

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 suitability of equipment, quality of service safety, and price being significant factors in awarding contracts.

Our shipping operations consist of the ownership and chartering of crude oil and petroleum product tankers and Roll-on/Roll-off vessels. To support these activities, we are also engaged in the design, purchase, sale, management and crewing 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, 2007, our shipping operations generated revenues of SEK 3.8 billion, including net gain on sale of vessels of SEK 107 million, generated operating income of SEK 290 million, and had depreciation and amortization expenses of SEK 137 million.

We own, charter in and provide commercial management services for crude oil and product tankers. As of March 31, 2008, we owned three product tankers and leased two product tankers pursuant to long-term finance leases and we also had 50% interests in one crude oil tanker and four shuttle tankers. All our owned and finance leased tankers are double hulled. As of March 31, 2008, we also chartered in 33 Product, Aframax, Panamax and Suezmax tankers.

As of March 31, 2008, the average period of the charter contracts for the 33 chartered in tankers was 24 months. Of these tankers, 7 were chartered out at an average period of 42 months. The other 26 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 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, 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.

The table below sets forth certain information with respect to our owned and finance leased tankers as of March 31, 2008.

The table below sets forth certain information with respect to our owned and finance leased tanker sales and purchases on an annual basis for the past five years.

The table below sets forth certain information with respect to our tanker charters as of March 31, 2008.

In addition, we have entered into 8.5-year charter agreements (with an option to extend the charter for 1.5 years) with Argo Shipping International Corp. for Stena Atlantica and Stena Antarctica, two ice-class Aframax tankers that are chartered in on a long-term bareboat charter by us. The charter term commenced on the delivery of the vessels from the shipyard during 2006.

Recent acquisitions and sales. Two Panamax tankers were delivered from the shipyard in February 2006 and June 2006, respectively. Both vessels were sold to a third party upon delivery from the shipyard and are chartered back to us from the new owner for a period of 30 months.

Our owned ice-class Aframax tanker was sold to a joint venture company with Neste Oil in which we have a 50% interest in August 2006. The vessel is on time charter to Neste Oil for a period of ten years.

Two product tankers were sold to Arlington and delivered to them in January 2006. The vessels were chartered back to us from Arlington for a period of three years with options for an additional 4.5 years.

In June 2007, we purchased two newbuilt 16,500 dwt product tankers for an aggregated purchase price of $37.5 million. The vessels were delivered from Taizhou Maple Leaf Shipyard in Zhejiang, China, during the third quarter of 2007, and sold in November 2007 and January 2008, respectively, to an Iraqi operator, for a total price of $20 million each.

In 2006, we increased our investment in the shuttle tanker segment by buying a 50% interest in Navion Gothenburg, a newbuilt Suezmax tanker that has been converted to a shuttle tanker. The other 50% is owned by TeeKay. The vessel was delivered at the end of July 2007 and has been chartered out to Petrobras for thirteen years.

In October 2007, we entered into an agreement to acquire three medium range tankers, Stena Italica (renamed after our acquisition Stena Concert), Stena Conqueror and Stena Conquest, which we previously had on time charter from the seller. The aggregated purchase price for the three vessels was $152 million. This sale was completed in the first quarter of 2008.

Chartering activities. As of March 31, 2008, 26 of our 33 chartered in 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 March 31, 2008, the total number of vessels on contracts of affreightment amounted to 8. As of March 31, 2008, 6 of our chartered in tankers were on time charter contracts with remaining periods ranging from 3 months to 8 years.

From January 1, 2008 until March 31, 2008, spot market rates have ranged from $25,000 to $70,000 per day for Aframax tankers, $7,000 to $26,000 per day for Panamax tankers, $12,000 to $19,000 per day for Product tankers and $27,000 to $83,000 for Suezmax tankers. Spot market rates at March 31, 2008, were $31,000 for Aframax tankers, $8,500 for Panamax tankers, $14,500 for Product tankers and $37,000 for Suezmax tankers.

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

In January 2008, we entered into a Panamax pooling agreement with the same partner, Sonangol Shipping. The revenues from the pool are split between the pool in proportion to the number of tankers each delivered to the pool and a tanker index.

For the five years ended December 31, 2007, our average tanker utilization rate was approximately 98%.

The table below sets forth certain information relating to the utilization of our owned and chartered in tankers for the last five years.

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 and to other third parties. Commercial management includes arranging charters, fuel, documentation and port services, revenue collection and accounting services.

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 Ltd. In November 2004, we sold two Product tankers and our 75% interests in two Panamax tankers to 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 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 that Concordia sold to Arlington concurrently with the sale of our 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 through 2009, 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 Management Ltd. (‘‘NMM’’), has agreed to manage all six of Arlington’s tankers during the terms of the charters for a fixed daily fee per vessel that increases 5% annually.

We sold two additional Product tankers to Arlington 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 that increases over the term of the charters. NMM has agreed to manage all eight of Arlington’s tankers during the terms of the charters for a fixed daily fee per vessel that increases 5% annually.

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

We currently own 8.1% of the outstanding shares of Arlington and Concordia, currently owns 9.9% of the outstanding shares of Arlington.

Roll-on/Roll-off vessels permit trucks, freight trailers, buses, cars, and, to a certain extent, containers on chassis to drive directly onto and off the ship. 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 predominantly freight trailers only and limited number of passengers.

Over the past five years, the fleet size within our Roll-on/Roll-off operations has ranged from six to ten vessels. As of March 31, 2008, we owned four RoRo vessels and one HSS vessel, Stena Discovery, which was taken out of operation by Stena Line in January 2007. We also had one finance leased RoPax vessel, a 50% ownership in one RoRo vessel and one RoRo vessel in which we had a 50% ownership. As of March 31, 2008, we also chartered in one RoRo vessel and one RoPax vessel.

For the five years ended December 31, 2007, our average Roll-on/Roll-off vessel utilization rate was approximately 97.5%. The table below sets forth information with respect to the utilization of our Roll-on/Roll-off vessels, excluding the HSS vessel Stena Discovery, during the last five years.

The customers for our Roll-on/Roll-off vessels consist primarily of operators in the international freight and passenger transportation business. Because 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.

The tables below set forth information about existing chartering arrangements in place with respect to our Roll-on/Roll-off and RoPax vessels, i.e, excluding the laid up HSS vessel, Stena Discovery, as of March 31, 2008.

Fleet management. We order new vessels to be built, purchase existing vessels, charter vessels in, charter vessels out and sell 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.

The table below sets forth certain information with respect to our purchases and sales of vessels within our Roll-on/Roll-off operations and the net gain from such sales for the past five years. We do not include in the table any transfers of Roll-on/Roll-off vessels from our Roll-on/Roll-off vessel operations to our ferry operations.

Recent acquisitions and sales. In March 2006, we entered into an agreement to acquire a newbuilt RoPax vessel from the Visentini shipyard in Italy. In May 2007, we took delivery of the vessel Stena Ausonia, renamed BORJA, on a three year charter. We have exercised an option with the owner to acquire the vessel at the end of the three year charter for €45 million.

In August 2007, we sold the RoRo vessel Mont Ventoux to Stena Metall, realizing a net gain of SEK 100 million. The vessel is bareboat chartered back for a period of 10 years.

In March 2008, we sold the RoRo vessel Stena Shipper to a company in which we hold 50% of the shares for a sales price of $11.5 million. The vessel has been renamed Crowley Shipper.

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.

As part of our ongoing commitment to maintaining a high quality fleet and efficient operations, we own and operate a ship management company, NMM, which provides ship management services from offices in Glasgow, St. Petersburg, Aberdeen, Gothenburg, Houston, Singapore, Manilla, Hamburg and Mumbai. Ship management includes crewing, inventory control, maintenance and technical management.

As of December 31, 2007, NMM provided services for approximately 120 vessels and approximately 7,100 seafarers for us, Concordia, Chevron, Technip and several other third parties.

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

General. We are involved in the acquisition, selling, constructing, refurbishment and management of residential and commercial properties. In the year ended December 31, 2007, our real estate operations, including net gain on sale of properties of SEK 97 million, generated revenues of SEK 2.1 billion and operating income of SEK 867 million, which include depreciation and amortization expenses of SEK 170 million. Substantially all our real estate operations are conducted through our unrestricted subsidiaries. As of March 31, 2008, our real estate portfolio consisted of two segments: 291 leasehold and freehold properties in Sweden and 46 freehold and leasehold properties located in The Netherlands, Germany, Luxembourg and France. A substantial majority (89%) 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 properties owned by the Olsson family. As of December 31, 2007, our management estimates, based on external and internal valuations, that the market value of properties owned by our real estate operations was approximately SEK 22.6 billion. As of December 31, 2007, the book value of these properties totaled SEK 17.1 billion.

Each of our real estate subsidiaries finances its acquisitions of real property with equity contributions and individual mortgages from various commercial and mortgage banks, which are non-recourse to Stena AB and the Restricted Group.

Swedish properties. Our real estate portfolio in Sweden as of March 31, 2008, consisted of 291 residential and commercial properties totaling approximately 1,920,000 square meters.

As of March 31, 2008, our residential properties consisted primarily of multi-family rental properties (approximately 21,800 units) that, in terms of square meters, comprise approximately 79% of our properties in Sweden or approximately 1,513,000 square meters. Our commercial properties in Sweden consist mainly of office buildings and comprise the remaining 21% of our property portfolio in Sweden or approximately 407,000 square meters. The occupancy rate for our Swedish properties, based on square meters, as of December 31, 2006 and December 31, 2007 was 98%.

Of our Swedish properties, 39 are leased pursuant to long-term ground leases from local governments. These leases typically run for a 60 year period with a right of renewal every 40 years. Rent is renegotiated after the first 20 years and every 10 years thereafter. In practice the leases are indefinite.

International. As of March 31, 2008, our properties outside Sweden consisted of 46 commercial properties, 39 of which were located in The Netherlands. The remaining properties are located in Germany, Luxembourg and southern France. Our non-Swedish properties total approximately 192,000 square meters. The occupancy rates for our non-Swedish properties, based on square meters, as of December 31, 2006 and December 31, 2007, were 88% and 89%, respectively.

Stena Realty B.V. also invests indirectly in real estate. It holds a 10.5% stake in the Acre Fund, which is majority owned by Schiphol Airport. The Acre Fund owns approximately 195,000 square meters of office and warehouse space at the Schiphol Airport. Stena Realty B.V. also owned as at December 31, 2006 a 9% stake in the Stockholm Stock market quoted company Ruric which develops and invests in real estate in St. Petersburg, Russia. Our shareholding in Ruric was sold in March 2007.

During 2006 and 2007, we invested $20 million in a fund managed by ING for development of residential complexes in China. Today the fund is developing nine large residential areas in China totaling 2.3 million square meters. In 2007, we committed to an additional investment in the fund of $35 million, of which, as of March 31, 2008, $1 million remained to be paid. Thereby we increased our stake in the fund from 5.7% to 11.25%.

In July 2007, we invested €100 million to acquire a 7.07% stake in the ING Dutch Office Fund, which owns a portfolio of prime office buildings in the Netherlands. 80% of the offices are located in the four major Dutch cities and includes the World Trade Center in Amsterdam and the head office of Nationale Nederlanden, The Netherlands’ tallest building, in Rotterdam. External bank financing is in place for 55% of our investment.

In July 2007, we committed to invest €14 million in a new office building (5,400 square meters) in southern France with occupancy currently scheduled to take place during the second quarter of 2008. This building is expected to meet the highest environmental standards recently introduced in France.

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 each of the years ended December 31, 2006 and December 31, 2007, such fees aggregated to SEK 12.

General. Through our unrestricted subsidiary Adactum, we make long-term investments in listed as well as private companies in new businesses outside our traditional lines of business. The aim is to create value for the Company in industries outside our core business by building strong, profitable companies that can create platforms for new business areas in the Company. We contribute mainly capital and active ownership to these businesses. In the year ended

December 31, 2007, Adactum generated revenues of SEK 2.1 billion and operating income of SEK 72 million, which include depreciation and amortization expenses of SEK 75 million. As of March 31, 2008, Adactum had direct investments in five private companies, of any significance, of which three are wholly-owned subsidiaries, and held significant ownership interests in four listed companies. Adactum’s investments are financed through equity contributions and debt that is non-recourse to Stena AB and the Restricted Group.

Investments in private companies. In April 2004, Adactum acquired Blomsterlandet through which we are creating a chain of retailers with one of Sweden’s most extensive range of indoor and outdoor plants. Since our acquisition, the number of garden centers in Sweden has increased from 18 to 40. Revenue of Blomsterlandet increased in the year ended December 31, 2007 to SEK 961 million, representing an increase of 15% compared to SEK 836 million for the year ended December 31, 2006.

In June 2005, Adactum acquired Envac, which operates automated household and municipal waste collection systems with activities in 30 countries. The company has grown extensively over the past year, particularly in the Asian market. Revenue in Envac increased in the year ended December 31, 2007 to SEK 1.1 billion, representing an increase of 33% compared to SEK 853 million for the year ended December 31, 2006.

In December 2005, we entered into a contract to acquire five wind power systems (windmills) for a total investment of SEK 140 million. Through our subsidiary Stena Renewable Energy, in January 2007, we commenced successful operations of Sweden’s largest land-based wind power generating plan, near Ludvika, Sweden. In November 2007, we ordered twelve more wind power systems to be installed at the same location for an aggregate investment of SEK 340 million. Operations of these new systems is expected to commence end of 2008.

In June 2007, Adactum acquired a 45% interest in MPP MediaTec Group AB (‘‘MediaTec’’) for a total investment of approximately SEK 340 million. MediaTec is a newly formed group comprised of three leading Swedish companies in the media technology industry and is one of Europe’s largest groups in this field. The business areas within MediaTec are Outside Broadcast, Large Display Solutions and Event & Exhibition Technology. The group had a proforma combined turnover of SEK 810 million in 2007 and approximately 270 employees.

Investments in listed companies. Our listed holdings held through Adactum in Ballingslöv International AB (publ) (manufacturer of kitchens, bathrooms and storage units), Gunnebo AB (publ) (developer of security products and systems), Gunnebo Industrier AB (publ) (manufacturer of chain/lifting components and fastening systems) and Midelfart Sonesson AB (publ) (manufacturer of health and beauty products) had a total market value of SEK 1.2 billion as of December 31, 2007. During the year ended December 31, 2007, we invested a total of SEK 399 million in these companies.

Recent acquisitions. In October 2007, Adactum acquired 10% of the shares in SentoClone for a total investment of SEK 55 million. SentoClone is a Life Science research company focusing on the development and marketing of a method for treating cancer based on the utilization of the patient’s immune system.

We maintain an investment portfolio of marketable securities and other short-term investments. As of December 31, 2007, the fair value of these investments (including restricted cash of SEK 1.2 billion) amounted to SEK 10.9 billion, as compared to SEK 8.3 billion (including restricted cash of SEK 882 million) as of December 31, 2006. 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 bonds.

We have also invested in 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, 2007, total assets of these VIEs amounted to SEK 9.8 billion, which was financed in part by US dollar denominated notes issued by the VIEs in an aggregated amount of SEK 8.0 billion.

In addition to our hedging arrangements, we actively trade in currencies and to a lesser extent in interest rates. As of December 31, 2007, the notional amounts of such instruments were SEK 1,698 million as compared to SEK 47 million as of December 31, 2006.

The net gain on our portfolio of debt and equity securities and investment in VIEs, together with dividends received and the results from our currency and interest rate trading activities, for the years ended December 31, 2005, 2006 and 2007, amounted to a gain of SEK 1.0 billion, a gain of SEK 1.1 billion and a gain of SEK 1.2 billion, respectively. We seek to maintain an investment portfolio that is well diversified with regards to asset classes and geographical markets to balance our exposure to various risks and have established a series of procedures and limits 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 current policies regarding our investments include limits on leverage, limits on percentage of debt securities and certain types of equity securities in our portfolio and limits on the transaction amounts by any single trader. In the case of certain of our investments, various 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.

Recent significant events. In the first quarter of 2008, we repurchased $18 million of our Senior Notes due 2013 and $43 million of our Senior Notes due 2016. As of March 31, 2008, there were $152.8 million of our Senior Notes due 2013 outstanding and $129 million of our Senior Notes due 2016 outstanding.

The hull and machinery of each of our vessels have been certified as being ‘‘in class’’ by its respective classification society: American Bureau, DnV or Lloyds Register. 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 owned and finance leased vessels and drilling rigs, as of December 31, 2007, was approximately SEK 28.1 billion as compared with the net book value as of December 31, 2007, of SEK 15.2 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.

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 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. Some of 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 (P&I) 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, or pollution arising from oil or other substances. 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 that 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/drillships for damages arising from pollution is limited to $150 million per incident, except that coverage for 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 2004, one of our ferries was involved in a collision with another vessel. Insurance 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 deductibles that we believe are commercially reasonable.

The following table sets forth significant subsidiaries owned, directly or indirectly as of December 31, 2007:


Name of Company	Domicile	Percentage Owned
AB Stena Finans	Sweden		100
Stena Fastigheter AB	Sweden		100
Stena Line Scandinavia AB	Sweden		100
Stena Adactum AB	Sweden		100
Stena Don AB	Sweden		100
Stena International S.á.r.l.	Luxembourg		100
Stena Investment Lux S.á.r.l.	Luxembourg		100
Stena Line Holland BV	The Netherlands		100
Stena Realty BV	The Netherlands		100
Stena Line Ltd	United Kingdom		100
Stena (UK) Ltd	United Kingdom		100
Stena North Sea Ltd	United Kingdom		100
Stena (Switzerland) AG	Switzerland		100
Stena Maritime AG	Switzerland		100
Stena Finanzverwaltungs AG	Switzerland		100
Stena Tay (Hungary) Kft	Hungary		100
Stena Cyprus Holding Ltd	Cyprus		100
Stena DrillMax I Ltd	Bermuda		100
Stena DrillMax II Ltd	Bermuda		100
Stena DrillMax III Ltd	Bermuda		100

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.

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 are OPA ’90, CERCLA and MTSA.

OPA ‘90. 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 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. The 2006 amendments to OPA ‘90 limit the liability of responsible parties as follows:

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 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 our newbuildings 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.

MTSA. MTSA is intended to protect U.S. ports and waterways from a terrorist attack. It mandates that certain foreign-flagged vessels, such as liquefied natural gas (‘‘LNG’’) and oil tankers, entering U.S. waterways meet specific security requirements and comply with the International Ship and Port Security code.

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. 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 CLC. Under 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. CLC 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 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 CLC.

MARPOL 73/78. Annex 1 of MARPOL 73/78 deals with the prevention of pollution from oil. MARPOL 73/78 provides stringent construction and operating standards to prevent the release of

oil into the environment. Under the requirements of MARPOL 73/78, all new oil tankers built since 1996 are required to have double hulls. MARPOL 73/78 was modified following the Erika and Prestige incidents on the West Coast of Europe in 1999 and 2002, respectively. In 2002, new amendments came in to force to Annex 1 of MARPOL 73/78which 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. Vessels fall into these categories if they are over 20,000 dwt carrying heavy oil and over 30,000 dwt carrying other oils. Category 3 tankers are tankers above 5,000 dwt 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 applies 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 April 5, 2005. These amendments accelerate the final phasing out of category 1 tankers to 2005 and category 2 and 3 tankers to 2010, although depending on the age of the ship, these dates can be earlier.

All our owned and finance leased tankers are double hulled vessels and all our tankers are fully compliant with MARPOL 73/78 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 73/78 and its amendments.

Annex VI of MARPOL entered into force on May 19, 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. Annex VI 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). Annex VI also prohibits the incineration onboard ship of certain products, such as contaminated packaging materials and polychlorinated biphenyls (PCBs). Our fleet is in compliance with these new requirements.

EU Directive 2005/33/EC amends the Directive 1999/32/EC as regards the sulphur content of marine fuels and entered into force on July 6, 2005. The 2005/33/EC Directive to a great extent mirrors 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 in compliance with the amended EU Directive.

ICLL. 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 ICLL. 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 ICLL within the past five years.

SOLAS. SOLAS ‘74 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 ‘74 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.

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 SOLAS convention held in November 1995, all such vessels must be in full compliance with SOLAS ‘90.

At the SOLAS ’95 convention, 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 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 SOLAS convention held 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 of shipping led 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. Our 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.

SOLAS was further amended in May 2006 (effective January 1, 2008) with respect to Long Range Identification and Tracking (‘‘LRIT’’). SOLAS regulation on LRIT establishes a multilateral agreement for sharing LRIT information, including the ship’s identity, location and date and time of the position, for security and search and rescue purposes. The amendment contains a phased-in implementation schedule for ships constructed before the entry into force of the amendment.

Our drilling units are designed and constructed to meet all applicable rules and regulations for operation world-wide. Three of them are designed to operate in the harsh environment of the North Sea British sector, including Stena Don and Songa Dee, which are also designed to operate in 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, Stena Don has been fully certified to meet the regulations of the Norwegian Petroleum Directorate (‘‘NPD’’). 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. 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 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:

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 onboard 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 Athens convention has governed the liability of carriers for damage suffered by passengers carried on a seagoing vessel. The Athens convention 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 its liability unless the carrier acted with intent to cause such damage or recklessly and with knowledge that such damage would probably result.

The Athens convention and the limits have been substantially altered and increased by the 2002 Protocol to the Athens 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 $395,000 per passenger on each distinct occasion to approximately $632,000 per passenger (exact amounts are determined by the applicable daily conversion rate of USD to SDRs, the unit of account used for liability under the Athens convention), 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 Athens Convention to ensure that the carrier can meet these potential liabilities.

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 HNS 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 HNS is ratified and comes into force.

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. Our 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 shareholders’ equity from Swedish GAAP to US GAAP, see Note 31 to our Consolidated Financial Statements.

We generate revenue primarily from our ferry operations, chartering out our tankers, Roll-on/Roll-off vessels 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 or real estate also may have an impact on our results in each period.

In the third quarter of 2004 we ordered two RoPax vessels from a shipyard in Norway for use by Stena Line. The newbuilding process is managed by our RoRo division. The first of these vessels was delivered in August 2006 and commenced operations on our Killingholme-Hoek van Holland route as Stena Trader. The second vessel, Stena Traveller, was delivered in June 2007 and also put in service on the Hoek van Holland-Killingholme between Holland and the UK.

In November 2006, we entered into a contract with Aker Yards in Germany to build two Super Ferries to be used by Stena Line. The total investment is approximately €460 million, of which €400 million remains to be paid as of December 31, 2007. Deliveries are scheduled for the first and third quarter of 2010. The contract includes options for two additional vessels of the same type.

Depreciation and amortization charges in the years ended December 31, 2005 and 2006 included impairment charges of SEK 765 million and SEK 710 million, respectively, related to the HSS vessels, one of which was taken out of service in January 2007 because it was unprofitable to operate that vessel on its route at then current bunker fuel prices. There were no impairment charges in 2007.

In March and June 2007, respectively, Stena Britannica and Stena Hollandica returned to service after having been lengthened. The investments related thereto amounted to SEK 344 million and SEK 544 million, respectively.

In August 2007, two RoPax vessels were ordered from the Samsung shipyard in Korea. The estimated aggregated investment is approximately €220 million with expected delivery in the first and third quarter of 2011.

In August 2007, Stena Carrier was sold to Stena Metall with a gain of SEK 116 million. The vessel is chartered back for a period of ten years.

In November 2007, Stena Searider was sold to an Italian shipping company with a gain of SEK 30 million.

In November 2007, an agreement was reached to acquire 100% of the shares in Sembo, a Swedish package holiday company. The acquisition of SEK 61 million became effective on January 1, 2008.

Roll-on/Roll-off vessel operations. In March 2006, we entered into an agreement to acquire a newbuilt RoPax vessel from the Italian shipyard, Visentini. The vessel, BORJA, was delivered in May 2007. The vessel is first chartered for three years and will then be acquired for €45 million.

In August 2007, Mont Ventoux was sold to Stena Metall. The vessel is chartered back for a period of ten years.

Crude oil and petroleum product transportation. In addition to the four tankers sold to Arlington in 2004, we sold two additional product tankers to Arlington which were delivered in January 2006. The vessels were chartered back to us for a period of three years with options for an additional 4.5 years.

Two Panamax tankers were delivered from the shipyard in February 2006 and June 2006, respectively. Both vessels were sold to a third party upon delivery from the shipyard and are chartered back to us from the new owner for a period of 30 months.

Our owned ice-class Aframax tanker was sold in August 2006 to a joint venture company with Neste Oil, in which we have a 50% interest. The vessel is on time charter to Neste Oil for a period of ten years.

In 2006, we increased our investments by SEK 32 million in the shuttle tanker segment by acquiring a 50% share of Navion Gothenburg, a new-built Suezmax tanker that has been converted into a shuttle tanker. The remaining 50% is owned by TeeKay. The vessel was delivered at the end of July 2007 and is chartered out to Petrobas for a period of thirteen years.

In June 2007, two newly built, 16,500 dwt product tankers were acquired for $37.5 million from a shipyard in China. The vessels were sold in November 2007 and January 2008, respectively, to an Iraqi operator for $20 million each.

In October 2007, an agreement was signed to acquire three medium range tankers, Stena Italica (renamed after our acquisition to Stena Concert), Stena Conqueror and Stena Conquest that Stena Bulk AB (‘‘Stena Bulk’’) already chartered from the seller. The aggregated purchase price for all three vessels is $152 million and was completed in the first quarter of 2008.

In August 2005, we ordered a drillship, Stena DrillMAX, from the SHI shipyard in Korea which was delivered in December 2007. The total investment was approximately $660 million. 80% of our investment in this vessel is financed by a combination of Export Credit Agency financings, bank financing and mezzanine debt. In April 2006, we entered into a four-year firm contract, with an option for one additional year, with Repsol for Stena DrillMAX at day rates currently between $495,000 to $545,000, based on achievement of certain performance incentives.

In March 2006, we ordered a second Stena DrillMAX drillship, to be named Stena Carron, from the SHI shipyard in Korea. The total investment is expected to be approximately $680 million, with delivery scheduled for the third quarter of 2008. In October 2006, we entered into financing arrangements for this drillship structured in the same way as the financing for the first drillship. In July 2006, we entered into a five-year firm contract, with an option for three additional years, with Chevron for the second drillship at a dayrate of $450,000 for the five years firm period and $390,000 for the three year option period.

In May 2006, we sold the drilling rig Stena Dee to the Norwegian company Songa Offshore for a net consideration of $267.3 million. The rig was chartered back to us until January 2009 to complete its present charter contract with StatoilHydro.

In October 2006, we ordered a third Stena DrillMAX drillship, to be named Stena Forth, from the SHI shipyard in Korea. The total investment is expected to be approximately $760 million with delivery scheduled for mid 2009. In March 2007, we entered into financing arrangements for this drillship structured similarly to the financing for the first two DrillMAX drillships. In September 2007, we entered into a five-year firm contract with Hess Corporation for the third DrillMAX drillship at day rates between $498,500 and $538,500, based on achievement of certain performance incentives.

In the year ended December 31, 2005, we purchased and sold a large number of properties, mainly in Sweden. Properties were sold for a total price of SEK 3.9 billion. Total investments in properties were SEK 1.9 billion, of which SEK 1.6 billion related to properties acquired.

In the year ended December 31, 2006, we acquired properties for approximately SEK 1.6 billion, mainly in Gothenburg, Stockholm and The Netherlands. During the same period properties were sold for approximately SEK 674 million.

In the year ended December 31, 2007, we acquired properties for approximately SEK 455 million, mainly in Gothenburg and Stockholm. During the same period properties were sold for approximately SEK 343 million.

During 2006 and 2007, we invested $20 million in a fund managed by ING for development of residential complexes in China. In 2007, we committed to an additional investment in the fund of $35 million, of which, as of February 29, 2008, $1 million remained to be paid.

In July 2007, we invested €100 million in a 7.07% share in the ING Dutch Office Fund which owns a portfolio of prime office buildings in The Netherlands.

In June 2005, 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 577 million.

In December 2005, we entered into a contract to acquire five wind power systems (windmills) for a total price of SEK 140 million. In January 2007, through our subsidiary Stena Renewable Energy, we commenced operations of those power systems, currently Sweden’s largest land-based wind power generating plant, near Ludvika, Sweden.

In June 2007, Adactum acquired a 45% share in MediaTec for SEK 340 million. MediaTec is a recently formed group consisting of three leading Swedish companies in the media technology sector and is one of Europe’s biggest groups in this area.

In October 2007, Adactum acquired a 10% share in SentoClone for SEK 55 million. SentoClone is a life research company that focuses on developing and marketing a method based on using patients’ own immune systems to fight cancer.

In November 2007, Adactum ordered 12 additional windmills through its subsidiary Stena Renewable Energy for approximately SEK 340 million, for operation near the existing wind farm in Ludvika, Sweden. The windmills are expected to commence operation by the end of 2008.

On February 8, 2007, we completed an offering of €300 million of our Senior Notes due 2017. We used a portion of the proceeds of the offering to repurchase approximately $177 million of our Senior Notes due 2012, substantially all of these notes then outstanding, pursuant to a tender offer and consent solicitation. Pursuant to the tender offer and consent solicitation, we amended the indenture governing our Senior Notes due 2012 to eliminate the principal restrictive covenants.

On February 14, 2007, we completed an offering of €102 million of Senior Notes due 2019.

On September 28, 2007, our unrestricted subsidiary Stena Royal entered into a new $350 million secured revolving credit facility with Svenska Handelsbanken AB (publ) and Nordea Bank Sweden AB (publ). The facility matures on September 28, 2012, and we have an option to extend it for up to two additional years. The medium and long-term investment portfolios in Stena Royal are pledged as securityfor the facility. The facility includes a cross-default provision ($30 million threshold) with respect to debt of Stena AB, Stena Royal or any present or future subsidiary of Stena AB.

In 2007, we repurchased $4.2 million of our Senior Notes due 2013 and $78 million of our Senior Notes due 2016. The notes carry an interest rate of 7.5% and 7%, respectively, and are due for repayment in 2013 and 2016, respectively. After these repurchases, we had outstanding $170.8 million of our Senior Notes due 2013 and $172 million of our Senior Notes due 2016.

In the first quarter of 2008, we repurchased $18 million of our Senior Notes due 2013 and $43 million of our Senior Notes due 2016. As of March 31, 2008, there were $152.8 million of our Senior Notes due 2013 outstanding and $129 million of our Senior Notes due 2016 outstanding.


	Year ended December 31,
	2005			2006			2007
	(SEK in millions)
CONSOLIDATED GROUP
Income Statement Data (Swedish GAAP):
Total revenues		19,619			22,895			22,005
Direct operating expenses		(12,631	)		(13,547	)		(14,372	)
Selling and administrative expenses		(1,861	)		(2,127	)		(2,177	)
Depreciation and amortization		(2,734	)		(2,634	)		(1,703	)
Income from operations		2,393			4,587			3,753
BUSINESS SEGMENT DATA
Revenues:
Ferry operations		9,045			9,413			9,868
Net gain (loss) on sale of vessels		—			—			146
Total Ferry operations		9,045			9,413			10,014
Drilling operations		1,871			3,027			3,842
Net gain on sale of vessels		—			1,483			—
Total Drilling operations		1,871			4,510			3,842
Shipping Roll-on/Roll-off vessels		458			373			413
Net gain on sale of vessels		191			219			100
Total Roll-on/Roll-off vessels		649			592			513
Crude Oil tankers		3,804			3,764			3,265
Net gain on sale of vessels		124			611			7
Total crude oil tankers		3,928			4,375			3,272
Other Shipping		143			146			152
Total Shipping		4,720			5,113			3,937
Property operations		1,882			1,970			1,989
Net gain on sale of properties		813			194			97
Total Property		2,695			2,164			2,086
New Businesses operations		1,283			1,692			2,118
Other		5			3			8
Total		19,619			22,895			22,005
Income (Loss) from Operations:
Ferry operations		(7	)		393			1,266
Net gain (loss) on sale of vessels		—			—			146
Total Ferry operations		(7	)		393			1,412
Drilling operations		(2	)		774			1,390
Net gain on sale of vessels		—			1,483			—
Total Drilling operations		(2	)		2,257			1,390
Shipping: Roll-on/Roll-off vessels		104			89			86
Net gain on sale of vessels		191			219			100
Total Roll-on/Roll-off vessels		295			308			186
Crude oil tankers		742			284			109
Net gain on sale of vessels		124			611			7
Total crude oil tankers		866			895			116
Other shipping		(7	)		(8	)		(14	)
Total Shipping		1,154			1,195			288
Property operations		579			758			771
Net gain on sale of property		813			194			97
Total Property		1,392			952			868
New Businesses operations		46			59			72
Other		(190	)		(269	)		(277	)
Total		2,393			4,587			3,753
Depreciation & Amortization:
Ferry operations		1,578			1,613			820
Drilling		590			633			493
Shipping: Roll-on/Roll-off vessels		124			99			105
Crude oil tankers		41			34			18
Other shipping		11			12			14
Total Shipping		176			145			137
Property		337			174			170
New Businesses operations		43			60			75
Other		10			9			8
Total		2,734			2,634			1,703

Comparison of the year ended December 31, 2007 to the year ended December 31, 2006

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. Approximately 29% of our total revenues are generated in US dollars and approximately 29% are generated in SEK. Approximately 29% of our total expenses are incurred in US dollars and approximately 33% are incurred in SEK. Although we seek to hedge the net effects of 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:

Total revenues from operations increased SEK 1,267 million, or 6%, in the year ended December 31, 2007 to SEK 21,655 million from SEK 20,388 million in the year ended December 31, 2006, mainly due to increased operating revenues in the offshore drilling operations. Gains recorded on vessel sales during 2007 amounted to SEK 253 million compared to SEK 2,313 million during 2006., Ferry operations. Ferry revenues are primarily generated from ticket sales, freight haulage and on board spending. Revenues from ferry operations increased SEK 455 million, or 5%, in the year ended December 31, 2007, to SEK 9,868 million from SEK 9,413 million in the year ended December 31, 2006, mainly due to higher revenues from the freight and travel business due to higher volumes of freight units and higher ticket and freight prices and increased revenues from onboard sales.

Net Gain on Sale of Vessels, Ferry Operations. In year ended December 31, 2007, gains of SEK 146 million were recorded on the sale of the vessels Stena Carrier and Stena Searider. In the year ended December 31, 2006, no vessel sales were made.

Offshore Drilling. Drilling revenues consist of charter hires for our drilling rigs. Revenues from drilling operations increased SEK 815 million, or 27%, in the year ended December 31, 2007 to SEK 3,842 million from SEK 3,027 million in the year ended December 31, 2006, mainly due to new contracts at higher day rates for the Stena Don, Stena Spey and the Stena Tay, offset in part by the weakening of the US dollar against the SEK. The change in day rates reflects new charter contracts and the market conditions in effect at the time a charter is made in the particular geographic area.

Net Gain on Sale of Vessels, Drilling. In the year ended December 31, 2007, no vessel sales were made. In the year ended December 31, 2006, gains of SEK 1,483 million were recorded on the sale of the drilling rig Stena Dee.

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

operations decreased SEK 453 million, or 11%, in the year ended December 31, 2007 to SEK 3,830 million from SEK 4,283 million in the year ended December 31, 2006.

Revenues from chartering out Roll-on/Roll-off vessels increased SEK 39 million, or 10%, in the year ended December 31, 2007, to SEK 412 million from SEK 373 million in the year ended December 31, 2006, mainly due to the delivery of the newbuilt RoPax vessel Borja in May 2007, partly offset by the sale of the RoPax vessel Svealand and the redelivery of Vasaland in April 2006, respectively.

Revenues from crude oil tankers decreased SEK 500 million, or 13%, in the year ended December 31, 2007, to SEK 3,264 million from SEK 3,764 million in the year ended December 31, 2006, mainly due to lower charter rates in the spot market, together with the weakening of the US dollar with respect to the SEK. In the year ended December 31, 2007, the Company operated an average of 41 tankers (chartered in or owned), compared to 42 tankers (chartered in or owned) in the year ended December 31, 2006.

Net Gain on Sale of Vessels, Shipping. In the year ended December 31, 2007, gains of SEK 107 million were recorded on the sale of the RoRo vessel Mont Ventoux and on the sale of one of two newbuilt product tankers, delivered from a shipbuilder in China. In the year ended December 31, 2006, gains of SEK 830 million were recorded on the sale of the RoPax vessel Svealand and the tanker vessels Stena Contest, Stena Concept, Stena Compass, Stena Compassion and Stena Arctica.

Property. Property revenues consist of rents for properties owned and management fees for properties managed by the Company. Revenues from property operations increased SEK 19 million, or 1%, in the year ended December 31, 2007 to SEK 1,989 million from SEK 1,970 million in the year ended December 31, 2006, mainly related to increased number of properties and higher rents.

Net Gain on Sale of Properties. In the year ended December 31, 2007, gains of SEK 97 million were recorded on the sale of properties. In the year ended December 31, 2006, gains of SEK 194 million were recorded on the sale of properties.

New Businesses Adactum. Adactum revenues consist of revenues from Adactum’s subsidiaries. Revenues from Adactum increased SEK 426 million, or 25%, in the year ended December 31, 2007 to SEK 2,118 million from SEK 1,692 million, in the year ended December 31, 2007, mainly due to increased business activities in all subsidiaries. Of the total revenues in the year ended December 31, 2007, SEK 961 million were related to Blomsterlandet, SEK 1,137 million to Envac and SEK 17 million to Stena Renewable Energy as compared to SEK 836 million related to Blomsterlandet, SEK 853 million related to Envac and SEK 3 million related to ‘‘Stena Renewable Energy’’ in the year ended December 31, 2006.

Total direct operating expenses increased SEK 825 million, or 6%, in the year ended December 31, 2007 to SEK 14,372 million from SEK 13,547 million in the year ended December 31, 2006, mainly as a result of increased operating expenses in all operations except for shipping operations and the property 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 increased SEK 412 million, or 6%, in the year ended December 31, 2007 to SEK 6,811 million from SEK 6,399 million in the year ended December 31, 2006, mainly due to increased expenses for bunker, personnel and port operations. Direct operating expenses for ferry operations for the year ended December 31, 2007 was 69% of revenues, as compared to 68% for the year ended December 31, 2006.

Offshore 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 285 million, or 20%, in the year ended December 31, 2007 to SEK 1,728 million from SEK 1,443 million in the year ended December 31, 2006. The increase is mainly due to increased personnel expenses for the rigs and external charter hire expenses and a drydock provision for the rig Stena Dee, together with personnel training costs for the DrillMAX drillships, partly offset by the weakening of the US dollar against the SEK. Direct operating expenses from drilling operations for the year ended December 31, 2007 were 45% of drilling revenues as compared to 48% for the year ended December 31, 2006.

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 decreased SEK 263 million, or 8%, in the year ended December 31, 2007 to SEK 3,174 million from SEK 3,437 million in the year ended December 31, 2006.

Direct operating expenses with respect to Roll-on/Roll-off vessels increased SEK 34 million, or 22%, in the year ended December 31, 2007 to SEK 187 million from SEK 153 million in the year ended December 31, 2006, mainly due to the delivery of the newbuilt RoPax vessel Borja in May 2007 and charter hire costs for the RoRo vessel Mont Ventoux, which was sold and chartered back in August 2007, partly offset by the sale of the RoPax vessel Svealand and the redelivery of Vasaland in April 2006, respectively. Direct operating expenses for Roll-on/Roll-off vessels for the year ended December 31, 2007 were 45% of revenues as compared to 41% for the year ended December 31, 2006.

Direct operating expenses associated with crude oil tankers decreased SEK 296 million, or 9%, in the year ended December 31, 2007 to SEK 2,980 million from SEK 3,276 million, mainly due to the weakening of the US dollar with respect to the SEK, partly offset by increased costs for bunker fuel. Direct operating expenses for crude oil operations for the year ended December 31, 2007 were 91% of revenues, as compared to 87% for the year ended December 31, 2006. Direct operating expenses for crude oil tankers include time-charter costs, which are fixed for periods between 6 months and up to 10 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 decreased SEK 2 million in the year ended December 31, 2007 to SEK 884 million from SEK 886 million in the year ended December 31, 2006, mainly related to increased maintenance costs, partly offset by lower energy costs due to warmer weather. Total direct operating expenses from property operations in the year ended December 31, 2007 were 44% of property revenues, as compared to 45% for the year ended December 31, 2006.

New Businesses Adactum. Direct operating expenses for Adactum consist of expenses from Adactum’s subsidiaries. Direct operating expenses from Adactum operations increased SEK 380 million, or 28%, in the year ended December 31, 2007 to SEK 1,756 million from SEK 1,376 million in the year ended December 31, 2006, mainly due to increased business activity in all subsidiaries. Of the total operating expenses in the year ended December 31, 2007, SEK 874 million were related to Blomsterlandet, SEK 872 million to Envac and SEK 1 million to Stena Renewable Energy as compared to SEK 761 million related to Blomsterlandet and SEK 615 million to Envac in the year ended December 31, 2006. Direct operating expenses for Adactum operations for the year ended December 31, 2007 were 83% of revenues, as compared to 81% for the year ended December 31, 2006.

Selling and administrative expenses increased SEK 50 million, or 2%, in the year ended December 31, 2007 to SEK 2,177 million from SEK 2,127 million in the year ended December 31, 2006, mainly due to increased personnel costs, together with increased consultancy costs, partly offset by costs referring to the acquisition bid of the German/Danish Company Scandlines made in 2006. Total selling and administrative expenses in the year ended December 31, 2007 were 10% of total revenues, as compared to 9% for the year ended December 31, 2006.

Depreciation and amortization charges decreased SEK 931 million, or 35%, in the year ended December 31, 2007 to SEK 1,703 million from SEK 2,634 million in the year ended December 31, 2006, mainly due to the write-down of SEK 710 million of the HSS vessels made in 2006, offset in part by depreciation for new vessels delivered. Depreciation and amortization charges also decreased as a result of the sale of the drilling rig Stena Dee and an extension of the useful life of the drilling rig Stena Don of five years as of January 1, 2007. The weakening of the US dollar with respect to the SEK, which primarily impacted depreciation charges on drilling rigs that are denominated in US dollars, together with the sales of tankers and RoPax vessels also contributed to the decrease of depreciation and amortization charges.

Share of affiliated companies´ results in the year ended December 31, 2007 refer to the Company’s portion of the results of Midelfart Sonesson AB (publ), Ballingslöv International AB (publ), Gunnebo AB (publ) and MediaTec. Share of affiliated companies’ results in the year ended December 31, 2006 refer to the Company’s portion of the results of Midelfart Sonesson AB (publ) and Ballingslöv International AB (publ) As of December 31, 2007, the Company’s ownership of Midelfart Sonesson AB (publ) had decreased to 22.4% and the ownership in Ballingslöv International AB (publ) had increased to 28.6%. As of December 31, 2006, the ownership of these companies was 22.7% and 25.0 %, respectively.

In the year ended December 31, 2007, Adactum increased its ownership in the listed company Gunnebo AB (publ.) to 24.9%. As of December 31, 2006, the ownership of this company was 18.5%. As of May 22, 2007, the investment in Gunnebo AB (publ) has been reclassified as an affiliated company.

In June 2007, Adactum acquired a 45% interest in MediaTec for at total investment of SEK 338 million. The investment in MediaTec is accounted for as an affiliated company.

Financial income and expense, net increased by SEK 92 million in the year ended December 31, 2006 to SEK 208 million from SEK 116 million in the year ended December 31, 2005.

Net gain (loss) on securities in the year ended December 31, 2007 was SEK 950 million, of which SEK 656 million related to realized gains on marketable debt and equity securities and SEK 294 million related to unrealized gains and losses. Net gain (loss) on securities in the year ended December 31, 2006, was SEK 982 million, of which SEK 532 million related to realized gains on marketable debt and equity securities and SEK 450 million related to unrealized gains and losses.

Interest income in the year ended December 31, 2007 increased SEK 181 million to SEK 919 million from SEK 738 million in the year ended December 31, 2006, mainly related to increased interest income in our investments in VIEs and higher liquidity during the year.

Interest expense for the year ended December 31, 2007 increased SEK 21 million to SEK (1,670) million from SEK (1,649) million for the year ended December 31, 2006. This includes interest expense for the debt in VIEs, which increased SEK 74 million to SEK (416) million from SEK (342) million, partly as a result of the investment in the VIEs. Other interest expense decreased SEK 53 million to SEK (1,254) million from SEK (1,307) million.

During the year ended December 31, 2007, foreign exchange gains (losses), net amounted to SEK 28 million, of which gains of SEK 13 million from currency trading and gains of SEK 15 million from translation differences. In the year ended December 31, 2006, foreign exchange gains (losses), net amounted to SEK 110 million, of which gains of SEK 7 million from currency trading and gains of SEK 103 million from translation differences.

Other financial income (expense) of SEK (230) million for the year ended December 31, 2007 includes expenses of SEK (97) million for the repurchase of the Senior Notes due 2012 and

SEK (59) million related to amortization of the deferred financing charges for our Senior Notes, the $1 billion revolving credit facility, bank loans, capital lease obligations and investments in VIEs. Other financial income (expense) of SEK (167) million for the year ended December 31, 2006 includes SEK (45) million related to amortization of deferred finance charges.

Income taxes for the year ended December 31, 2007 were SEK (490) million, consisting of current taxes of SEK (151) million and deferred taxes of SEK (339) million. The effective tax rate in 2007 was approximately 13%. Income taxes for the year ended December 31, 2006 were SEK (368) million, consisting of current taxes of SEK (299) million and deferred taxes of SEK (69) million. The effective tax rate in 2006 was approximately 8%.The provision for taxes is based upon the applicable tax rates in the various jurisdictions where revenues are generated.

Comparison of the year ended December 31, 2006 to the year ended December 31, 2005

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 40% of our total revenues are generated in US dollars and approximately 30% 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:

Total revenues increased SEK 3,276 million, or 17%, in the year ended December 31, 2006 to SEK 22,895 million from SEK 19,619 million in the year ended December 31, 2005, mainly as a result of gains on sale of vessels and increased operating revenues in almost all business segments, partly offset by decreased gains on sale of properties.

Ferry operations. Ferry revenues are primarily generated from ticket sales, freight haulage and on board sales. Revenues from ferry operations increased SEK 368 million, or 4%, in the year ended December 31, 2006 to SEK 9,413 million from SEK 9,045 million in the year ended December 31, 2005, mainly due to increased volumes in the freight business activity, partly offset by decreased volumes in passengers, cars and onboard sales.

Offshore Drilling. Drilling revenues consist of charter hires for our drilling rigs. Revenues from drilling operations increased SEK 1,156 million, or 62%, in the year ended December 31, 2006 to SEK 3,027 million from SEK 1,871 million in the year ended December 31, 2005, mainly due to new contracts at higher day rates for Stena Tay and Stena Clyde, as well as higher utilization rates across the fleet. The change in day rates reflects new charter contracts and the market conditions in effect at the time a charter is made in the particular geographic area.

Net Gain on Sale of Vessels, Drilling. In the year ended December 31, 2006 gains of SEK 1,483 million were recorded on the sale of the drilling rig Stena Dee. In the year ended December 31, 2005, no vessel sales were made.

Shipping. Shipping revenues primarily represent charter hires for our owned and chartered in vessels and management fees for vessels managed by the Company. Revenues from shipping operations decreased SEK 122 million, or 3%, in the year ended December 31, 2006 to SEK 4,283 million from SEK 4,405 million in the year ended December 31, 2005.

Revenues from chartering out Roll-on/Roll-off vessels decreased SEK 85 million, or 19%, in the year ended December 31, 2006, to SEK 373 million from SEK 458 million in the year ended December 31, 2005, mainly due to the sale of the RoPax vessels Pride of Aquitaine in October 2005, Svealand in April 2006, and the redelivery of Vasaland in April 2006, partly offset by higher charter hire received for Stena Challenger and Mont Ventoux.

Revenues from crude oil tankers decreased SEK 40 million, or 1%, to SEK 3,764 million in the year ended December 31, 2006, from SEK 3,804 million in the year ended December 31, 2005. In the year ended December 31, 2006, 42 tankers were operated (chartered or owned), compared to 39 tankers in the year ended December 31, 2005.

Net Gain on Sale of Vessels, Shipping. In the year ended December 31, 2006, gains of SEK 830 million were recorded on the sale of the RoPax vessel Svealand and the tanker vessels Stena Contest, Stena Concept, Stena Compass, Stena Compassion and Stena Arctica. In the year ended December 31, 2005, gains of SEK 315 million were recorded on the sale of the RoRo vessel Pride of Aquitaine and on the crude oil tanker Stena Antarctica.

Property. Property revenues consist of rents for properties owned and management fees for properties managed by us. Revenues from property operations increased SEK 88 million, or 5%, in the year ended December 31, 2006 to SEK 1,970 million from SEK 1,882 million in the year ended December 31, 2005, mainly related to increased number of properties and increased rents.

Net Gain on Sale of Properties. In the year ended December 31, 2006, gains of SEK 194 million were recorded on the sale of properties. In the year ended December 31, 2005, gains of SEK 813 million were recorded, mainly related to properties acquired in the purchase of Drott.

New Businesses Adactum. Adactum revenues consist of revenues from Adactum’s subsidiaries. Revenues from Adactum increased SEK 409 million, or 32%, in the year ended December 31, 2006 to SEK 1,692 million from SEK 1,283 million, in the year ended December 31, 2005, mainly due to increased business activities in all subsidiaries. Of the total revenues in the year ended December 31, 2006, SEK 836 million were related to Blomsterlandet, SEK 853 million to Envac and SEK 3 million to Stena Renewable Energy, as compared to SEK 747 million related to Blomsterlandet and SEK 523 million to Envac in the year ended December 31, 2005.

Total direct operating expenses increased SEK 916 million, or 7%, in the year ended December 31, 2006 to SEK 13,547 million from SEK 12,631 million in the year ended December 31, 2005, 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 166 million, or 3%, in the year ended December 31, 2006 to SEK 6,399 million from SEK 6,565 million in the year ended December 31, 2005, mainly due to decreased personnel related costs. The decrease is also due to a an impairment charge related to the HSS vessels of SEK 55 million, recorded in the year ended December 2005. Direct operating expenses for ferry operations for the year ended December 31, 2006 were 68% of revenues, as compared to 73% for the year ended December 31, 2005.

Offshore Drilling. Direct operating expenses for drilling consist primarily of personnel costs, insurance, maintenance and catering costs. Direct operating expenses from drilling operations increased SEK 331 million, or 30%, in the year ended December 31, 2006 to SEK 1,443 million from SEK 1,112 million in the year ended December 31, 2005. The increase is mainly due to higher expenses for Stena Tay and Stena Clyde, related to their new contracts in the US Gulf of Mexico,

Nigeria and Australia, respectively. Direct operating expenses from drilling operations for the year ended December 31, 2006, were 48% of drilling revenues, as compared to 59% for the year ended December 31, 2005.

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 371 million, or 12%, in the year ended December 31, 2006 to SEK 3,437 million from SEK 3,066 million in the year ended December 31, 2005.

Direct operating expenses with respect to Roll-on/Roll-off vessels decreased SEK 34 million, or 18%, in the year ended December 31, 2006 to SEK 153 million from SEK 187 million in the year ended December 31, 2005, mainly due to the sale of the RoPax vessel Svealand in April 2006 and the redelivery of Vasaland in April 2006. Direct operating expenses for Roll-on/Roll-off vessels for the year ended December 31, 2006 were 41% of revenues, the same as for the year ended December 31, 2005.

Direct operating expenses associated with crude oil tankers increased SEK 405 million, or 14%, in the year ended December 31, 2006 to SEK 3,276 million from SEK 2,871 million, mainly due to increased expenses resulting from higher market rates for chartered in vessels and bunker fuel costs. Direct operating expenses for crude oil operations for the year ended December 31, 2006 were 87% of revenues, as compared to 75% for the year ended December 31, 2005. Direct operating expenses for crude oil tankers include time-charter costs, which are fixed for periods between 6 months and up to 10 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 76 million, or 9%, in the year ended December 31, 2006 to SEK 886 million from SEK 810 million in the year ended December 31, 2005, mainly related to an increased number of properties and increased heating costs. Total direct operating expenses from property operations in the year ended December 31, 2006 were 45% of property revenues, as compared to 43% for the year ended December 31, 2005.

New Businesses Adactum. Direct operating expenses for Adactum consists of expenses from Adactum’s subsidiaries. Direct operating expenses from Adactum operations increased SEK 302 million, or 28%, in the year ended December 31, 2006 to SEK 1,376 million from SEK 1,074 in the year ended December 31, 2005, mainly due to increased business activity in all subsidiaries. Of the total operating expenses in the year ended December 31, 2006, SEK 761 million were related to Blomsterlandet, SEK 615 million to Envac, as compared to SEK 693 million related to Blomsterlandet and SEK 375 million to Envac in the year ended December 31, 2005.

Selling and administrative expenses increased SEK 266 million, or 14%, in the year ended December 31, 2006 to SEK 2,127 million from SEK 1,861 million in the year ended December 31, 2005, mainly due to expenses in Envac, acquired in May 2005, together with increased personnel costs. The increase is also related to costs of SEK 52 million referring to the acquisition bid of the German/Danish Company Scandlines. Total selling and administrative expenses in the year ended December 31, 2006 were 9% of total revenues, as compared to 10% for the year ended December 31, 2005.

Depreciation and amortization charges decreased SEK 100 million, or 4%, in the year ended December 31, 2006 to SEK 2,634 million from SEK 2,734 million in the year ended December 31, 2005. Depreciation and amortization charges in the year ended December 31, 2006 includes impairment charges related to the HSS vessels of SEK 710 million. Depreciation and amortization

charges in the year ended December 31, 2005 included impairment charges related to the HSS vessels of SEK 765 million and impairment charges for real estate of SEK 180 million. The decrease in total depreciation and amortization is mainly due to decreased impairment charges.

Share of affiliated companies’ results in the year ended December 31, 2006 and December 31, 2005 refers to our portion of the results of Midelfart Sonesson AB (publ) and Ballingslöv International AB (publ).

Financial income and expense, net increased by SEK 68 million in the year ended December 31, 2006 to SEK 116 million from SEK 48 million in the year ended December 31, 2005.

Net gain (loss) on securities in the year ended December 31, 2006 was SEK 982 million, of which SEK 532 million related to realized gains on marketable debt and equity securities and SEK 450 million related to unrealized gains and losses. Net gain (loss) on securities in the year ended December 31, 2005 amounted to 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.

Interest income in the year ended December 31, 2006 increased SEK 170 million to SEK 737 million from SEK 567 million in the year ended December 31, 2005, mainly related to increased interest income in our investments in VIEs.

Interest expense for the year ended December 31, 2006 increased SEK 254 million to SEK (1,649) million from SEK (1,395) million for the year ended December 31, 2005. This includes interest expense for the debt in VIEs, which increased SEK 143 million to SEK (342) million from SEK (199) million, partly as a result of the investment in the VIEs. Other interest expense increased SEK 111 million to SEK (1,307) million from SEK (1,196) million.

During the year ended December 31, 2006, foreign exchange gains (losses), net amounted to SEK 110 million, of which gains of SEK 7 million from currency trading and gains of SEK 103 million from translation differences. In 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.

Other financial income (expense) of SEK (167) million for the year ended December 31, 2006 includes SEK (45) 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 (121) million for the year ended December 31, 2005 includes SEK (57) million related to amortization of deferred finance charges.

Income taxes for the year ended December 31, 2006 were SEK (368) million, consisting of current taxes of SEK (299) million and deferred taxes of SEK (69) million. The effective tax rate in 2006 was approximately 8%. 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. The effective tax rate in 2005 was approximately 7%.The provision for taxes is based upon the applicable tax rates in the various jurisdictions where revenues are generated.

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, 2007, we had total cash and marketable securities of SEK 11,562 million as compared with SEK 9,148 million as of December 31, 2006.

Cash flows provided by operating activities increased to SEK 4,586 million in 2007 from SEK 3,579 million in 2006. Cash flows used in investing activities in 2007 amounted to SEK (12,862) million, including capital expenditure of SEK (8,315) million. Cash flows used in investing activities in 2006 amounted to SEK (7,299) million, including capital expenditure of SEK (8,148) million. Cash flows provided by financing activities in 2007 amounted to SEK 7,654 million as compared with SEK 1,092 million in 2006.

Total interest bearing debt as of December 31, 2007, was SEK 32,793 million, excluding the debt in the VIEs, as compared with SEK 24,469 million at December 31, 2006. Interest bearing debt in the VIEs as of December 31, 2007 was SEK 8,021 million, as compared with SEK 6,302 million at December 31, 2006. Total debt increased partly due to the strengthening of the closing rate of the SEK against the US dollar, but also due to the increased investments. As of December 31, 2007, $574 million was utilized under the $1 billion revolving credit facility plus $21 million used for issuing of bank guarantees and letters of credit. As of December 31, 2006, $386 million was outstanding under this facility plus $16 million used for issuing of bank guarantees and letters of credit. In 2007, Stena Royal, a subsidiary in the unrestricted group, entered into a new revolving credit facility of $350 million, of which $109 million was utilized as of December 31, 2007. 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, 2007, was SEK 8,453 million ($1,309 million), of which SEK 2,977 million ($461 million) is due within the next twelve months, SEK 2,188 million ($339 million) is due during 2009 and SEK 3,287 million ($509 million) is due in 2010 and thereafter. We plan to finance the unpaid balance, together with additional expenses and financing costs, through cash from operations, the existing revolving credit facilities, capital lease agreements, new bank loans or other financing arrangements; financing for 58% of the unpaid balance has already been arranged.

We believe that, based on current levels of operating performance and anticipated market conditions, cash flow from operations, together with other available sources of funds, including refinancings, will be adequate to make required payments of principal and interest on outstanding debt, to permit proposed capital expenditures, including newbuildings and other vessel acquisitions, and to fund anticipated working capital requirements.

Our commercial commitments are listed in Note 25 of our Consolidated Financial Statements and relate mainly to purchase obligations for newbuildings.

One of our subsidiaries and TeeKay have each guaranteed the performance of the obligations of one of the Stena/TeeKay joint ventures 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 TeeKay have also guaranteed the repayment by the other Stena/TeeKay joint ventures of loans from a group of banks. Our liability under these loans is limited to 50% of the amount outstanding under the loan agreements, including interest, charges, expenses and damages. As of December 31, 2007, the outstanding total loan amounts were $230 million.

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. 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.

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 increases the volatility of reported earnings.

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.

In September 2006, the Financial Accounting Standards Board, or FASB, issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements; rather, it applies under other accounting pronouncements that require or permit fair value measurements. The provisions of SFAS No 157 are to be applied prospectively as of the beginning of the fiscal year in which this statement is initially applied, with any transition adjustment recognized as a cumulative-effect adjustment to the opening balance of retained earnings. The provisions of SFAS No. 157 are effective for the fiscal years beginning after November 15, 2007. We are currently assessing what the impact of the adoption of SFAS No. 157 will be on our financial position and results of operations.

In September 2006, the Financial Accounting Standards Board, or FASB, issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, or SFAS No. 158. Effective December 31, 2006, the Company adopted the recognition and disclosure provisions of SFAS No. 158. The Company has not yet adopted the measurement date provisions which are not effective until fiscal year 2008. The Company does not anticipate a material effect on its financial statements as a result of adoption of the measurement date provisions of SFAS No. 158.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. The fair value option established by SFAS No. 159 permits, but does not require, all entities to choose to measure eligible items at fair value at specified election dates. An entity would report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. We are currently assessing what the impact of the adoption of SFAS No. 159 will be on our financial position and results of operations.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combination. SFAS No. 141R will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R will change the accounting treatment and disclosure for certain specific items in a business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Accordingly, any business combinations we engage in will be recorded and disclosed following existing GAAP until January 1, 2009. We expect SFAS No. 141R will have an impact on accounting for business combinations once adopted but the effect is dependent upon acquisitions at that time. We are still assessing the impact of this pronouncement.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51. SFAS No. 160 establishes new accounting and reporting standards for the non controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. We have not completed our evaluation of the potential impact, if any, of the adoption of SFAS No. 160 on our consolidated financial position, results of operations and cash flows.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. SFAS No. 161 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and requires companies with derivative instruments to disclose information about how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133, and how derivative instruments and related hedged items affect a company’s financial position, financial performance, and cash flows. The required disclosures include the fair value of derivative instruments and their gains or

losses in tabular format, information about credit-risk-related contingent features in derivative agreements, counterparty credit risk, and the company’s strategies and objectives for using derivative instruments. SFAS No. 161 expands the current disclosure framework in SFAS No. 133. SFAS No. 161 is effective prospectively for periods beginning on or after November 15, 2008.

The differences in net income and shareholders’ 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 shareholders’ 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 1,990 million for the year ended December 31, 2005, SEK 2,979 million for the year ended December 31, 2006 and SEK 3,342 million for the year ended December 31, 2007, as compared to SEK 2,268 million, SEK 4,339 million and SEK 3,389 million of net income determined under Swedish GAAP for the years ended December 31, 2005, 2006 and 2007, respectively.

Shareholders’ equity determined in accordance with US GAAP would have been SEK 17,465 million and SEK 20,475 million at December 31, 2006 and 2007, respectively. Under Swedish GAAP, shareholders’ equity was SEK 18,587 and SEK 21,306 million at December 31, 2006 and 2007, respectively.

The Company’s financial reporting is up to 2007 prepared in accordance with generally accepted accounting principles in Sweden (Swedish GAAP). Effective from January 1, 2008, Stena will prepare the financial reports in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) as endorsed by the EU and issued by the International Accounting Standards Board (IASB).

Effective as of January 1, 2008, the parent company will prepare its financial reports in accordance with RFR 2, Accounting for legal entities. Due to the nature of the Company’s operations, the transition will not have any significant impact.

Stena has since 1995 issued Senior Notes in the United States and in connection therewith is required to file an annual report on Form 20-F with the SEC. In accordance with the Swedish and American rules, companies that change the accounting principles into IFRS have to report one comparative year. This means that the opening balance is January 1, 2007.

The below presentation is focused on the areas where Stena’s current accounting principles are expected to be affected by the implementation of IFRS. The most significant areas are further explained in the opening balance as of January 1, 2007 and the restatement of balance sheet and income statement for the year ended 2007.

Restatements and transition effects, First-time adoption of International Financial Reporting Standards (IFRS 1)

In accordance with IFRS’s transitions rules (IFRS 1), restatement of previous periods have been made. The general rule is that restatement of the financial reporting for the periods after the transition date should be made as if IFRS had been applied historically. There are, however, certain exemptions from the general rule of which Stena has chosen. These exemptions are further described in the accounting principles;

Significant changes in accounting principles which has an impact on the Company’s financial reports

In accordance with IAS 27, minority interests are presented as a separate component of shareholders’ equity and is included in the net income of the year in the income statement.

According to Swedish GAAP, all intangible assets have been amortized over their estimated useful lives. In accordance with IFRS, intangible assets which considered to have indefinite useful lives should not be amortized. These kind of assets are tested annually for impairment. The Company has chosen not to apply IFRS 3, Business Combinations retrospectively according to the IFRS transition rules. The Company has decided that intangible assets with indefinite useful lives should include only goodwill which is why amortization charged to the income statement under Swedish GAAP for the period January 1, 2007 and for the year 2007 are reversed and added back to the carrying value of goodwill.

In accordance with IFRS 1 transition rules actuarial gains and losses arising prior to January 1, 2007 could be set to zero and charged to equity in the opening balance. The Company has applied this rule to all pension plans in the group in the opening balance as of January 1, 2007.

In accordance with the Swedish Annual Accounts Act, it is possible to account for financial instruments at fair value and there are only a few adjustments which are made in accordance with IFRS. The bunker fuel hedges have previously not been accounted for in accordance with Swedish GAAP, i.e., they have been treated as off-balance items. The Company applies hedge accounting for these contracts which is why these are accounted for in the equity accounts according to IFRS. For foreign exchange hedges as well as interests rate swaps contracts, hedge accounting is not applied which is why these results are reported through Income Statement according to IFRS.

At the date of transition to IFRS, properties are accounted for at fair value in accordance with IAS 40, Investment Properties, fair value adjustments are reported as other income and expenses and repair and maintenance cost in according to plan should be reversed and reported as capitalized expenses. No depreciation is made on properties. The properties are tested annually for impairment. Depreciation for the period January 1, 2007 and for the year 2007 has been added back to the carrying value. Impairment tests have been made as of January 1, 2007 and December 31, 2007.

Sale of assets is not the core business which is why this sale is reported net as other income in accordance with IAS 18, Revenues.

IFRS 1 provides an option as to treat the effects of Changes in Foreign Exchange Rates. A first time adopter can set the cumulative translation difference to zero for foreign operations and this option has been applied by the Company for the opening balance January 1, 2007.

The definition of liquid funds in the Company’s consolidated cash flow statements is identical to the definition in IAS 7, Cash flow statements. Liquid funds consist of cash, bank assets and short term investments which can be converted to cash within 90 days.


Consolidated Balance Sheet SEK (in millions)	Note	Swedish GAAP Jan1, 2007	IFRS adjustment	IFRS		Swedish GAAP Dec 31, 2007	IFRS adjustment	IFRS
Assets
Intangible assets	a	688	41		729	620	41		661
Vessels, buildings and equipment	b	18,058	95		18,153	23,245	102		23,347
Property	c, k	16,453	4,872		21,325	16,995	5,560		22,555
Investments in affiliated companies		397			397	1,403			1,403
Investments in VIE’s		7,341			7,341	9,251			9,251
Marketable securities		5,802			5,802	7,674			7,674
Other non current assets	d, g, h	3,520	815		4,335	5,474	(39)		5,435
Total fixed assets		52,259	5,823		58,082	64,662	5,664		70,326
Inventories		317			317	418			418
Trade debtors		2,007			2,007	2,670			2,670
Other receivables	d, g	1,617	(72)		1,545	2,444	753		3,197
Prepaid expenses and accrued income	b	871	(95)		776	1,098	(102)		996
Total short-term receivables		4,812	(167)		4,645	6,630	651		7,281
Short-term investments		2,462			2,462	3,180			3,180
Cash and cash equivalents		884			884	708			708
Total assets		60,417	5,656		66,073	75,180	6,315		81,495
Shareholders’ equity and liabilities
Share Capital		5			5	5			5
Restricted reserves		842			842	716			716
Retained earnings		13,401	4,371		17,772	17,196	3,964		21,160
Net income		4,339			4,339	3,389	464		3,853
Minority interest	f	162			162	171			171
Total shareholders’ equity	e	18,749	4,371		23,120	21,477	4,428		25,905
Non-current liabilities
Long-term debt		18,427			18,427	23,335			23,335
Debt in VIE’s		6,302			6,302	8,021			8,021
Senior Notes	g	2,905	(17)		2,888	6,012	(39)		5,973
Capitalized lease obligations		1,246			1,246	2,307			2,307
Other noncurrent liabilities		932			932	886			886
Provisions for Pension	h	2,205	(391)		1,814	1,886	(391)		1,495
Other provisions		1,668			1,668	2,713			2,713
Deferred income taxes	i	1,709	1,706		3,415	2,219	2,340		4,559
Total noncurrent liabilities		35,394	1,298		36,692	47,379	1,910		49,289
Short-term debt	g	642			642	985	(23)		962
Senior Notes	g	1,211	(13)		1,198
Capitalized lease obligations		38			38	154			154
Trade accounts payable		1,036			1,036	1,113			1,113
Income tax payable		166			166	116			116
Other		424			424	599			599
Accrued costs and prepaid income		2,757			2,757	3,357			3,357
Total current liabilities		6,274	(13)		6,261	6,324	(23)		6,301
Total liabilities		41,668	1,285		42,953	53,703	1,887		55,590
Total shareholders’ equity and liabilities		60,417	5,656		66,073	75,180	6,315		81,495


Consolidated Income Statement SEK (in millions)	Note	Swedish Dec 31, 2007			Adjustments			IFRS
Revenues	j		22,005			(350	)		21,655
Other income	c, j		48			806			854
Total direct operating expenses	k		(15,820	)		100			(15,720	)
Selling and administration expenses	a, l		(2,363	)		216			(2,147	)
Other operating expenses			(117	)					(117	)
Share of affiliated companies’ results			(61	)					(61	)
Income from operations			3,692			772			4,464
Gain (loss) on securities, net			1,141						1,141
Interest income			945						945
Interest expense	m		(1,878	)		(145	)		(2,023	)
Total financial income and expenses			208			(145	)		63
Minority interest			(21	)					(21	)
Income before taxes			3,879			627			4,506
Income taxes			(490	)		(163	)		(653	)
Net income			3,389			464			3,853

The impact on deferred taxes according to IFRS. The effective tax rate is on average 28%.

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 shareholders 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 appointees, are elected by resolution of a general meeting of shareholders. 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 shareholders at any time, and vacancies on the board, except when filled by a deputy director, may only be filled by shareholder 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 March 31, 2008.

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 on the board of Stena Metall. Mr. Jeansson is chairman of the boards of

BIL Sweden and the Volvo Pensionsstiftelse and chairman of Sixth Swedish National Pension Fund. He also serves as director of Volvo Lastvagnar AB, Volvo Construction Equipment, Svenskt Naringsliv 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. Mr. Olsson is also Chairman of the Board 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 from 1984 to December 31, 2007, 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. He has been employed by Stena AB since 1975. Mr. Carlsson resigned as chief financial officer of Stena AB on December 31, 2007. He remains as Executive Vice President and holds the position of Head of Strategy.

Jan Carlstein has served as a director of Stena AB since 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 a director of Stena AB since 1997 and served as Managing Director of Stena Fastigheter, a subsidiary of Stena AB, from 1981 to 1997. Mr. Eriksson also served as a member of the board of directors of Stena Fastigheter from 1997 to 2006.

Anne-Marie Pouteaux has served as a director of Stena AB since February 2008. Mrs. Pouteaux is a partner of Wistrand Advokatbyra Göteborg KB and is also a member of the board of directors of Stena Bulk AB.

Jörgen Lorén has served as a director of Stena AB, representing Stena AB employees affiliated with the Swedish Ship Officers’ Association, since 2006. Mr. Lorén 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 Seamen’s 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.

Christel Armstrong Darvik (born 1953) has served as Managing Director of Stena Fastigheter AB since October 1, 2006. She is a member of the board of directors of Specialfastigheter Sverige AB. Mrs. Armstrong Darvik has been employed in the Stena Sphere since 2006.

Gunnar Blomdahl (born 1955) has served as Managing Director of Stena Line Holding B.V. 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.

Peter Claesson (born 1965) has served as Director of Finance of Stena AB since January 1, 2008. Mr. Claesson was recruited from Trelleborg Group, where he was employed for 15 years, the last year of which he was part of the group management as head of Group Treasury. Mr. Claesson serves on the board of directors of many of our companies. Mr. Claesson has been employed in the Stena Sphere since 2008.

Claes Davidsson (born 1950) has served as Director of Ship Management and HR since 2003. Mr. Davidsson also serves as chairman of NMM in Glasgow, Scotland and of Austen Maritime PTE Ltd., Singapore. Mr. Davidsson has been employed in the Stena Sphere since 1983.

Staffan Hultgren (born 1961) has served as Director of Business Administration and principal financial officer since January 1, 2008. Previously, he served as chief controller of Stena AB. Mr. Hultgren also serves on the boards 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 NMM since 1991. Mr. MacLeod also serves as a member of the board of directors of several of our 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. From 1984 to 1996 he 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 NMM. Mr. Ryder has been employed in the Stena Sphere since 1982. In 2006 Mr. Ryder was appointed deputy managing director of Stena Rederi.

Christer Schoug (born 1956) has served as shipping coordinator in Stena Rederi since 2005 and since 2006 as director and Managing Director of Stena RoRo AB and deputy managing director of Stena Rederi. Mr. Schoug also serves as vice chairman of NMM in Glasgow, Scotland. Mr. Schoug has been employed in the Stena Sphere since 1995.

Martin Svalstedt (born 1963) has served as Managing Director of Adactum since 2002. Mr. Svalstedt also serves as chairman of Ballingslöv International AB (publ), Envac, Gunnebo AB (publ), S-Invest Trading AB and Stena Renewable AB and as board member in Midelfart Sonesson AB (publ), Mediatec, SentoClone AB, Gislaved Folie AB and Adactum.

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

For the year ended December 31, 2007, the aggregate compensation paid by the Stena AB to its directors (a total of nine persons) amounted to approximately SEK 13 million. For the year ended December 31, 2006, the aggregate compensation paid by the Stena AB to its directors amounted to approximately SEK 12 million.

Following a decision by the board on December 20, 2006, we established an audit committee. At the same time, the board approved the charter for the audit committee.

Lennart Jeansson (chairman of the board of Stena AB), Jan Carlstein (member of the board of Stena AB), Staffan Hultgren (director of Business Administration for Stena AB) and Anne-Marie Pouteaux (outside counsel to the Company and member of the board of Stena AB) are members of the audit committee. Mr. Lennart Jeansson acts as chairman of the audit committee.

Pursuant to the charter, the overall objectives and responsibilities of the audit committee are to assist the board in fulfilling its oversight responsibility relating to the Company´s accounting matters, the system of internal controls, the management’s monitoring and controlling of business risks, corporate governance activity and legal and regulatory requirements to the extent applicable to financial matters.

The audit committee is appointed by and can be removed by the board of directors and shall have at least three meetings per year.

The chart below sets forth the average number of employees in each of our principal business areas for the three years ended December 31, 2007.

In addition to the employees referred to above, NMM employed 4,842 persons in 2007 in external ship management services, as compared to 4,475 persons in 2006 and 4,172 persons in 2005.

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

All of the issued and outstanding voting shares of Stena AB were owned as follows as of March 31, 2008:

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. Stefan Sten Olsson Holding Ltd. is a company incorporated in the British Virgin Islands whose sole shareholder is the Stena Trust. The settlor and sole beneficiary of the Stena Trust is Mr. Stefan Sten Olsson. Stefan Sten Olsson is the brother of Dan Sten Olsson and Madeleine Olsson Eriksson.

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 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 of Association, 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 of Association 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.

We have entered into various transactions with other companies in the Stena Sphere, which includes the companies wholly owned by the Sten Allan Olsson family in Sweden, Sessan and Stena Metall and their subsidiaries. Another significant company within the Stena Sphere is 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 and the Company through Stena Bulk AB , 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 agreements were made in 2006 or 2007.

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 13 million, SEK 25 million and SEK 22 million in 2005, 2006 and 2007, respectively, for these services.

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 2005, 2006 and 2007 for these services.

In 2001 and 2002, Sessan acquired all 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, 2007, DKK 219 million was outstanding under this facility, as compared to DKK 213 million as of December 31, 2006.

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 us in 1996. The vessel is chartered back as an operating lease, for which we paid charterhire of SEK 61 million for the year 2005 and SEK 59 million for each of the years 2006 and 2007.

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. Sessan had the option to buy these shares at a price of 10% above the price paid by us. This option was exercised during 2006.

In 2003, we granted an interest bearing loan of SEK 10 million to Sessan to finance the acquisition of shares in an unrelated company. During 2006, we acquired shares in Ballingslöv International AB (publ) at a market value of SEK 35 million from Sessan. At the same time the loan of SEK 10 million was repaid.

We purchase a substantial part of our bunker fuel from Stena Metall. Such purchases aggregated SEK 1,127 million, SEK 1,840 million and SEK 1,781 million in 2005, 2006 and 2007, respectively.

We paid charterhire for vessels to Stena Metall at an amount of SEK 63 million for each of the years 2005 and 2006 and of SEK 89 million for 2007.

We provide management and other services to Stena Metall. We received SEK 1 million in each of the years 2005, 2006 and 2007 for these services.

During 2007, two vessels, Stena Carrier and Mont Ventoux, were sold to Stena Metall at market value and chartered back as operational leases.

We rent office space from members of the Olsson family. In 2005, 2006 and 2007, we paid SEK 29 million, SEK 32 million and SEK 40 million, respectively, in respect of such properties.

We manage certain properties owned by members of the Olsson family. In 2005, 2006 and 2007, members of the Olsson family paid us SEK 13 million, SEK 12 million and SEK 12 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 2005, the Company sold a property to the Olsson family for SEK 96 million. The sale was made at market price.

In 2006, we acquired shares in Gunnebo AB (publ) and Gunnebo Industrier AB (publ) at a market value of SEK 18 million from the Olsson family.

In August 2007, Transocean Offshore Deepwater Drilling Inc. (‘‘Transocean’’) brought suit against Stena Drilling Limited in the United States District Court for the Southern District of Texas (‘‘the Texas Action’’). Transocean alleges that we have infringed four U.S. patents owned by Transocean by virtue of certain acts of selling and offering for sale the Stena DrillMAX I, II and III vessels. In September 2007, we filed a motion to dismiss the Texas Action on jurisdiction grounds. If granted, the dismissal would not foreclose the possibility of Transocean asserting future claims of patent infringement in connection with the DrillMAX vessels in the U.S. or other jurisdictions where Transocean holds counterparts to the U.S. patents.

In March 2007, Transocean initiated legal proceedings against Samsung Heavy Industries Co., Ltd. (‘‘Samsung’’) in South Korea (‘‘the Korean Action’’) alleging that Samsung has infringed certain South Korean patents that are counterparts to the U.S. patents asserted in the Texas Action. According to the Korean Action, among the allegedly infringing acts are Samsung’s construction of the DrillMAX I, II and III vessels. We have intervened in the Korean Action in order to clarify our obligation, if any, to indemnify Samsung for damages or expenses arising out of any finding of infringement relating to the DrillMAX vessels. As of the date of this Annual Report, neither case is at a stage where it is possible to provide a meaningful evaluation of the likelihood of an unfavorable outcome. However, we believe it is highly unlikely that any unfavorable outcome in these cases will materially impact our ability to perform our obligations under current customer contracts for the DrillMAX vessels.

We are also 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.

We paid a cash dividend of SEK 195 million, SEK 215 million and SEK 550 million for the years ended December 31, 2005, 2006 and 2007, respectively. The dividends are made out of unrestricted earnings in the shareholders’ equity and paid out the year after the respective financial year.

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.

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.

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 that 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 major borrowings, for example, 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.

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 amendments to the Articles of Association 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.

Our Articles of Association 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.

There are no limitations under Swedish law or in our Articles of Association 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 of Association, 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 of Association, a vote of at least 75% of shares represented at the annual general meeting of our shareholders is required to amend this put provision.

There are no provisions in our Articles of Association 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.

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

Revolving credit facility. On December 8, 2004, Stena Holland BV (formerly Stena International B.V.) 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 Limited, DnB NOR Bank ASA and HSBC Bank plc act as lead arrangers and Svenska Handelsbanken AB (publ.) acts as facility agent. The $1 billion revolving credit facility was made available for the purposes of refinancing Stena Holland BV’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. Stena Holland BV’s and SSAG’s obligations under the $1 billion revolving credit facility are guaranteed by Stena AB and certain of its subsidiaries.

The final maturity of the $1 billion revolving credit facility is January 28, 2013. Borrowings under the $1 billion revolving credit facility bear interest at a rate equal to the aggregate of LIBOR plus an applicable 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 Stena Holland BV and SSAG under the $1 billion revolving credit facility are secured by, among other things, first priority security interests on Stena Spey, Stena Clyde, Stena Tay, Stena Saga, Stena Nautica, Stena Don, Stena Forwarder, Stena Baltica, Stena Carisma (and its linkspans), Stena Danica, Stena Discovery, Stena Europe, Stena Forecaster, Stena Forerunner, Stena Foreteller, Stena Germanica, Stena Scandinavica, Stena Scanrail, Stena Seatrader and the Holyhead and Stranraer ports. In the event that an asset securing the $1 billion revolving credit facility is sold or declared a total loss, availability under the $1 billion revolving credit facility will, unless appropriate replacement collateral is provided within 270 days, 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 any debt secured by a prior mortgage therein) to 140% of the facility amount.

The $1 billion revolving credit facility imposes various financial and operating covenants upon the Restricted Group. 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 capitalization, and (iv) require us to maintain ownership of the security parties that, at the date of execution of the credit facility agreement, are members of the Stena AB group.

As of December 31, 2007, the amount of indebtedness under the $1 billion revolving credit facility was $575 million plus $21 million used in connection with guarantees and letters of credit.

Adactum secured bank facility. On October 16, 2006, Adactum entered into a new secured revolving credit facility with Svenska Handelsbanken AB (publ) and Nordea Bank Sweden AB (publ) with a total principle amount of SEK 450 million. The facility matures on October 16, 2009 and bears interest at a rate based on Stockholm Interbank Offered Rates plus an applicable margin of 0.75%. 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 shares in listed companies held by Adactum are pledged as security for the facility. The facility includes a cross-default provision ($15 million threshold) with respect to debt of Stena AB, Adactum or any present or future subsidiary of Stena AB. As of December 31, 2007, SEK 450 million under the facility was utilized. The facility is non-recourse to Stena AB.

Stena Royal secured bank facility. On September 28, 2007, Stena Royal , an unrestricted subsidiary, entered into a new $350 million secured revolving credit facility with Svenska Handelsbanken AB (publ) and Nordea Bank Sweden AB (publ). The facility matures on September 28, 2012, subject to our option to extend it for up to two additional years. The facility bears interest at a rate based on LIBOR, EURIBOR or Stockholm Interbank Offered Rates as applicable depending on currency drawn down plus an applicable margin of 0.45% to 0.70% depending on the ratio between the aggregated drawn down amount and the value of the underlying security. Stena Royal may select every time it borrows funds under the facility an interest period of three or six months or such other period as may be agreed up to a maximum of twelve months. Interest is payable at the end of the relevant interest period. The medium and long-term investment portfolios of shares in listed companies held by Stena Royal are pledged as security for the facility. The facility includes a cross-default provision ($30 million threshold) with respect to debt of Stena AB, Stena Royal or any present or future subsidiary of Stena AB. As of December 31, 2007, $109 million was utilized under the facility.

Debt in VIEs. As of December 31, 2007, we had investments in four VIEs: Canyon Capital CDO-2002, Canyon Capital CLO-2004, Canyon Capital CLO-2006 and Canyon Capital CLO-2007. The assets and liabilities of the VIEs are consolidated in our financial statements, although the debt of the VIEs is non-recourse to Stena AB.

As of December 31, 2007, Canyon Capital CDO-2002 Ltd, Canyon Capital CLO-2004 Ltd and Canyon Capital CLO-2006 Ltd, had issued senior secured notes to fund their portfolio investments in the US high yield bond and corporate loan markets.

As of December 31, 2007, the total outstanding debt of all VIEs was SEK 8,021 million. The remaining funding for the VIEs has been provided by us 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, $10.9 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 $200 million Class A1 notes, $77.5 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%. Canyon Capital CLO-2006 Ltd issued senior secured notes maturing in August 2020, consisting of $266 million Class A notes, $15.2 million Class B notes, $22.8 million Class C notes, $22.8 million Class D notes and 13.3 million Class E notes. The notes bear interest at a variable rate of LIBOR plus a margin of 0.25-0.27% for Class A notes and 0.42%, 0.70%, 1.60% and 3.75% for Class B, C, D and E notes, respectively. Interest is payable semi-annually. Each series of notes is secured by the underlying securities held by the issuing VIE. Canyon Capital CLO-2007 is still in its ramp-up phase and is expected to close by the fourth quarter of 2008. Short term funding is provided by the arranging bank.

and December 1 of each year. The Senior Notes due 2016 are redeemable at our option, in whole or in part, at any time on or after December 1, 2009. The indentures governing these notes contain certain covenants with respect to, among other things, 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. These senior notes are unsecured obligations of Stena AB and rank pari passu in right of payment with Stena AB’s other unsubordinated indebtedness.

Senior Notes due 2017 and Senior Notes due 2019. As of December 31, 2007, we had outstanding €300 million principal amount of Senior Notes due 2017 and € 102 million principal amount of Senior Notes due 2019. The Senior Notes due 2017, issued in February 2007, mature on February 1, 2017, and interest is payable semi-annually on February 1 and August 1 of each year. The Senior Notes due 2019, issued in February 2007, mature on February 1, 2019, and interest is payable semi-annually on February 1 and August 1 of each year. The indentures governing these notes contain certain covenants with respect to, among other things, limitations on consolidated and subsidiary indebtedness and limitations on liens on capital markets indebtedness. These senior notes are unsecured obligations of Stena AB and rank pari passu in right of payment with Stena AB’s other unsubordinated indebtedness.

The $1 billion 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 Stena International S.á.r.l. and/or SSAG, then all amounts outstanding under the $1 billion revolving credit facility become immediately payable on demand, and upon such demand the facility terminates. In addition, the SEK 450 million Adactum facility will become payable on demand if Stena AB ceases to own, directly or indirectly, 100% of the equity in Adactum.

The indentures governing all of our 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 at least 50% of the voting equity in Stena AB.

Property-related debt. As of December 31, 2007, we had bank facilities and mortgage loans secured by the real estate, buildings and land in our real estate business segment of approximately SEK 13.0 billion that are denominated in SEK and Euros, with maturities from 2008 through 2024. These facilities and loans are non-recourse to Stena AB.

Other. As of December 31, 2007, we were obligated with respect to the guarantees of lease obligations and certain loans used to finance the acquisition of vessels and other assets in the aggregate amount of approximately SEK 8.1 billion. These are denominated in US dollars, British pounds, Euro and SEK.

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.

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. All our financial transactions are carried out through the central finance functions located in Sweden, Luxembourg, Switzerland and The Netherlands, which conduct their operations within established risk mandates and limits. The information presented below should be read in conjunction with Note 27 to our Consolidated Financial Statements.

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 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.

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 Swedish 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.

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.

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 in US dollars. Our financial exposure is managed through us generally maintaining loans and investments in the same currency. In companies with 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 102 million and SEK 15 million for the financial years ended December 31, 2006 and 2007, respectively. This equals 0.2% and 0.02% of total assets of SEK 60,417 million and SEK 75,180 million as of December 31, 2006 and 2007, respectively.

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 on the date of the balance sheet. To the extent that the currency exposure from the net assets of certain foreign subsidiaries is hedged, we use foreign exchange contracts. We record translation differences arising from net assets of foreign subsidiaries directly to shareholders’ equity.

The book value of our net assets of subsidiaries denominated in a foreign currency, as of December 31, 2006 and 2007, was approximately SEK 12.8 billion and SEK 15.8 billion, respectively. The net assets are expressed mainly in Swedish kronor, Euro, 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 shareholders’ equity as of December 31, 2007 by SEK 158 million. In 2007, our shareholders’ equity increased by SEK 58 million due to exchange rate differences and after net impact of equity hedge adjustments (see also Note 18 to our Consolidated Financial Statements).

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 price of oil. 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 in our Consolidated Financial Statements).

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 offering memorandum. 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.

We recorded net gains from currency and interest rate trading activities of SEK 7 million and SEK 14 million for the financial years ended December 31, 2006 and 2007, respectively.

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 risk profile on our interest-bearing liabilities. For example, all 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. 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 2007, 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 50% floating rate borrowings and 50% fixed rate bond loans and other 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, 2007 to manage these interest rate risks, including interest rate swaps to effectively convert floating rate borrowings to fixed rate borrowings.

At December 31, 2007, the fair value of our marketable securities and short-term investments (excluding restricted cash) amounted to SEK 9.6 billion. The potential change in fair value resulting from a hypothetical 1% change of prices would be SEK 96 million. Under current Swedish GAAP, movements in fair value of these investments will result in an immediate change to our financial statements.

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

Evaluation of Controls and Procedures. An evaluation of our disclosure controls and procedures was conducted as of December 31, 2007 (the ‘‘Evaluation Date’’) under the supervision of our Chief Executive Officer and Director of Business Administration.

Limitations on Effectiveness of Controls. Our Chief Executive Officer and Director of Business Administration do not expect that our disclosure controls or internal controls will prevent all error and all 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 Director of Business Administration 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.

Effectiveness of Internal Control Over Financial Reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of the Evaluation Date based on the framework in COSO, The Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation of our internal control over financial reporting, the Company’s management has concluded that, as of the Evaluation Date and subject to the limitations discussed above, our internal control over financial reporting is effective.

On April 25, 2008, our Board of Directors determined that Staffan Hultgren qualifies as an ‘‘audit committee financial expert’’ within the meaning of Item 16A of this Annual Report. Mr. Hultgren is our Director of Business Administration and is, therefore, not ‘‘independent’’.

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. We have amended our code of ethics to provide that the code now applies to our Chief Executive Officer, Principal Financial Officer, Director of Business Administration, Director of Finance and Chief Accounting Officer. A copy of our amended code is filed as an exhibit to this Annual Report.

Aggregate fees for professional services rendered by auditors and advisors for the years ended December 31, 2006 and 2007 were:

The audit fees for the years ended December 31, 2006 and 2007 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 other audit related service fees for the years ended December 31, 2006 and 2007 include fees for supporting guidelines concerning accounting practices and standards.

Tax service fees for the years ended December 31, 2006 and 2007 were for services performed in connection with income tax compliance, consulting and tax research services and assistance with tax audits.

The Other fees category for the year ended December 31, 2006 and 2007 includes fees primarily related to other general consulting.

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 2007, 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 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

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, 2007			F-3
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2007			F-4
Consolidated Balance Sheets as of December 31, 2006 and 2007			F-5
Consolidated Statements of Changes in Shareholders´ Equity for each of the years in the two-year period ended December 31, 2007			F-7
Notes to the Consolidated Financial Statements			F-8
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.


Exhibit Number
	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’’)).*
	2	.4	Indenture dated as of February 8, 2007 between the Company and Deutsche Bank AG, as trustee relating to the Company’s 6.125% Senior Notes due 2017*
	2	.5	Indenture dated as of February 14, 2007 between the Company and Deutsche Bank AG, as trustee relating to the Company’s 5.875% Senior Notes due 2019*
	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 publ.*
	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.)*
	11	.1	Amended Code of Ethics relating to the Chief Executive Officer, Principal Financial Officer and Chief Accounting Officer of Stena AB (publ).**
	12	.1	Certification of Dan Sten Olsson, Chief Executive Officer of Stena AB, dated April 29, 2008.**
	12	.2	Certification of Staffan Hultgren, Principal Financial Officer of Stena AB, dated April 29, 2008.**
	13	.1	Certification of Chief Executive Officer and Principal 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.**

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.

We have audited the consolidated balance sheets of Stena AB (publ) and subsidiaries as of December 31, 2006 and 2007, and the related consolidated statements of income and cash flows for each of the years in the three year period ended December 31, 2007 and the related consolidated statements of changes in shareholders’ equity for each of the years in the two year period ended December 31, 2007. 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 misstatement. An audit includes examining, on a test basis, evidence supporting the 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 referred to above present fairly, in all material respects, the financial position of Stena AB (publ) and subsidiaries as of December 31, 2006 and 2007, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2007 and the changes in shareholders’ equity for each of the years in the two year period ended December 31, 2007, in conformity with generally accepted accounting principles in Sweden.

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 presented in Note 31 to the consolidated financial statements.


	Years ended December 31
SEK million	Note		2005 SEK			2006 SEK			2007 SEK			2007 USD (unaudited- Note 1)
Revenues
Ferry
Operations				9,045			9,413			9,868			1,528
Net gain on sale of vessels		3								146			23
Total ferry operations				9,045			9,413			10,014			1,551
Drilling
Operations				1,871			3,027			3,842			595
Net gain on sale of vessels		3					1,483
Total drilling				1,871			4,510			3,842			595
Shipping
Operations				4,405			4,283			3,830			593
Net gain on sale of vessels		3		315			830			107			17
Total shipping				4,720			5,113			3,937			610
Property
Operations				1,882			1,970			1,989			308
Net gain on sale of properties		3		813			194			97			15
Total property				2,695			2,164			2,086			323
New Businesses
Operations				1,283			1,692			2,118			328
Total New Businesses				1,283			1,692			2,118			328
Other				5			3			8			1
Total revenues		2		19,619			22,895			22,005			3,408
Direct operating expenses
Ferry operations				(6,565	)		(6,399	)		(6,811	)		(1,055	)
Drilling				(1,112	)		(1,443	)		(1,728	)		(268	)
Shipping				(3,066	)		(3,437	)		(3,174	)		(492	)
Property				(810	)		(886	)		(884	)		(137	)
New Businesses										(1,756	)		(272	)
Other				(1,078	)		(1,382	)		(19	)		(3	)
Total direct operating expenses				(12,631	)		(13,547	)		(14,372	)		(2,227	)
Gross profit				6,988			9,348			7,633			1,181
Selling and administrative expenses		4		(1,861	)		(2,127	)		(2,177	)		(337	)
Depreciation and amortization				(2,734	)		(2,634	)		(1,703	)		(263	)
Income from operations		2		2,393			4,587			3,753			581
Share of affiliated companies’ results		5		21			27			(61	)		(9	)
Financial income and expense:
Dividends received				79			103			211			33
Gains (loss) on securities, net		6		921			982			950			147
Interest income				567			737			919			142
Interest expense				(1,395	)		(1,649	)		(1,670	)		(259	)
Foreign exchange gains (losses), net		7		(3	)		110			28			4
Other financial income (expense), net		8		(121	)		(167	)		(230	)		(35	)
Finance net				48			116			208			32
Minority interest		12		(21	)		(23	)		(21	)		(3	)
Income before taxes				2,441			4,707			3,879			601
Income taxes		9		(173	)		(368	)		(490	)		(76	)
Net income				2,268			4,339			3,389			525

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


	Years ended December 31
SEK million	Note		2005 SEK			2006 SEK			2007 SEK			2007 USD (unaudited- Note 1)
Net cash flows from operating activities
Net income				2,268			4,339			3,389			525
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		2		2,734			2,634			1,703			264
Share of affiliated companies´ results				(21	)		(27	)		61			9
Dividend from affiliated companies				2			12			12			2
(Gain)/loss on sale of tangible fixed assets		3		(1,128	)		(2,512	)		(366	)		(57	)
(Gain)/loss on securities, net				(921	)		(982	)		(950	)		(147	)
Unrealized foreign exchange (gains)/losses				138			(142	)		(156	)		(24	)
Deferred income taxes		9		85			69			339			52
Minority interests				21			23			21			3
Provision for pensions				(81	)		(115	)		(221	)		(34	)
Other non cash items				73			(217	)		122			19
Net cash flows from trading securities				(428	)		229			(425	)		(66	)
Cash flow from operations before changes in working capital				2,742			3,311			3,529			546
Changes in working capital
Receivables				(821	)		(589	)		(1,094	)		(169	)
Prepaid expenses and accrued income				43			(17	)		(251	)		(39	)
Inventories				(52	)		6			(104	)		(16	)
Trade accounts payable				219			167			87			13
Accrued costs and prepaid income				246			398			1,547			240
Income tax payable				55			(11	)		(44	)		(7	)
Other current liabilities				(27	)		314			916			142
Net cash provided by operating activities				2,405			3,579			4,586			710
Net cash flows from investing activities
Purchase of intangible assets				(78	)		(21	)		(53	)		(8	)
Cash proceeds from sale of tangible fixed assets		3		4,570			5,023			1,211			188
Capital expenditure on tangible fixed assets		2		(5,152	)		(8,148	)		(8,315	)		(1,288	)
Purchase of subsidiary, net of cash acquired		26		(518	)
Investments in affiliated companies				(67	)		(49	)		(697	)		(108	)
Proceeds from sale of securities				4,227			7,043			5,439			842
Purchase of securities				(5,777	)		(10,968	)		(9,245	)		(1,432	)
Increase of noncurrent assets				(130	)		(148	)		(1,171	)		(182	)
Decrease of noncurrent assets				14			12			10			2
Other investing activities				(39	)		(43	)		(41	)		(6	)
Net cash used in investing activities				(2,950	)		(7,299	)		(12,862	)		(1,992	)
Net cash flows from financing activities
Proceeds from issuance of debt				1,277			6,076			9,868			1,528
Principal payments on debt				(1,549	)		(404	)		(2,688	)		(416	)
Net change in borrowings on line-of-credit agreements				2,287			(3,842	)		1,783			276
Principal payments on capitalized lease obligations				(41	)		(39	)		(38	)		(6	)
Net change in restricted cash accounts				23			(610	)		(420	)		(65	)
Dividends paid				(195	)		(215	)		(550	)		(85	)
Other financing activities				48			126			(301	)		(47	)
Net cash provided by financing activities				1,850			1,092			7,654			1,185
Effect of exchange rate changes on cash and cash equivalents				59			(232	)		446			69
Net change in cash and cash equivalents				1,364			(2,860	)		(176	)		(28	)
Cash and cash equivalents at beginning of year				2,380			3,744			884			138
Cash and cash equivalents at end of year				3,744			884			708			110

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


	Years ended December 31
SEK millions	Note	2006 SEK		2007 SEK		2007 USD (unaudited- Note 1)
ASSETS
Noncurrent assets:
Intangible assets	10		688		620		96
Tangible fixed assets:	11
Vessels			10,277		15,241		2,360
Construction in progress			5,658		5,821		902
Equipment			628		867		134
Property			17,948		18,311		2,836
Total tangible fixed assets			34,511		40,240		6,232
Financial fixed assets:
Investment in affiliated companies	5		397		1,403		217
Investment in VIEs	12		7,341		9,251		1,433
Marketable securities	13		5,802		7,674		1,189
Other noncurrent assets	14, 19		3,520		5,474		848
Total financial fixed assets			17,060		23,802		3,687
Total noncurrent assets			52,259		64,662		10,015
Current assets:
Inventories			317		418		65
Short-term receivables
Trade debtors	15		2,007		2,670		413
Other receivables	15		1,617		2,444		378
Prepaid expenses and accrued income	15		871		1,098		170
Total short-term receivables			4,495		6,212		961
Short-term investments	16		2,462		3,180		493
Cash and cash equivalents	17		884		708		110
Total current assets			8,158		10,518		1,629
Total assets	2		60,417		75,180		11,644
STOCKHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity:	18
Share capital			5		5		1
Reserves			842		716		112
Retained earnings			13,401		17,196		2,662
Net income			4,339		3,389		525
Total shareholders’ equity			18,587		21,306		3,300
Minority interest	12		162		171		26
Provisions:	19
Deferred income taxes			1,709		2,219		344
Pension liabilities			2,205		1,886		292
Other provisions			1,668		2,713		420
Total provisions			5,582		6,818		1,056


	Years ended December 31
SEK millions	Note	2006 SEK		2007 SEK		2007 USD (unaudited- Note 1)
Noncurrent liabilities:
Long-term debt	20		18,427		23,335		3,614
Debt in VIEs	12		6,302		8,021		1,243
Senior Notes	21		2,905		6,012		931
Capitalized lease obligations	22		1,246		2,307		357
Other noncurrent liabilities	23		932		886		137
Total noncurrent liabilities			29,812		40,561		6,282
Current liabilities:
Short-term debt	20		642		985		153
Senior Notes	21		1,211
Capitalized lease obligations	22		38		154		24
Trade accounts payable			1,036		1,113		172
Income tax payable			166		116		18
Other current liabilities			424		599		93
Accrued costs and prepaid income	24		2,757		3,357		520
Total current liabilities			6,274		6,324		980
Total shareholders’ equity and liabilities			60,417		75,180		11,644
Pledged assets	25		34,046		43,312		6,708
Commitments and contingent liabilities	25		1,225		1,693		262

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


	Years ended December 31, 2006 and 2007
SEK million	Share capital		Restricted reserves			Unrestricted reserves			Total
Balance as of December 31, 2005		5		926			14,201			15,132
Dividend paid							(215	)		(215	)
Transfer to charitable trust							(25	)		(25	)
Reclassifications							177			177
Change of accounting principles for pensions							(349	)		(349	)
Revaluation of financial instruments							386			386
Transfers between reserves				(82	)		82
Exchange differences				(2	)		(856	)		(858	)
Total changes in equity before net income				(84	)		(800	)		(884	)
Net income							4,339			4,339
Balance as of December 31, 2006		5		842			17,740			18,587
Dividend paid							(550	)		(550	)
Transfer to charitable trust							(55	)		(55	)
Share of associated company							(89	)		(89	)
Revaluation of financial instruments							(34	)		(34	)
Transfers between reserves				(132	)		132
Exchange differences				6			(213	)		(207	)
Hedge of net investment in foreign subsidiaries							265			265
Total changes in equity before net income				(126	)		(544	)		(670	)
Net income							3,389			3,389
Balance as of December 31, 2007		5		716			20,585			21,306

Our 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). Effective January 1, 2008, the Company will apply the EU-approved International Financial Reporting Standards (IFRS).

Solely for the convenience of the reader, our Consolidated Financial Statements have been translated from Swedish kronor (SEK) into United States dollars ($) using the December 31, 2007 Noon Buying Rate of the Federal Reserve Bank of New York of $1.00 = SEK 6.4568.

Our 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.

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, except for sale of vessels, which are translated at the average exchange rate for the quarter in which the vessel is delivered. 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.

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. Investments in affiliated companies that relate to major strategic investments are recorded as share of affiliated companies´ results. Results from other associated companies, having a more direct link to normal operations, are included in direct operating expenses. Dividends received are recorded as a reduction of the carrying value.

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 the 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 these 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.

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.

Sale of goods is accounted for at the time of delivery to the customer according to the terms of sale.

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

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:

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 over 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.

Financial expenses are accounted for in the period to which it relates. Financial expenses related to construction of vessel newbuildings are 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.

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. 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 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.

Exchange rate differences arising from the translation of financial statements of foreign subsidiaries are taken directly to shareholders’ equity. Exchange differences from borrowings in foreign currency or forward contracts designated as a hedge of such exposure are taken directly to shareholders’ equity to match the exchange difference of the related net investment in the foreign subsidiary. Any premiums or discounts from foreign exchange or swap contracts are recognized as an adjustment of the Company’s net interest expense.

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.

Realized results from foreign exchange forward contracts or from currency option contract, 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 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 extend 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.

The Company has exposure to the price of bunker fuel 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 are divided into current taxes and deferred taxes. Deferred income taxes include the tax effect of unutilized tax losses calculated at nominal local tax rates and other temporary

differences 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.

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.

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 at cost.

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 two to five years. 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 financial expenses, 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 and port terminals refer to buildings for use by the Company in its own business.

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 vessel brokers for such reviews. For properties, estimates are based on internal or external valuations. If a review indicates that the carrying value of an asset may not be recoverable, discounted cash flows based upon estimated capital expenses 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.

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.

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

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 shareholders´ 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 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.

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 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.

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

In accordance with the Swedish accounting standard RR 29 Employee Benefits, defined benefit plans are accounted for by the use of consistent principles.

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 recognised 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 recognised. 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.

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 return, 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 recognised 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. All companies report defined benefit pension plans in accordance with local rules and guidelines in the respective country.

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.

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, Luxembourg and Germany. New Businesses include financial activities and investments in other business areas through the unit Adactum. Other include 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 million	2005			2006			2007
Ferry operations		813			1,103			1,266
Impairment charges		(765	)		(710	)
Additional operating expenses		(55	)
Net gain on sale of vessels								146
Total ferry operations		(7	)		393			1,412
Drilling		(2	)		774			1,390
Net gain on sale of vessels					1,483
Total Drilling		(2	)		2,257			1,390
Shipping:
Roll-on/Roll-off vessels		104			89			86
Net gain on sale of vessels		191			219			100
Total		295			308			186
Crude oil tankers		742			284			109
Net gain on sale of vessels		124			611			7
Total		866			895			116
Other shipping		(7	)		(8	)		(12	)
Total shipping		1,154			1,195			290
Property Operations		759			758			770
Impairment charges		(180	)
Net gain on sale of properties		813			194			97
Total property		1,392			952			867
New Businesses Operations		46			59			72
Total New Businesses		46			59			72
Other		(190	)		(269	)		(278	)
Income from operations		2,393			4,587			3,753

As a consequence of the high oil prices, impairment charges related to the HSS vessels were recorded of SEK 710 million in 2006 and SEK 765 million in 2005. In 2005, additional direct operating costs related to the HSS vessels of SEK 55 million and impairment charges for real estate for SEK 180 million were also recorded. All impairment charges are accounted for as depreciation. There were no impairment charges recorded in 2007.

Depreciation of vessels and real estate is included in direct operating expenses, while depreciation and amortization of intangible assets, equipment and buildings and land is included in selling and administrative expenses.

Depreciation and amortization expense includes amortization of assets under capitalized leases amounting to SEK 90 million, SEK 92 million and SEK 170 million for the years ended December 31, 2005, 2006, and 2007, respectively.

Capital expenditures in 2007 for property include SEK 89 million related to ongoing newbuilding projects for real estate. For the year December 31, 2006, capital expenditures for property included SEK 230 million related to ongoing newbuilding projects for real estate. See Note 11.

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 in the Far East and other markets. The Company’s investments in VIEs are included in Other markets.


		Year ended December 31
SEK million		2005			2006			2007
Vessels	Cash proceeds from sale of vessels		863			4,335			793
	Net book value of vessels sold		(548	)		(2,022	)		(540	)
	Net gain on sale of vessels		315			2,313			253
Equipment	Cash proceeds from sale of equipment		3			6			18
	Net book value of equipment sold		(3	)		(5	)		(9	)
	Net gain (loss) on sale of equipment					1			9
Real Estate	Cash proceeds from sale of properties		3,629			674			364
	Net book value of properties sold		(2,816	)		(480	)		(267	)
	Net gain on sale of properties		813			194			97
Buildings	Cash proceeds from sale of buildings					6			17
	Net book value of buildings sold					(2	)		(10	)
	Net gain on sale of buildings					4			7
Total	Cash proceeds from sale of vessels, equipment and property		4,495			5,021			1,192
	Net book value of assets sold		(3,367	)		(2,509	)		(826	)
Total gain			1,128			2,512			366

Net gain on sale of equipment and buildings is included in other operating income.

Total cash proceeds include sales costs of SEK 2 million and SEK 19 million, which is not included in the consolidated statement of cash flow for 2006 and 2007, respectively.

For the year ended December 31, 2007, selling and administrative expenses include SEK 259 million relating to central administration expenses. Selling expenses include costs for doubtful receivables of SEK 3 million. For the year ended December 31, 2006, selling and administrative expenses included SEK 300 million of central administration expenses and selling expenses included costs for doubtful receivables of SEK 24 million.

Investments in associated 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 14.

In 2004, the Company invested in more than 20% of the Swedish listed company Midelfart Sonesson AB (publ), which therefore is accounted for as an associated company. As of December 31, 2007, the investment represents 22.4% of the capital and 25.1% of the votes. As of December 31, 2006 the investment represented 22.7% and 26.4% of the votes. The total value of the market value of the investment as of December 31, 2007 was SEK 122 million. As of December 31, 2006 the total share of the market value was SEK 243 million. The Company’s share of results amounted to SEK (107) million in 2007 and SEK 0 million in 2006.

In June 2005, the Company invested in further shares in the Swedish listed company Ballingslöv AB (publ). The share of capital increased to more than 20% and is accounted for as an associated company. As of December 31, 2007, the investment represents 28.6% of the capital and the votes.
As of December 31, 2006, the investment represented 25.0%. The market value of the investment as of December 31, 2007 and 2006 was SEK 631 million and SEK 545 million, respectively. The Company’s share of results as per December 31, 2007 and 2006 amounted to SEK 44 million and SEK 27 million, respectively.

In May 2007, the Company invested in further shares in Gunnebo AB (publ). The share of capital increased to more than 20% and is accounted for as an associated company. As of December 31, 2007, the investment represents 24.9% of the capital and the votes. As of December 31, 2006, the investment represented 18.5%. The market value of the investment as of December 31, 2007 and 2006, was SEK 735 million and SEK 644 million, respectively. The Company’s share of results as per December 31, 2007 amounted to SEK 5 million.

In June 2007, the company acquired 45% of the share in the newly formed company Mediatec. The value of the investment as of December 31, 2007 was SEK 338 million. The Company’s share of results as per December 31, 2007 amounted to SEK (2) million. As of December 31, 2007, the investment represents 45% of the capital and votes.

The investments in Midelfart Sonesson, Ballingslöv and Gunnebo are pledged as security for bank debt. The results of these companies are reported with a three month time lag, with the exception of Midelfart Sonesson, which as of December 31, 2007 also included the share of the result for the fourth quarter of 2007.

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.

Interest expenses for vessels and properties under construction have been capitalized as cost of acquisition. See Note 11.

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

Exchange differences include result of trading of foreign exchange contracts and other financial instruments.


	Year ended December 31
SEK million	2005			2006			2007
Sweden		1,167			2,288			563
Rest of the world		1,253			2,392			3,376
Share of affiliated companies´ results		21			27			(60	)
Total income before taxes		2,441			4,707			3,879
Current:
For the period, Sweden		(11	)		(54	)		(10	)
Adjustments previous years, Sweden								(1	)
For the period, Rest of the world		(85	)		(308	)		(277	)
Adjustments previous years, Rest of the world		8			63			137
Total current tax		(88	)		(299	)		(151	)
Deferred:
For the period, Sweden		202			11			(22	)
Adjustments previous years, Sweden		(58	)		79
For the period, Rest of the world		(54	)		(199	)		(246	)
Adjustments previous years, Rest of the world		(175	)		40			(71	)
Total deferred tax		(85	)		(69	)		(339	)
Total income taxes		(173	)		(368	)		(490	)

Cash paid for taxes in 2007 was SEK 176 million, as compared to SEK 92 million in 2006.

The reconciliation of the difference between the statutory tax rate in Sweden and the effective tax rate are set forth below:

The principle reason why the effective income tax rate is lower than the statutory income tax rate is that the international shipping activities and results from sales of shares are tax exempt in many countries.

Goodwill related to ferry operations and the acquisition of ferry routes in the Irish Sea is amortized over 7 years. Goodwill related to Blomsterlandet and Envac is amortized over 10 and 20 years, respectively. Investments in other intangible fixed assets include an on-line reservation system in the ferry operations, which is amortized over 7 years. Remaining intangible assets are amortized over 5 years.


SEK million	Vessels			Constrution in progress			Equipment			Property			Total
Acquisition cost at the beginning of year		19,343			5,658			945			19,075			45,021
Other additions		1,461			6,329			252			800			8,842
Disposals		(833	)					(126	)		(360	)		(1,319	)
Transfers		5,510			(5,636	)		140			(14	)
Translation differences		(573	)		(530	)		(37	)		70			(1,070	)
Acquisition cost at the end of year		24,908			5,821			1,174			19,571			51,474
whereof capitalized interest		972			451						24			1,447
Accumulated depreciation at the beginning of year		(9,066	)					(317	)		(1,127	)		(10,510	)
Disposals		293						117			84			494
Translation differences		330						27			7			364
Transfers		(23	)					23
Current year depreciation		(1,201	)					(157	)		(224	)		(1,582	)
Accumulated depreciation at the end of year		(9,667	)					(307	)		(1,260	)		(11,234	)
Net book value at the beginning of year		10,277			5,658			628			17,948			34,511
Net book value at the end of year		15,241			5,821			867			18,311			40,240

The insured value of the whole vessel fleet as of December 31, 2007 was SEK 31,841 million, as compared to SEK 19,227 million as of December 31, 2006.

Other additions include SEK 527 million relating to the new vessel BORJA which is classified as a finance lease agreement.

As of December 31, 2007, Construction in progress included six newbuildings: two RoPax-vessels, ‘‘Superferries’’, under construction in Germany for delivery in 2010; two drillships under construction in Korea for delivery in 2008 and 2009; and two RoPax vessels ordered from a shipyard in Korea for delivery in 2011. Construction in progress also includes construction of real estate in Stockholm and France. In total, the contract amount with the shipyards amounts to SEK 13,261 million. Yard payments of SEK 4,809 million, real estate projects of SEK 221 million, capitalized interest of SEK 451 million and other capitalized costs of SEK 340 million are included in Construction in progress as of December 31, 2007.

The amount of interest capitalized on construction in progress was SEK 654 million and SEK 239 million for the years ended December 31, 2007 and 2006, respectively. Additionally, SEK 2 million was capitalized on real estate newbuildings for 2007. No capitalization was made in 2006.


SEK million	Real estate			Buildings and land			Total
Acquisition cost at the beginning of year		17,214			1,861			19,075
Other additions		751			49			800
Disposals		(349	)		(11	)		(360	)
Transfers		104			(118	)		(14	)
Translation differences		130			(60	)		70
Acquisition cost at the end of year		17,850			1,721			19,571
Accumulated depreciation at the beginning of year		(761	)		(366	)		(1,127	)
Disposals		82			2			84
Translation differences		(7	)		14			7
Current year depreciation		(169	)		(55	)		(224	)
Accumulated depreciation at the end of year		(855	)		(405	)		(1,260	)
Net book value at the beginning of year		16,453			1,495			17,948
Net book value at the end of year		16,995			1,316			18,311

Real estate relates to the commercial properties operated by the business unit Stena Fastigheter. The total estimated market value for the real estate as of December 31, 2007 exceeds the net book value. Out of the net book value as of December 31, 2007 for real estate, SEK 14,580 million relates to Swedish properties, of which land represents SEK 1,767 million. The tax assessment value for these properties amounted to SEK 14,538 million, of which land represents SEK 4,231 million. Land represented SEK 1,350 million of the net book value as of December 31, 2006 of SEK 14,217 million related to Swedish properties. The tax assessment value for these properties last year amounted to SEK 11,478 million, out of which land SEK 4,035 million.

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

Since late 2002, the Company has invested in variable interest entities (‘‘VIEs’’). The VIEs have invested in different debt securities, including high yield bonds. The VIEs have issued debt securities which are secured by their assets. As of 2005, Swedish GAAP has changed the way in which the VIEs are consolidated. 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.

The investments in the CDO (‘‘Collateral Debt Obligation’’) and CLO (‘‘Collateral Loan Obligation’’) started in December 2002, August 2003 and October 2005. They where established during 2003, June 2004 and August 2006. The latest CLO was started in November 2006. The minority interest for the CDO/CLOs are 13.7%, 15.4%, 11.3% and 5%, respectively.

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 of VIEs refers to secured notes issued by the VIEs and secured bank loans borrowed by the VIEs. These obligations are secured by pledges of the assets of the VIEs and are not guaranteed by the Company.

The underlying bonds in the VIEs are recorded at market value. Together with other similar investments, unrealized gains and losses for the underlying bonds are recorded directly to shareholders’ equity. The corporate loans are, as per December 31, 2007, recorded at cost in the balance sheet and no revaluation is done. The market value of the corporate loans is SEK 347 million lower than cost.

As of December 31, 2007 shares with a book value of SEK million 173 have been pledged as security for bank debt. As of December 31, 2006, shares with a book value of SEK 1,025 million were pledged as security for bank debt.

Reclassification refers to transfer from noncurrent to associated companies regarding Gunnebo AB (publ.) see further Note 5.

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


SEK million	No. of shares		Book value
Held by parent company:
Bioinvent		2,240,000		42
Vitrolife		110,000		3
Total				45
Strategic investments
Gunnebo Industrier		1,222,044		173
Arlington Tankers		1,252,988		178
Other investments
Vestas Wind Systems		1,225,400		857
Sandvik		5,276,100		587
Expro		4,333,305		574
Outotec		1,603,637		570
Orkla		4,150,000		518
Lindab		3,230,600		476
Volvo A		4,038,000		436
H&M B		1,030,000		405
H&M Bonds		170,000,000		385
Q-cells		352,000		325
Lukoil		580,000		322
Vallourec		139,000		243
Schibsted		832,400		232
Explorer Financial Fund		33,999		196
HSBC Growth Fund		814,520		181
Unified Energy System		11,050,000		137
Assa Abloy		990,800		129
X5 Retail		514,669		121
Schlumberger		180,000		114
East Capital Exploration BTA		850,000		85
Technip		150,000		77
Sistema		290,000		77
ABB		400,000		74
Jardine Strategic		470,000		47
Sberbank		2,450,000		21
Renewable Energy
Corporation		60,000		20
Skeie Drilling & Production		603,000		14
Hafslund		60,000		11
Other				44
Total listed shares				7,674

Deferred tax assets relate to unutilized tax losses carried forward. Reclassifications include netting against deferred tax liabilities. See Note 19.

Other receivables as of December 31, 2007 include receivables related to sales of subsidiaries amounting to SEK 1,961 million. Other receivables as of December 31, 2006 include receivables related to sales of subsidiaries amounting to SEK 1,548 million.

Reclassification refers to classification from long term to short-term receivables.

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.


SEK million		No. of shares or % held	Book value
Held by parent company:
Alligator		1,643,670	32
Amplus		895,719	114
Prostalund		3,655,816
Ram one		124,818	140
Health Invest		500,000	32
Univits		3,088,670	2
			320
Held by subsidiaries:
SentoClone	Sweden	10%	55
Örgryte Bostads AB & Co KB	Sweden		3
Austen Maritime Services Pte Ltd	Singapore	50%	9
Partrederiet SUST I DA	Norway	50%	24
Partrederiet SUST III DA	Norway	50%	48
Ugland Stena Storage A/S (USS)	Norway	50%
Stena Ugland Shuttle Tankers	Norway
Nordic Rio LLC	Marshall Islands	50%	11
Stena Sonangol Suezmax pool LLC	Marshall Islands	50%
Navion	Marshall Islands	50%	32
ING DUTCH OFFICE FUNDS	Netherlands	7,07%	965
Schiphol Real Estate CV	Netherlands	540	193
China Opportunity Fund	China	5,71%	75
EQT China	China	4,72%	15
Tanker Ltd (SUST)	Cayman Islands	50%
Chase Private Equity Fund	Cayman Islands	3,729,232	25
ICE Canyon emerging market CLO	Cayman Islands	10%	64
Glacia Limited	Bermuda	50%	52
RoRo Partners Ltd	Bermuda	49%	3
Other			3
Total non listed shares			1,897

Companies held between 20% and 50%, and that are not strategic, are accounted for as other associated companies. The share of these companies’ results is included in direct operating expenses. See Note 5.

The total allowance for doubtful trade receivables was SEK 39 million as of December 31, 2007 and SEK 46 million as of December 31, 2006.

Certain marketable debt and equity securities and restricted cash amounting to SEK 2,063 million at December 31, 2007 and SEK 547 million at December 31, 2006 have been pledged as security for bank debt. See Note 25.

Restricted cash as of December 31, 2007 includes SEK 178 million of cash and cash equivalents in the VIEs, which is not available to the Company. As of December 31, 2006, such restricted cash amounted to SEK 486 million. Other restricted cash represents bank accounts that have been pledged to cover various long-term liabilities and commitments of the Company.

Short-term deposits are defined as bank deposits that have original maturities of up to three months.

The changes in shareholders´ equity for the period December 31, 2004 to December 31, 2007 are as follows:


	Share		Restricted			Unrestricted
SEK million	capital		reserves			reserves			Net Income			Total
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	)
Revaluation of financial instruments							303						303
Change of accounting principles for pensions							(1,075	)					(1,075	)
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
Allocation of last year’s result							2,268			(2,268	)
Dividend paid							(215	)					(215	)
Transfer to charitable trust							(25	)					(25	)
Reclassifications							177						177
Change of accounting principles for pensions							(349	)					(349	)
Revaluation of financial instruments							386						386
Transfers between reserves				(82	)		82
Exchange differences				(2	)		(856	)					(858	)
Net income										4,339			4,339
Balance as of December 31, 2006		5		842			13,401			4,339			18,587
Allocation of last year’s result							4,339			(4,339	)
Dividend paid							(550	)					(550	)
Transfer to charitable trust							(55	)					(55	)
Share of associated company							(89	)					(89	)
Revaluation of financial instruments							(34	)					(34	)
Transfers between reserves				(132	)		132
Exchange differences				6			(213	)					(207	)
Hedge of net investment in foreign subsidiaries							265						265
Net income										3,389			3,389
Balance as of December 31, 2007		5		716			17,196			3,389			21,306

Restricted reserves include the equity part of untaxed reserves (net of applicable deferred taxes) and legal reserves.

Share of associated company refers to adjustment of the share of Gunnebo AB (publ) as the ownership increased to 20% of the capital and the share was reclassified as associated company.

The board of directors of the Company has proposed that the shareholders approve at the forth-coming shareholders´ meeting in 2008 a dividend of SEK 390 million and a transfer of SEK 40 million to the Sten A. Olsson Foundation for Culture and Science, established in October 1996 to make contributions to art and science projects and other public good purposes

as a gift according to the Companies Act Chapter 17 paragraph 5. Since 1996, the Stena Sphere has contributed SEK 235 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, 2007, accumulated exchange differences since January 1, 2002 amounted to SEK (1,972) million. As of December 31, 2006, such accumulated exchange differences amounted to SEK (1,700) million.

The accumulated revaluation of financial instruments as per December 31, 2007 amounts to SEK 867 million and as per December 31 2006 to SEK 901 million.

Other provisions relate to provisions for income related to the financing of the DrillMAX vessels Stena Carron, Stena Forth and the vessels Stena Trader and Stena Traveller. The provisions will be dissolved during the time of the future leasing periods.


	As of December 31,
SEK million	2006			2007
Deferred tax liabilities:
Tangible fixed assets		2,124			2,428
Financial fixed assets		388			202
Other		261			396
Total deferred tax liabilities		2,773			3,026
Deferred tax assets:
Tangible fixed assets		481			626
Tax loss carryforwards		815			817
Financial fixed assets		623			32
Provisions		40			484
Other		122
Less deferred tax assets not recognized		(638	)		(552	)
Total deferred tax assets recognized		1,443			1,407
Net deferred tax liability		1,330			1,619
Out of which:
Deferred tax assets (Note 14)		379			600
Deferred tax liabilities		1,709			2,219

Deferred taxes have been calculated net on a country basis. Net deferred tax assets are shown as Other noncurrent assets. Calculation of deferred taxes is based on local nominal tax rate.

Most tax loss carryforwards can be carried forward indefinitely. Tax loss carryforwards of SEK 821 million expire between 2008 and 2016.

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.

The Company participates in different multi-employer plans in Great Britain. One of the plans was accounted for as defined contribution plan, but new information in 2006 about this scheme makes it possible to account this as a defined benefit plan. The change was treated according to RR 5 and URA 44 as a change in ccounting principle as from October 1, 2006.

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.


Obligations for pensions, net (SEK million)	Sweden			Great Britain			Other Europe			Total
Obligations, January 1, 2006		90			1,767			(10	)		1,847
Change in accounting principles					498						498
Balance sheet, net, October 1, 2006		90			2,265			(10	)		2,345
Current service costs		7			32			6			45
Interest costs		9			487			6			502
Expected return on plan assets		(7	)		(520	)		(6	)		(533	)
Actuarial gains and losses					1						1
Exchange differences					(30	)		(1	)		(31	)
Payment of pension fees from the company		(7	)		(151	)					(158	)
Benefits paid		(3	)					(6	)		(9	)
Other provisions		(1	)		(1	)		(11	)		(13	)
Obligations for pensions, net, December 31, 2006		88			2,083			(22	)		2,149
Current service costs		7			49			6			62
Interest costs		12			701			6			719
Expected return on plan assets		(12	)		(700	)		(7	)		(719	)
Actuarial gains and losses		(2	)		1						(1	)
Exchange differences					(106	)		(2	)		(108	)
Payment of pension fees from the company		(11	)		(269	)		2			(278	)
Benefits paid		(3	)					(5	)		(8	)
Other provisions								1			1
Obligations for pensions, net, December 31, 2007		79			1,759			(21	)		1,817


(Provisions for pensions, net) SEK million	Sweden			Great Britain			Other Europe			Total
Net provisions for pensions, January 1, 2006		90			1,767			(10	)		1,847
Current value of funded obligations		227			12,448			131			12,806
Fair value of plan assets		(193	)		(10,723	)		(132	)		(11,048	)
Provisions, net		34			1,725			(1	)		1,758
Unrecognized actuarial gains and losses		54			358			(21	)		391
Net provisions for pensions, December 31, 2006		88			2,083			(22	)		2,149
Current value of funded obligations		307			11,020			147			11,474
Fair value of plan assets		(227	)		(10,144	)		(134	)		(10,505	)
Provisions, net		80			876			13			969
Unrecognized actuarial gains and losses		(1	)		883			(34	)		848
Net provisions for pensions, December 31, 2007		79			1,759			(21	)		1,817
whereof reported as other non-current assets		(47	)					(22	)		(69	)
Provisions for pensions		126			1,759			1			1,886

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 2013 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 2013 and beyond.

The Company has a revolving credit facility of $1 billion. The facility was renegotiated in January 2006 and expires in 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, 2007, the utilized portion of the facility was USD 596 million, of which USD 575 million was actually drawn and USD 21 million used for issuing of bank guarantees. As of December 31, 2006, the utilized portion of the facility was USD 402 million, of which USD 386 million was actually drawn and USD 16 million used for issuing of bank guarantees. As of 2007, the Company has an additional revolving credit facility of USD 350 million and the utilized portion of the facility was USD 109 million. As of December 31, 2007, the Company had SEK 875 million in other unutilized, mainly uncommitted overdraft facilities and other similar lines of credit, as compared to SEK 1,416 million as of December 31, 2006.

‘‘Not specified’’ includes borrowings and utilized credit lines for properties and vessels that have formal repayment dates in 2008. 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. ‘‘Not specified’’ also includes the utilized portion of the Revolving Credit Facilities.

Stena AB (publ) has since 1995 financed the business with issuance of Senior Notes in the USA. Loans issued in 1995 and 1997 have been repaid by the end of 2003.

In November 2002, the Company issued $200 million of notes at an interest rate of 9.625% with maturity on December 1, 2012.

In November 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. In 2007, USD 4.2 million and USD 78 million, respectively, was repaid. Thereafter the Senior Notes amounted to USD 170.8 million and USD 172 million, respectively.

In February 2007, a decision was taken to issue bonds on the European market. On February 8, 2007, the Company completed an offering of EUR 300 million of our Senior Notes due 2017. The

Company used a portion of the proceeds of the offering of the notes to purchase our Senior Notes due 2012 in a tender offer and consent solicitation. The loan was accounted for as short-term Senior Notes as per December 31, 2006.

On February 14, 2007, the Company completed an offering of EUR 102 million of our Senior Notes due 2019. The Company used these proceeds for general corporate purposes.

For the loans in the USA there are no pledged securities but certain ratios between operating income and interest expense must be fulfilled in order to ensure further borrowing possibilities. These ratios do not include the Property operations and certain financial investments.

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 indentures for our Senior Notes due 2012 and 2013 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. The indentures for our Senior Notes due 2017 and 2019 contain certain covenants with respect to, among other matters: (i) limitations on consolidated and subsidiary debt and (ii) limitations on liens in respect of capital markets indebtedness.

For the loans in Europe there are no pledged securities, however there is one condition for the interest cover ratio of 2:1.

The operating lease obligations include chartering of crude oil tankers on a time charter basis, chartering of ferries principally on a bareboat basis, as well as obligations related to rentals of properties and ports.

Two RoPax vessels and two tankers are leased under capital leases. The gross amount of vessels under capital leases as of December 31, 2006 and 2007 amounted to SEK 1,756 million and SEK 7,990 million, respectively. The net book value related to these capital leases amounted to SEK 1,393 million as of December 31, 2006 and SEK 7,461 million as of December 31, 2007.

As of December 31, 2007 the future minimum lease commitments under non cancellable operating leases and capital leases were as follows:

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, 2007 was as follows:

As of December 31, 2007 the future minimum rentals to be received under non cancellable operating leases were as follows:

In addition to the minimum lease rentals as above, the Company has entered into lease agreements for the DrillMAX vessels Stena Carron and Stena Forth, currently under construction.

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.

Prepaid income as of December 31, 2007 includes SEK 26 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, 2006, these net proceeds amounted to SEK 34 million.

Other noncurrent liabilities include a net debt amount to SEK 621 million as per December 31, 2007 and SEK 690 million as per December 31, 2006 regarding capital leases for the DrillMAX vessels Stena Carron and Stena Forth.

Repayment of noncurrent liabilities is required according to the following schedule:


	As of December 31,
SEK million	2006		2007
Mortgages on vessels		10,046		15,717
Mortgages on properties		14,202		14,336
Chattel mortgages		137		210
Investment in affiliated companies		352		1,188
Marketable securities		1,025		173
Trade debtors		344		322
Short term investments		547		2,063
Reservation of title		52		52
Total assets pledged for normal bank debt		26,705		34,061
Investment in VIEs		7,341		9,251
Total assets pledged for bank debt		34,046		43,312
Normal bank debt and capitalized lease obligations		20,353		26,781
Debt in VIEs		6,302		8,021
Total bank debt and capitalized lease obligations		26,655		34,802

In addition, certain insurance policies have also been pledged to cover various liabilities and commitments.

Future minimum lease commitments relating to operating leases of vessels, ports, etc., amount to SEK 2,616 million for 2008 and SEK 7,052 million for 2009. See Note 22.

As of December 31, 2007, a total of six vessels were on order from different shipyards. The total contract amount for these vessels amounts to SEK 13,261 million. Yard payments of SEK 4,809 million have been made in respect of these contracts.

Guarantees include mainly newbuilding projects in associated companies and guarantee commitments for equipment delivered.

The Company uses financial instruments to reduce the risk of major adverse effect on its results from price changes in the currency, interest rate and oil markets.

As a basic principle fixed assets are financed with long term funding in the form of issued bonds, bank debt and leasing liabilities.

Each subsidiary’s assets are financed in local currency and to the extent that assets and liabilities in foreign currency cannot be matched, the net exposure is hedged with financial derivative contracts.

To achieve a desired currency mix and interest fixing profile the Company uses various types of interest rate derivatives such as fixed rate swaps, cross currency Interest rate swaps. Interest rate options are also used either to cap or to lock in a range of the interest rate level.

Currency risks arise when converting foreign currency denominated profit and loss or balance sheet items to SEK and when converting cash flows in foreign currency. These risks are reduced by hedging with forward foreign exchange contracts or with currency options.

Fluctuations in the price of bunker fuel, which predominantly affects the Ferry operations, are managed by fixed price agreements with the supplier for the various grades of bunker fuels or by using financial derivatives for crude oil.

As part of the tanker operations the Company also uses, to a limited extent, contracts for freight rates, forward freight agreements.

The Financial risk management is carried out within the scope of the Company’s financial policies and guidelines by the treasury units in Switzerland, Holland, Luxembourg and Sweden.

All Financial instruments are dealt with counterparties who are considered to be creditworthy institutions (A as a minimum long term rating with Standard & Poors) and terms and conditions are defined in ISDA agreements or similar. In the normal course of business, none of the parties demand collateral for credit exposures from financial instruments. However, for credit risks relating to oil derivative contracts the Company holds collateral of SEK 727 million for 2007 and SEK 261 million for 2006.

The following table summarizes the notional volume and credit risks of financial derivative instruments

The Company holds fixed assets in ships and real estate in USD, SEK, EUR and GBP and as a consequence the debt portfolio and the accompanying interest rate risks are distributed by the same currencies. In order to manage this risk and to achieve desired interest rate levels the Company’s management makes regular assessments of the interest rate risks. This exposure is adjusted with interest rate derivatives which to the largest possible extent is matched against the maturity profiles of the underlying debt.

The following tables summarize the interest rate contracts for hedging of the interest rate exposure of the Company’s debt portfolio in various currencies:

Notional amounts

Type of
instrument

Currency

SEK million

Receive rate, %

Pay rate, %

Option
bought/sold

Length of
contracts

swap

SEK

1,400

3.03 – 3.05

3.23 – 3.63

November 2015

cap

SEK

3,500

3m Stibor

4.0

bought

November 2011

swap

EUR

306

6m Euribor

6m Euribor+1.68

September 2009

swap

EUR

5.52

6m Euribor+1.19

December 2012

swap

EUR

289

6m Euribor

3.83 – 3.92

October 2013

swap

EUR

453

6m Euribor

4.13

December 2014

cap

EUR

305

6m Euribor

strike 5.50

bought

September 2008

cap

EUR

362

3.25

6m Euribor

bought

October 2010

cap

EUR

6m Euribor

3.25

bought

March 2010

swap

GBP

593

3m Libor

5.5

January 2011

swap

GBP

440

3m Libor

3m Libor – 0.14

May 2028

swap

USD

1,718

3m Libor

2.83 – max 6.5

September 2008

swap

USD

687

9.63

3m Libor+5.0

December 2012

swap

USD

1,718

7.00

4.75+(BMA)*

December 2016

Total

11,958

Notional amounts

Type of
Instrument

Currency

SEK million

Receive rate, %

Pay rate, %

Option
bought/sold

Length of
contracts

swap

SEK

1,400

4.45 – 4.48

3.23 – 3.63

November 2015

cap

SEK

3,500

3m Stibor

bought

November 2011

swap

EUR

267

6m Euribor

6m Euribor+1.68

September 2008

swap

EUR

5.52

6m Euribor+1.19

December 2012

swap

EUR

348

6m Euribor

3.83 – 3.92

January 2013

cap

EUR

267

6m Euribor

strike 5.50

bought

September 2008

cap

EUR

378

3.25

6m Euribor

bought

October 2010

cap

EUR

6m Euribor

3.25

bought

March 2010

swap

GBP

563

3m Libor

6.03

January 2011

swap

GBP

418

3m Libor

3m Libor – 0.14

May 2028

swap

EUR

2,835

6.13

3.5+(index)*

February 2023

swap

USD

1,609

4.75+(BMA)*

December 2016

swap

USD

1,609

3m Libor

2.83 – 3.09

September 2008

Total

13,387

In addition to interest instruments as above, the VIEs investing in different debt securities, see Note 12, have also entered into certain hedging instruments. To reduce the potential negative effects on the actual values of these entities, interest swaps have been entered into at an amount equal to that of the underlying fixed rate bonds.

The following table summarizes interest rate swaps entered into for this purpose:

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, but also in GBP and EUR. The Company’s foreign currency risk arises from (i) the Company’s investment in foreign subsidiaries’ net assets (equity exposure), (ii) certain financial assets and liabilities (translation exposure when converting such balances into each company’s functional currency) and (iii) fluctuations in exchange rates on the value of the Company’s sales and purchases in foreign currencies (transaction exposure)

The Company’s policy is to hedge its translation exposure which mainly arises from USD borrowings in companies with SEK and EUR as their functional currency.

The Company also hedges a substantial part of its transaction exposure in USD, GBP, EUR, NOK, DKK from future cash flows from firm commitments such as charter vessel contracts as well as anticipated bunker fuel payment obligations (USD). The Company’s transaction exposure mainly originates from the Ferry operations.

The following two tables summarize by major currency the contractual net amounts of the Company’s forward exchange and option contracts to hedge the translation- and transaction exposures. The tables contain both forward foreign exchange contracts and currency options.

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 operations have an annual consumption of bunker fuel of 350,000 tons of fuel oil and 130,000 tons of gasoil which combined converts to an annual volume of about 3.5 millions barrels. A substantial part of this is hedged on a consecutive basis. All contracts are settled monthly at a volume corresponding to the underlying consumption.

The following table presents the notional amounts financial instruments used for fuel risk management:

The Company seeks to reduce its risk from changes in the price of tanker freight rates through the use of Freight Forward Agreements (FFA’s). The Company enters into contracts as a means to reduce or change the market exposure for chartered in tonnage. The maximum tenor of the contracts are 12 months.

The following table presents the notional amounts of financial instruments used for freight rate management:

The Company also buys and sells certain types of derivative financial instruments with the objective of generating profits on a short-term basis. 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 positions are taken within the limits of the Company’s financial trading policy. All positions are recorded at fair value and the unrealized gains and losses are part of the quarterly results. A summary of the results of the Company’s trading activities on derivative financial instruments is shown below.

The table below summarizes the fair value of balance sheet items in the case where the fair value differs from the carrying value and in addition, the fair value of all financial derivative instruments. When establishing the fair value, the quoted market prices as of 31 December have been used. The fair value calculation is based on the closing price, i.e., the market value that would have been received or paid if such instrument was sold or terminated on the closing date. The fair value of financial derivatives are recorded directly against shareholder’s equity after deduction of tax effects.


	2006				2007
	Total		No. of females		Total		No. of females
Parent Company:
Board, CEO, Executive vice president		3				2
Other employees		15		6		22		11
Subsidiaries in Sweden		3,856		1,601		4,106		1,762
Total Sweden		3,874		1,607		4,130		1,773
Subsidiaries outside of Sweden:
Great Britain		1,671		457		1,684		474
The Netherlands		758		121		732		117
Denmark		178		113		182		112
Ireland		93		36		90		33
Norway		99		50		91		57
Poland		49		32		59		39
Switzerland		6		1		6		1
Spain		134		28		152		34
Portugal		6		3		12		3
France		4		1		4		1
Luxembourg		2				7		1
Russia		3		1		3		1
China		52		11		71		16
Singapore		18		4		18		4
Korea		29		4		43		10
United States		22		6		26		7
India		68		38		81		47
United Arab Emirates		14		4		26		5
Other		15		2		8		1
Ship borne employees		950		10		1,094		11
Total outside of Sweden		4,171		922		4,389		974
Total group		8,045		2,529		8,519		2,747

Ship borne 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 ship borne employees in Stena Line in 2007 was 3,706 as compared to 3,471 in 2006.

The following tables present the wages, salaries and other remuneration of the employees of the Company.


	2006						2007
SEK million	Board and CEO		Other employees		Total		Board and CEO		Other employees		Total
Parent company		8		22		30		8		29		37
Subsidiaries in Sweden		34		1,071		1,105		41		1,145		1,186
Total Sweden		42		1,093		1,135		49		1,174		1,223
Subsidiaries outside of Sweden:
Great Britain		18		609		627		17		650		667
The Netherlands		8		258		266		5		262		267
Denmark		2		71		73		2		78		80
Ireland				35		35				36		36
Norway		1		46		47		1		56		57
Poland		1		8		9		1		10		11
Switzerland		9		2		11		6		2		8
Spain		2		40		42		2		45		47
Portugal				2		2				2		2
France				2		2				3		3
Luxembourg		1		1		2		4		8		12
Russia				11		11				1		1
China		2		10		12		2		12		14
Singapore		1		10		11		1		3		4
Korea		2		7		9		1		11		12
United States		2		30		32		3		22		25
India				3		3				5		5
United Arab Emirates		1		4		5		7				7
Other				10		10				5		5
Ship borne employees				510		510				672		672
Total outside of Sweden		50		1,669		1,719		52		1,883		1,935
Total group		92		2,762		2,854		101		3,057		3,158

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 who work on board such vessels. The amount of this subsidy in 2007 was SEK 462 million, out of which SEK 430 million related to the ferry operations. In 2006, the

amount of the subsidy was SEK 443 million, out of which SEK 412 million related to the ferry operations. The amounts received have reduced personnel costs.

Salaries of SEK 10 million were paid to the Chief Executive Officer and the Executive Vice President in 2007 and SEK 9 million in 2006. The corresponding pension charges amounted to SEK 6 million in 2007 and SEK 6 million in 2006. The aggregate compensation paid by Stena AB (publ) to its directors (a total of nine persons) amounted to SEK 13 million in 2007 and SEK 12 million in 2006, of total salaries paid to other employees SEK 33 million were paid to other officers than the Chief Executive Officer, the Executive vice President and the board members in 2007. 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 valid. The period of notice 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 180,000 in 2007, out of which SEK 40,000 was paid to the Chairman of the Board and SEK 20,000 was paid to each of the Chief Executive Officer and the Executive Vice President. In 2006, the board members of Stena AB were paid SEK 200,000, out of which SEK 40,000 was paid to the Chairman of the Board and SEK 20,000 was paid to each of the Chief Executive Officer and the Executive Vice President. The Chairman of the Board has invoiced SEK 475,000 and SEK 375,000 for consultations for the years 2007 and 2006, respectively.

The Company has entered into various transactions with other companies in the Stena Sphere, which includes the companies wholly owned by the Olsson family in Sweden, Sessan and Stena Metall and their subsidiaries. Another significant company within the Stena Sphere is 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 and the Company through 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 agreements were made in 2005, 2006 or 2007.

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 13 million, SEK 25 million and SEK 22 million in 2005, 2006 and 2007 respectively, for these services.

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 for the years 2005, 2006 and 2007 for these services.

In 2001 and 2002, Sessan acquired all 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, 2007, DKK 219 million was outstanding under this facility, as compared to DKK 213 million as of December 31, 2006.

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 charter hire of SEK 61 million for 2005 and SEK 59 million for each of the years 2006 and 2007.

Sessan has invested in shares in the Swedish company 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. Sessan had the option to buy these shares at a price of 10% above the price paid by the Company. This option was exercised during 2006.

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. During 2006, the Company acquired shares in Ballingslöv at a market value of SEK 35 million from Sessan. At the same time the loan of SEK 10 million was repaid.

The Company purchases a substantial part of its bunker fuel from Stena Metall. Such purchases aggregated SEK 1,127 million, SEK 1,840 million and SEK 1,781 million in 2005, 2006 and 2007, respectively.

During 2007 two vessels, Stena Carrier and Mont Ventoux, were sold to Stena Metall at market value and chartered back as operational leases.

The Company paid charter hire for vessels to Stena Metall at an amount of SEK 63 million for the years 2005 and 2006 and SEK 89 million or 2007.

The Company provides management and other services to Stena Metall. The Company received SEK 1 million in each of the years 2005, 2006 and 2007 for these services.

The Company rents office space from members of the Olsson family. In 2005, 2006 and 2007, the Company paid SEK 29 million, SEK 32 million and SEK 40 million, respectively, in respect of such properties.

The Company manages certain properties owned by members of the Olsson family. In 2005, 2006 and 2007, members of the Olsson family paid the Company SEK 13 million, SEK 12 million and SEK 12 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 2006, the Company acquired shares in Gunnebo and Gunnebo Industrier at a market value of SEK 18 million from the Olsson family.

Stena Bulk took delivery of the three medium range tankers, Stena Italica, Stena Conqueror and Stena Conquest in the first quarter of 2008.

In the first quarter of 2008, the Company repurchased USD 18 million of the Senior Notes due 2013 and USD 43 million of the Senior Notes due 2016.

After the year-end, the financial leases for Stena DrillMax and the RoPax vessels Stena Trader and Stena Traveller have been terminated. As a consequence of the termination of the leases, the income that the five-year lease would have generated will be accounted for in the first quarter of 2008.

In the first quarter of 2008 properties were acquired for SEK 185 million and sold for SEK 800 million. In addition, Stena Property made an indicative bid of the Municipal housing companies in Stockholm.

In March 2008, Stena Shipper was sold to a company in which Stena holds 50% of the shares and the vessel was renamed Crowley Shipper.

Since part of Stena´s holdings are listed, the downturn of the world´s exchanges in the beginning of 2008 has had an impact on Stena.

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 shareholders’ 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)	2005			2006			2007
Net income under Swedish GAAP		2,268			4,339			3,389
Adjustments to reconcile to US GAAP:
Disposal of assets^(a)		80			(295	)		65
Depreciation of properties^(b)		(34	)		(153	)		(99	)
Investments in securities^(c)		(388	)		(503	)		(454	)
Financial instruments^(d)		1,295			(1,011	)		189
Purchase accounting Stena Line^(e)		34			111			34
Business combinations^(f)		33			35			36
Pensions^(g)		(1,533	)		(494	)		—
Deferred costs^(h)		15			13			—
Capital lease transaction⁽ⁱ⁾		73			766			—
Equity method investments^(j)		(18	)		(37	)		(3	)
Others		16			36			(1	)
Tax effect of US GAAP adjustments		149			172			186
Net income under US GAAP		1,990			2,979			3,342

Those differences which have a material effect on consolidated net income and stockholders’ equity are described as follows:

In 2007, Mount Ventoux and Stena Carrier were sold and the gain on the sale- and leaseback will be recognized over the charter periods until 2017. The gains amounted to SEK 100 and 116 millions, 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 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 for each of the years ended December 31, 2005, 2006 and 2007.

In accordance with SFAS No. 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 Shareholders’ 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.

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 attributable to the Company has been recorded as pension liabilities 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 being recognized, net of tax SEK 1,075, immediately in net income.

SFAS No.158 ‘‘Employers’ accounting for defined benefit pension and other postretirement plans’’ was issued by the FASB in September 2006. SFAS No.158 requires an employer to recognize the funded status of pension and other postretirement benefit plans (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. During 2006, the Company adopted the recognition and disclosure provisions of SFAS No.158. The adjustments as of December 31, 2007 were a SEK 357 million decrease in accumulated other comprehensive income and shareholders equity, a SEK 510 million increase in accrued pension liability, and a SEK 153 million decrease in deferred income taxes. The Company will adopt the measurement date provisions of SFAS No. 158 for the fiscal year ended December 31, 2008. The differences between Swedish and

US GAAP in 2007 are that no corridor method is applied under US GAAP and that there are different implementation dates for SFAS 87 and RR 29.

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, thereby reversing the adjustment under US GAAP.

During 2006, the HSS vessels have been written-down in Swedish GAAP and under US GAAP these write-downs were reversed since there is no longer a book value difference. The total write-down in accordance with US GAAP has been recognized.

The condensed consolidated financial statements under US GAAP are presented as follows:


Income statement – US GAAP	Year ended December 31,
(SEK in millions)	2005			2006			2007
Total revenues		18,491			20,388			21,655
Net gain sale of vessels		395			2,018			318
Net gain sale of property		935			194			97
Direct operating expenses		(11,525	)		(14,469	)		(14,144	)
Selling and administrative expenses		(3,393	)		(2,621	)		(2,177	)
Depreciation and amortization		(2,738	)		(1,875	)		(1,732	)
Total operating expenses		(17,656	)		(18,965	)		(18,053	)
Income from operations		2,165			3,635			4,017
Share of affiliated companies’ results		3			(10	)		(64	)
Interest income		567			738			919
Interest expense		(1,395	)		(1,649	)		(1,670	)
Other financial items		695			484			465
Total financial income and expense		(133	)		(427	)		(286	)
Income before tax		2,035			3,198			3,667
Income taxes		(24	)		(196	)		(304	)
Minority interest		(21	)		(23	)		(21	)
Net income		1,990			2,979			3,342


Balance sheet – US GAAP	As of December 31,
(SEK in millions)	2006		2007
Intangible fixed assets		688		620
Tangible fixed assets		33,616		39,392
Marketable securities		5,791		7,674
Investment in VIE’s		7,341		9,251
Other noncurrent assets		4,602		7,653
Total noncurrent assets		52,038		64,590
Short-term investments		2,462		3,180
Cash and cash equivalents		884		708
Other current assets		4,812		6,630
Total current assets		8,158		10,518
Total assets		60,196		75,108
Total shareholders’ equity		17,465		20,475
Minority Interest		162		171
Deferred income taxes		1,516		1,882
Pension liabilities		2,718		2,396
Other provisions		1,667		2,713
Long-term debt		25,995		29,347
Other noncurrent liabilities		1,515		11,800
Total noncurrent liabilities		27,510		41,147
Short-term debt		4,776		985
Other current liabilities		4,382		5,339
Total current liabilities		9,158		6,324
Total shareholders’ equity and liabilities		60,196		75,108

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.

The Company adopted the provisions of FIN 48 on January 1, 2007, and there was no material effect on the consolidated financial statements. As a result, the Company did not record any cumulative effect adjustment related to adopting FIN 48.

As of January 1, 2007, and for the 12-month period ended December 31, 2007, the Company did not have any material unrecognized tax benefits and thus, no interest and penalties related to unrecognized tax benefits were recognized. The Company records interest and penalties related to unrecognized tax benefits in tax expenses in the consolidated financial statements. In addition, the Company does not expect that the amount of unrecognized tax benefits will change significantly within the next 12 months.

The Company and its subsidiaries file income tax returns in various tax jurisdictions, particularly in Sweden and the UK. The income tax returns in Sweden are open to examination by the local tax authorities for the tax years beginning in 2002 and in the UK income tax returns for the tax years beginning in 1997.

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)	2006			2007
Deferred tax liabilities:
Property, vessels and equipment		2,124			2,585
Investments		580			202
Other		262			337
Total deferred tax liabilities		2,966			3,124
Deferred tax assets:
Property, vessels and equipment		710			883
Tax loss carryforwards		815			817
Investments		647			509
Provisions		40			185
Other		255			—
Total deferred tax assets		2,467			2,394
Less deferred tax assets not recognized		(638	)		(552	)
Net deferred tax assets		1,829			1,842
Net deferred tax liability under US GAAP		1,137			1,282
Out of which
Deferred tax assets		379			600
Deferred tax liability		1,516			1,882
Net deferred tax liability		1,137			1,282

The valuation allowances (deferred tax not recognized) were SEK 1,317 million as of January 1, 2005.

The valuation (decreased)/increased by SEK (736) million, SEK 57 million and SEK (86) million during the years ending December 31, 2005, 2006 and 2007, 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.

For Swedish GAAP purposes, certain borrowings that have formal repayment dates in 2008 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 2,885 million and SEK 5,267 million at December 31, 2006 and 2007, respectively, would be classified as short-term in a US GAAP consolidated balance sheet.

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.

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 shareholders’ equity (except those arising from transactions with the owners) and includes net income (loss), net unrealized capital gains or losses and 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 December 31, 2004					(1,829	)
Net income		1,990
Available for sale securities		116			116
Minimum liability, pensions		326			326
Foreign currency translation adjustment		441			441
Comprehensive income 2005		2,873
Balance as of December 31, 2005					(946	)
Net income		2,979
Adoption of SFAS 158, pensions					(312	)
Available for sale securities		498			498
Foreign currency translation adjustment		(887	)		(887	)
Comprehensive income 2006		2,590
Balances as of December 31, 2006					(1,647	)
Net income		3,342
Pensions, SFAS 158		(45	)		(45	)
Available for sale securities		291			291
Foreign currency translation adjustment		(148	)		(148	)
Comprehensive income 2007		3,440
Balances as of December 31, 2007					(1,549	)

Pension cost, on the defined benefit plans, calculated in accordance with US GAAP includes the following:

As of December 31, 2007, the amount of indebtedness under the $1 billion revolving credit facility was $575 million plus $21 million used in connection with guarantees and letters of credit.

Stena Royal secured bank facility. On September 28, 2007, Stena Royal, an unrestricted subsidiary, entered into a new $350 million secured revolving credit facility with Svenska Handelsbanken AB (publ) and Nordea Bank Sweden AB (publ). The facility matures on September 28, 2012, subject to our option to extend it for up to two additional years. The facility bears interest at a rate based on LIBOR, EURIBOR or Stockholm Interbank Offered Rates as applicable depending on currency drawn down plus an applicable margin of 0.45% to 0.70% depending on the ratio between the aggregated drawn down amount and the value of the underlying security. Stena Royal may select every time it borrows funds under the facility an interest period of three or six months or such other period as may be agreed up to a maximum of twelve months. Interest is payable at the end of the relevant interest period. The medium and long-term investment portfolios of shares in listed companies held by Stena Royal are pledged as

security for the facility. The facility includes a cross-default provision ($30 million threshold) with respect to debt of Stena AB, Stena Royal or any present or future subsidiary of Stena AB. As of December 31, 2007, $109 million was utilized under the facility.

Senior Notes due 2013 and Senior Notes due 2016. As of December 31, 2007, we had outstanding, $170.8 million principal amount of Senior Notes due 2013 and $172.0 million principal amount of Senior Notes due 2016. In 2007, we repurchased $4.2 million of our Senior Notes due 2013 and $78 million of our Senior Notes due 2016. In the first quarter of 2008, we repurchased $18 million of our Senior Notes due 2013 and $43 million of our Senior Notes due 2016. As of March 31, 2008, there were $152.8 million of our Senior Notes due 2013 outstanding and $129 million of our Senior Notes due 2016 outstanding. The Senior Notes due 2013, 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 Senior Notes due 2014, are redeemable at our option, in whole or in part, at any time on or after November 1, 2008. The Senior Notes due 2016, 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 Senior Notes due 2016 are redeemable at our option, in whole or in part, at any time on or after December 1, 2009. The indentures governing these notes contain certain covenants with respect to, among other things, 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. These senior notes are unsecured obligations of Stena AB and rank pari passu in right of payment with Stena AB’s other unsubordinated indebtedness.

The carrying amount, gross unrealized holding gains, gross unrealized holding losses, and fair value of available-for-sale and held-to-maturity debt securities by major security type and class of security at December 31, 2007 and 2006 were as follows:

The fair values of debt securities (both available-for-sale and held-to-maturity investments) and equity securities are based on quoted market prices at the reporting date for those or similar investments.

Proceeds from the sale of investment securities available for sale and held to maturity were SEK 5,439 million and SEK 7,043 million in 2007 and 2006, respectively; net realized gains/losses included in other income in 2007 and 2006 were SEK 22 million and SEK 3 million respectively.

The Company also maintains a SEK 3,180 million portfolio of investment securities classified as trading. These investments are subject to price volatility associated with any interest-bearing instrument. Net realized gains/losses on trading securities during the years ended December 31, 2007 and 2006 were SEK 106 million and SEK 397 million, respectively, and are included in financial income. Net unrealized gains/losses on trading securities held at year end and included in financial income for 2007 and 2006 were SEK (128) million and SEK (212) million, respectively.

The Company’s consolidated shareholders’ equity include an amount of SEK 1,219 million and SEK 1,198 million for the years ended 2006 and 2007, respectively, representing their share of the equity method investments and the investments in VIE’s. The Company does not have control over the dividends to be distributed out of such funds.

In September 2006, FASB issued SFAS No. 157, ‘‘Fair Value Measurements’’. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 statement does not require any new fair value measurements; rather, it applies under other accounting pronouncements that require or permit fair value measurements. The provisions of SFAS No. 157 are to be applied prospectively as of the beginning of the fiscal year in which this statement is initially applied, with any transition adjustment recognized as a cumulative-effect adjustment to the opening balance of retained earnings. The provisions of SFAS No. 157 are effective for the fiscal years beginning after November 15, 2007. We are currently assessing what the impact of the adoption of SFAS No. 157 will be on our financial position and results of operations.

In September 2006, FASB issued SFAS No. 158, ‘‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans’’. Effective December 31, 2006, the Company adopted the recognition and disclosure provisions of SFAS No. 158. The Company has not yet adopted the measurement date provisions which are not effective until fiscal year 2008. The Company does not anticipate a material effect on its financial statements as a result of adoption of the measurement date provisions of SFAS No. 158.

In February 2007, the FASB issued SFAS No. 159, ‘‘The Fair Value Option for Financial Assets and Financial Liabilities’’. The fair value option established by SFAS No. 159 permits, but does not require, all entities to choose to measure eligible items at fair value at specified election dates. An entity would report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. We are currently assessing what the impact of the adoption of SFAS No. 159 will be on our financial position and results of operations.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), ‘‘Business Combinations’’. SFAS No. 141R will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R will change the accounting treatment and disclosure for certain specific items in a business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Accordingly, any business combinations we engage in will be recorded and disclosed following existing GAAP until January 1, 2009. We expect SFAS No. 141R will have an impact on accounting for business combinations once adopted but the effect is dependent upon acquisitions at that time. We are still assessing the impact of this pronouncement.

In December 2007, the FASB issued SFAS No. 160, ‘‘Noncontrolling Interests in Consolidated Financial Statements’’ – An Amendment of ARB No. 51. SFAS No. 160 establishes new accounting and reporting standards for the non controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. We have not completed our evaluation of the potential impact, if any, of the adoption of SFAS No. 160 on our consolidated financial position, results of operations and cash flows.

In March 2008, the FASB issued SFAS No. 161, ‘‘Disclosures about Derivative Instruments and Hedging Activities’’. SFAS No. 161 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, requires companies with derivative instruments to disclose information about how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133, and how derivative instruments and related hedged items affect a company’s financial position, financial performance, and cash flows. The required disclosures include the fair value of derivative instruments and their gains or losses in tabular format, information about credit-risk-related contingent features in derivative agreements, counterparty credit risk, and the company’s strategies and objectives for using derivative instruments. The Statement expands the current disclosure framework in SFAS No. 133. SFAS No. 161 is effective prospectively for periods beginning on or after November 15, 2008.

Under date of April 29, 2008 we reported on the consolidated balance sheets of Stena AB (publ) and subsidiaries as of December 31, 2006 and 2007, and the related consolidated statements of income and cash flows for each of the years in the three-year period ended December 31, 2007, and the related statement of changes in shareholders’ equity for each of the years in the two year period ended December 31, 2007, as contained in the Annual Report on Form 20-F for the year 2007. 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 audits.

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.

Stena AB and Consolidated Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2005, 2006 and 2007

Stena AB and Consolidated Subsidiaries
Property Cost and Accumulated Depreciation
December 31, 2007
(SEK in millions)

Stena AB and Consolidated Subsidiaries
Property and Accumulated Depreciation
December 31, 2005


Description	Encumbrances		Initial cost to company		Costs capitalised		Total		Accumulated Depreciation			Net book value
Property data	(Mortgages) TSEK		TSEK		TSEK		[ 1 ] TSEK		[ 2 ] TSEK
SFAB, enclosure no 1		2,504,725		3,008,654		650,525		3,659,179		(289,295	)		3,369,884
SFNAB, enclosure no 2		716,211		542,708		11,986		554,694		(54,815	)		499,879
SFSAB, enclosure no 3		742,495		1,742,017		49,086		1,791,103		(68,420	)		1,722,683
SFHKB, enclosure no 4		369,250		351,345		48,238		399,583		(19,386	)		380,197
SFFAB group, enclosure no 5		5,553,983		8,089,080		256,066		8,345,146		(218,832	)		8,126,314
Total Stena Fastigheter group		9,886,664		13,733,804		1,015,901		14,749,705		(650,748	)		14,098,957
SRBV, enclosure no 6		1,835,467		2,065,055		99,468		2,164,523		(175,110	)		1,989,413
SPBV, enclosure no 7		752,761		824,932		111,939		936,871		(29,759	)		907,111
Total Stena Realty group		2,588,228		2,889,987		211,406		3,101,394		(204,869	)		2,896,525
Total real estate		12,474,892		16,623,792		1,227,307		17,851,099		(855,617	)		16,995,482
Stena Line, enclosure no 8				1,484,216		1,968		1,486,184		(379,737	)		1,106,447
Adactum, enclosure no 9				146,251				146,251		(7,526	)		138,725
NMM, Glasgow				57,348				57,348		(10,630	)		46,718
Stena Drilling, Aberdeen				13,776				13,776		(7,316	)		6,460
Scan-Port, Germany				15,726				15,726					15,726
Euro-Port, Denmark				1,322				1,322					1,322
Total buildings and land				1,718,639		1,968		1,720,607		(405,209	)		1,315,398
Total				18,342,431		1,229,275		19,571,706		(1,260,826	)		18,310,880


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		12,501		2,888		15,389		(1,383	)		1961	01/01/81	100 years
Kallebäck 7:8		10,505		7,155		497		7,652		(843	)		1964	01/01/81	100 years
Kallebäck 12:4		9,000		8,545		585		9,130		(952	)		1960	31/12/83	100 years
Stampen 26:2		97,500		73,253		6,114		79,367		(8,753	)		1988	01/01/94	100 years
Järnbrott 164:22		39,000		29,488		649		30,137		(3,710	)		1966	01/02/94	100 years
Sannegården 15:4		9,759		0		10,913		10,913		(1,303	)		1973	01/01/83	100 years
Sannegården 15:5		18,750		40,662		−14,068		26,594		(2,298	)		1973	01/01/83	100 years
Sannegården 22:19		3,115		−1		2,400		2,399		(277	)		1973	01/01/83	100 years
Partille 3:234-5		0		95		1		96		0				01/01/83	100 years
Askim 70:4-6		120,000		159,164		4,922		164,086		(11,396	)		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		(106	)		1968/98	01/01/00	100 years
Linkärven 6		0		14,061		−5,038		9,023		(4,340	)		1990	01/04/90	100 years
Järnbrott 144:5		8,625		8,008		263		8,271		(806	)		1963	01/08/83	100 years
Kallebäck 4:1		36,950		15,122		2,711		17,833		(1,455	)		1963	01/08/83	100 years
Kobbegården 257:3		28,500		19,369		1,584		20,953		(1,748	)		1970	01/08/81	100 years
Kobbegården 257:1		30,000		29,094		3,091		32,185		(3,108	)		1970	01/08/81	100 years
Kobbegården 257:2		25,000		0		0		0		0			1970	01/08/81	100 years


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		−21,412		47,847		26,435		(3,008	)		1968	01/08/81	100 years
Askim 70:3		48,195		14,452		6,145		20,597		(1,136	)		1968	01/08/81	100 years
Kobbegården 6:139		0		9,180		11,345		20,525		(2,312	)		1974	01/03/86	100 years
Gullbergsvass 5:121		78,000		90,011		15,309		105,320		(14,689	)		1988	01/04/94	100 years
Kobbegården 6:3		195,000		146,028		34,235		180,263		(15,596	)		1970	12/97	100 years
Helsingör 10		39,500		15,940		3,816		19,756		(1,706	)		1964	01/05/81	100 years
Kockum 20		8,996		7,840		3,589		11,429		(661	)		1960	01/05/81	100 years
Kockum 21/22		23,700		11,464		2,907		14,371		(1,260	)		1962	01/01/82	100 years
Bilden 10		21,000		6,759		18,159		24,918		(3,258	)		1963	04/84	100 years
Almen 20		24,375		10,307		9,303		19,610		(1,683	)		1966	05/81	100 years
Frans Suell 14		135,000		49,575		155,299		204,874		(25,140	)		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
Solbacken 22		10,475		7,470		3,711		11,181		(1,255	)		1964	05/92	100 years


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		38,037		21,487		59,524		(5,524	)		1959	05/81	100 years
Pilåkern 2		125		313		1,399		1,712		(120	)		1960/70	05/81	100 years
Almen 16		5,400		5,066		−1,101		3,965		(361	)		1961	05/81	100 years
Leonard 1		194,000		202,400		65,871		268,271		(26,668	)		1970	11/00	100 years
Abel 14		80,000		142,339		16,293		158,632		(11,921	)		1973	11/00	100 years
Abel 15		45,000		0		0		0		0			1973	11/00	100 years
Korpen 39		9,000		15,019		776		15,795		(1,230	)		1960/70	01/99	100 years
Laboratorn 4		16,800		30,008		867		30,875		(2,661	)		1960/70	01/99	100 years
Professorn 12		11,900		21,182		1,573		22,755		(2,096	)		1960/70	01/99	100 years
Hilleröd 12		5,250		5,388		536		5,924		(576	)		1962	01/81	100 years
Nyborg 22		32,000		15,307		1,798		17,105		(1,436	)		1968	08/82	100 years
Solbacken 13		2,700		4,796		4,204		9,000		(1,393	)		1965	06/86	100 years
Hymnen 1		22,400		13,660		14,797		28,457		(3,297	)		1960/70	05/94	100 years
Kantaten 1		42,000		25,523		21,378		46,901		(4,633	)		1960/70	05/94	100 years
Kantaten 2		33,600		18,592		15,298		33,890		(3,632	)		1960/70	05/94	100 years
Kantaten 3		37,800		21,070		17,601		38,671		(4,421	)		1960/70	05/94	100 years
Kantaten 6		27,300		18,666		16,057		34,723		(3,659	)		1960/70	05/94	100 years


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		10,040		10,193		20,233		(2,323	)		1960/70		01/97	100 years
Laboratorn 2		20,700		13,550		12,375		25,925		(2,708	)		1960/70		01/97	100 years
Professorn 9		19,400		14,272		11,965		26,237		(2,963	)		1960/70		01/97	100 years
Professorn 11		21,800		18,487		10,353		28,840		(3,338	)		1960/70		01/97	100 years
Laboratorn 3		21,800		18,811		12,274		31,085		(3,388	)		1960/70		01/97	100 years
Altona 20 & 21		113,000		95,572		80,096		175,668		(33,363	)		1966		09/98	100 years
Pontus 20		97,225		128,950		2,106		131,056		(8,355	)		1935		04/01	100 years
Luggude 8		20,000		27,500		0		27,500		(1,377	)		1967		04/01	100 years
Hämplingen 15		12,750		17,550		849		18,399		(1,284	)		1964		04/01	100 years
Utanverket 13		48,750		70,107		629		70,736		(4,226	)		1958		04/01	100 years
Kolga 6		55,000		75,402		3,552		78,954		(4,720	)		1935		04/01	100 years
Ryttmästaren 17		0		39,196		581		39,777		(1,864	)		1970		02/04	100 years
Fältspaten 1		60,000		83,030		0		83,030		(3,708	)		1982		02/04	100 years
Masthugget 712:30				17,000		0		17,000		(2,763	)		2005		2005	100 years
Hjälten 3		124,000		163,595				163,595		(3,016	)				2005	100 years
Hjälmen 3		81,200		89,033		1,446		90,479		(1,573	)				2005	100 years
Gropen 2		26,400		28,659				28,659		(558	)				2005	100 years
Grottan 16		14,400		9,032		820		9,852		(180	)				2005	100 years
Gnistan 13		12,800		8,923				8,923		(165	)				2005	100 years
Gästgivaren 3		11,200		10,400				10,400		(195	)				2005	100 years
Halmstad 6:4 mfl		0		0				0		0					2005	100 years
Gårdsten 58:1				545,839		16,425		562,264		(41,398	)				2006	100 years
Tynnered 13:2				265,945		5,966		271,911		(3,187	)				2006	100 years
Gårda 19:7				104,351				104,351		0
Consolidation				−236,259				−236,259		25,167
Total SFAB	2,504,725			3,008,654		650,525		3,659,179		−289,295


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		(1,860	)		1971-75	12/96	100 years
Erstavik 26: 9		21,078		17,149		700		17,849		(1,960	)		1971-75	12/96	100 years
Erstavik 26: 10		20,500		16,552		785		17,337		(1,937	)		1971-75	12/96	100 years
Erstavik 26: 11		47,500		32,632		1,010		33,642		(3,549	)		1971-75	12/96	100 years
Erstavik 26: 12		44,900		31,121		164		31,285		(3,113	)		1971-75	12/96	100 years
Erstavik 26: 13		42,100		27,907		430		28,337		(2,848	)		1971-75	12/96	100 years
Erstavik 26: 14		37,200		24,969		160		25,129		(2,502	)		1971-75	12/96	100 years
Erstavik 26: 15		36,208		24,594		97		24,691		(2,461	)		1971-75	12/96	100 years
Erstavik 26: 16		36,700		24,541		138		24,679		(2,458	)		1971-75	12/96	100 years
Erstavik 26: 17		36,800		25,221		631		25,852		(2,560	)		1971-75	12/96	100 years
Erstavik 26: 18		41,200		30,169		105		30,274		(3,016	)		1971-75	12/96	100 years
Erstavik 26: 20		7,000		4,311		81		4,392		(444	)		1971-75	12/96	100 years
Erstavik 26: 28		14,700		16,128		627		16,755		(1,849	)		1971-75	12/96	100 years
Erstavik 26: 29		15,225		16,264		678		16,942		(1,867	)		1971-75	12/96	100 years
Erstavik 26: 30		14,800		16,212		878		17,090		(1,951	)		1971-75	12/96	100 years
Erstavik 26:109		40,600		27,675		206		27,881		(2,785	)		1971-75	12/96	100 years
Erstavik 26:110		40,800		28,578		627		29,205		(3,005	)		1971-75	12/96	100 years
Erstavik 26:111		37,600		24,571		163		24,734		(2,461	)		1971-75	12/96	100 years
Erstavik 26:113		38,900		26,058		116		26,174		(2,606	)		1971-75	12/96	100 years
Erstavik 26:115		38,900		26,618		167		26,785		(2,667	)		1971-75	12/96	100 years
Erstavik 26:117		41,500		27,035		180		27,215		(2,706	)		1971-75	12/96	100 years
Erstavik 26:118		41,200		26,924		158		27,082		(2,694	)		1971-75	12/96	100 years
Erstavik 26:434				6,174		3,197		9,371		(1,516	)		1971-75	12/96	100 years
Erstavik 26:488				0				0		0			1971-75	12/96	100 years
Ongoing projects				25,273				25,273		0
TOTAL SFNAB		716,211		542,708		11,986		554,694		(54,815	)


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		17,885		3,545		21,430		(1,182	)		1902	04/00	100 years
Hågern Större 16		350,000		400,516		1,982		402,498		(29,854	)		1990	04/00	100 years
Tempelriddareorden 1		17,500		26,144		90		26,234		(1,604	)		1964	12/01	100 years
Tempelriddareorden 2		12,110		17,482		70		17,552		(1,074	)		1964	12/01	100 years
Tempelriddareorden 3		32,900		49,556		163		49,719		(3,039	)		1964	12/01	100 years
Tempelriddareorden 4		26,600		38,642		74		38,716		(2,361	)		1964	12/01	100 years
Tempelriddareorden 6		12,950		19,326		69		19,395		(1,186	)		1964	12/01	100 years
Tempelriddareorden 7		32,900		48,879		146		49,025		(2,995	)		1964	12/01	100 years
Tempelriddareorden 8		16,450		25,178		82		25,260		(1,544	)		1964	12/01	100 years
Tempelriddareorden 9		19,950		31,505		52		31,557		(1,924	)		1964	12/01	100 years
Söderbymalm 3:468		177,910		151,592		42,805		194,397		(10,197	)			12/02	100 years
Gröna rutan 1		1,750		3,218		8		3,226		(197	)		1964	12/01	100 years
Skansen 18		0		562,094				562,094		(11,263	)			09/05	100 years
Ekebo		0		350,000				350,000		0
TOTAL SFSAB		742,495		1,742,017		49,086		1,791,103		(68,420	)


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		(643	)		1955	07/01	100 years
Haninge Söderbymalm 6:10		28,000		24,720		2,682		27,402		(1,312	)		1956	07/01	100 years
Haninge Söderbymalm 3:328		9,000		9,270		1,657		10,927		(512	)		1956	07/01	100 years
Haninge Söderbymalm 3:329		10,000		11,330		2,035		13,365		(620	)		1956	07/01	100 years
Haninge Söderbymalm 3:333		9,000		9,270		933		10,203		(488	)		1957	07/01	100 years
Haninge Söderbymalm 3:372		9,000		10,300		1,667		11,967		(569	)		1964	07/01	100 years
Haninge Söderbymalm 3:337		49,250		44,290		7,182		51,472		(2,504	)		1964	07/01	100 years
Haninge Söderbymalm 9:1		29,000		29,870		4,949		34,819		(1,670	)		1964	07/01	104 years
Haninge Söderbymalm 9:2		26,000		28,840		4,886		33,726		(1,618	)		1964	07/01	105 years
Haninge Söderbymalm 6:13		10,500		14,573		2,554		17,127		(809	)		1964	07/01	100 years
Haninge Söderbymalm 6:14		33,750		26,030		4,430		30,460		(1,484	)		1964	07/01	100 years
Haninge Söderbymalm 6:15		18,250		15,624		2,449		18,073		(868	)		1962	07/01	100 years
Haninge Söderbymalm 6:16		6,000		8,331		1,235		9,566		(456	)		1962	07/01	100 years
Haninge Söderbymalm 7:16		56,500		47,694		8,057		55,751		(2,642	)		1963	07/01	100 years
Haninge Söderbymalm 3:395		14,750		13,523		2,175		15,698		(757	)		1967	07/01	100 years
Haninge Söderbymalm 3:476		45,250		44,290		1,094		45,384		(2,434	)		1985	07/01	100 years
Ongoing projects								0		0
Totalt SFHKB		369,250		351,345		48,238		399,583		(19,386	)


Description	Encumbrances		Initial cost to company		Costs capitalised		Accumulated Depreciation			Date of construction		Date acquired		Life on which Depreciation is computed
Property data	(Mortgages)		Buildings and land		Improvements
	TSEK		TSEK		TSEK		TSEK
Höken 56, 57, Malmö		78,370		125,347				(7,081	)		1984		2004	100 years
Jerusalem 69, 70 Malmö		38,250		64,718				(3,143	)		1966		2004	100 years
Möllebacken 23, Malmö		81,106		143,412				(7,721	)		1983		2004	100 years
Stralsund 33, Malmö		90,102		143,888				(5,614	)		1974		2004	100 years
Björnen 4, Malmö		25,715		41,124				(1,359	)		1986		2004	100 years
Gabriel 9, Malmö		74,573		119,639				(3,973	)		1985		2004	100 years
Mården 3, Malmö		56,361		98,602		84		(11,199	)		1988		2004	100 years
Axel 33, Malmö		177,181		324,405		418		(50,298	)		1988		2004	100 years
Bornholm 6, Malmö		77,337		123,864		133		(3,820	)		1975		2004	100 years
Granen 14, Malmö		28,293		43,690		1,286		(5,077	)		1979		2004	100 years
Fretten 11, 13 Malmö		88,167		140,862		0		(6,146	)		1979		2004	100 years
Nötskrikan 17, Malmö		43,669		69,833		0		(3,754	)		1900		2004	100 years
Jägaren 1, Nöbb. 2:15		12,981		15,828		640		(3,818	)		1980		2004	100 years
Jägaren 2-3, villebrådet 1 Lund		94,843		130,038		14,092		(11,612	)		1973		2004	100 years
Kilen 18, Lund		108,976		164,215		0		(11,310	)		1990		2004	100 years
Kilen 19, Lund		66,385		102,943		594		(8,379	)		1992		2004	100 years
Cedern 17		99,240		49,058		0		(12,010	)		1970		2004	100 years
Danzig 22		15,975		27,818		291		(4,926	)		1961		2004	100 years
Elefanten 41		72,000		135,257		14,161		(27,108	)		1989		2004	100 years
Hermodsdal 2		21,675		34,775		435		(8,740	)		1963		2004	100 years
Lars 4		14,790		29,554		409		(5,178	)		1958		2004	100 years
Mjödet 11		75,225		131,451		6,550		(27,921	)		1968		2004	100 years
Stacken 11		21,420		33,212		42		(8,465	)		1960		2004	100 years
Vårdkasen 2		11,050		17,950		823		(4,117	)		1968		2004	100 years
Hörby Häggenäs 9:62		0		228		0		(4	)	Other			2004	100 years
Tolered 129:25 mfl.		80,750		91,425		179,827		(14,857	)		1960		2004	100 years
Järnbrott 117:5 mfl.		282,200		405,101		0		(37,548	)		1962		2004	100 years
Kortedala 92:5 mfl.		70,550		129,592		0		(22,874	)		1958		2004	100 years
Kortedala 105:5		41,752		65,786		0		(5,165	)		1957		2004	100 years
Kortedala 105:3 mfl		157,998		248,833		653		(17,228	)		1956		2004	100 years


Description	Encumbrances		Initial cost to company		Costs capitalised		Accumulated Depreciation			Date of construction		Date acquired		Life on which Depreciation is computed
Property data	(Mortgages)		Buildings and land		Improvements
	TSEK		TSEK		TSEK		TSEK
Johanneberg 39:15		140,269		207,628		85		(6,993	)		1981		2004	100 years
Backa 7:12 mfl		142,450		200,091		3,320		(7,099	)		1965		2004	100 years
Backa 886:694-695		0		0		0		0		Other			2004	100 years
Tynnered		557,600		764,489		934		(34,134	)		1967		2004	100 years
Prästhult 1:6		0		217		0		(2	)	Land			2004	100 years
Tolered		183,600		248,530		31,289		(26,119	)		1960		2004	100 years
Jursta 3:5 och Jursta 3:6		0		30,090				(12,653	)	Other			2004	100 years
Jursta 3:6		0		0				0		Other			2004	100 years
Kungsängen 7:6, Uppsala		32,400		53,295				(11,566	)		1961		2004	100 years
Luthagen 80:1, Uppsala		125,600		221,150				(19,649	)		1991		2004	100 years
N Kvarngärdet, Uppsala		204,000		350,139				(22,403	)		1963		2004	100 years
Brahehus 1, Malmö		59,450		117,841				(9,977	)		1957		2004	100 years
Holmen 1, Malmö		90,400		153,803				(16,078	)		1982		2004	100 years
Stora Björnen 11		7,604		12,223				(421	)	Other			2004	100 years
Vittran 1		57,000		83,035				(2,872	)	Other			2004	100 years
Lantbon 15		1,500		37,013				(3,550	)	Other			2004	100 years
Handlaren 24		22,262		28,577				(988	)	Other			2004	100 years
Båtsmannen 1-2		12,590		20,201				(675	)	Other			2004	100 years
Geväret 3-5 & 7		18,407		22,276				(757	)	Other			2004	100 years
Gärdet 16 & 18		7,712		8,674				(291	)	Other			2004	100 years
Ingenjören 6		7,129		9,366				(314	)	Other			2004	100 years
Laxen 23		3,456		4,435				(150	)	Other			2004	100 years
Nämndemannen 1		4,113		5,616				(190	)	Other			2004	100 years
Tegen 2-4		14,473		17,647				(599	)	Other			2004	100 years
Täfteå 10:202		0		7,769				(275	)	Other			2004	100 years
Aspgärdan 19		13,300		19,992				(683	)	Other			2004	100 years
Flyttfågeln 2		56,600		82,287				(3,141	)	Other			2004	100 years
Hygget 1		31,100		36,020				(1,679	)	Other			2004	100 years


Description	Encumbrances		Initial cost to company		Costs capitalised	Accumulated Depreciation			Date of construction		Date acquired		Life on which Depreciation is computed
Property data	(Mortgages)		Buildings and land		Improvements
	TSEK		TSEK		TSEK	TSEK
Jägaren 4		7,000		3,777			(131	)	Other			2004	100 years
Jägaren 5		16,400		27,824			(976	)	Other			2004	100 years
Järven 18		10,000		12,962			(481	)	Other			2004	100 years
Järven 19		10,300		22,453			(1,000	)	Other			2004	100 years
Krukan 15		23,000		37,950			(9,812	)	Other			2004	100 years
Leoparden 2		12,100		11,975			(416	)	Other			2004	100 years
Leoparden 4		10,300		19,539			(683	)	Other			2004	100 years
Spetsen 15		5,700		7,081			(232	)	Other			2004	100 years
Spetsen 16		10,300		14,367			(489	)	Other			2004	100 years
Tranan 2-3		11,500		15,899			(533	)	Other			2004	100 years
Masen 9		1,516		19,316			(615	)	Other			2004	100 years
Sofiehem 2:156		19,000		20,154			(10,579	)	Other			2004	100 years
Flyttfågeln 11		20,000		28,840			(613	)	Other			2004	100 years
Hygget 75		5,000		17,510			(375	)		1951		2004	100 years
Martallen, Sthlm		7,826		21,860			(1,185	)		1931		2004	100 years
Källsmora 1:92 (ryttarfastighet)		0		208			(2	)		1929		2004	100 years
Wahrenberg 11		155,200		232,575			(19,878	)		1939		2004	100 years
Sjukhuset 3		222,510		316,713			(32,780	)		1950		2004	100 years
Tornet 10-12		81,940		139,266			(20,620	)		1969		2004	100 years
Vale 9		20,000		30,234			(3,616	)		1961		2004	100 years
Odinslund 6		62,900		88,343			(6,772	)		1925		2004	100 years
Danderyd 3:95		0		0			0			1965		2004	100 years
Dalkarlshugget 2		127,500		219,196			(5,814	)		1967		2004	100 years
Rosenbrödet 1		0		26,519			(698	)		1963		2004	100 years
Smörrutan 1		26,500		46,538			(1,216	)		1964		2004	100 years
Wienerbrödet 1		79,500		132,250			(3,677	)		1907		2004	100 years
Wienerkransen 3		52,105		96,654			(2,485	)		1889		2004	100 years
Wienerkransen 1		0		39,103			(1,301	)		1888		2004	100 years
Stativet 4		138,000		262,788			(18,989	)		1942		2004	100 years


Description	Encumbrances		Initial cost to company			Costs capitalised		Accumulated Depreciation			Date of construction		Date acquired		Life on which Depreciation is computed
Property data	(Mortgages)		Buildings and land			Improvements
	TSEK		TSEK			TSEK		TSEK
Jakobsberg 2:1164		36,000		53,683					(6,527	)		1989		2004	100 years
Järvakrogen 2		9,500		12,867					(370	)	Other			2004	100 years
Sikreno 8		6,205		7,170					(2,826	)		1924		2004	100 years
Stockshem 10		0		113,498					(29,070	)		1903		2004	100 years
Skansen 18		0		0					0			1970		2005	100 years
Täckeråker 1:8, 1:9, 2:11		85		12,418					(10,219	)		1991		2004	100 years
Täckeråker 2:14		36		3,959					(48	)	Other			2004	100 years
Pelaren – Uppdelad i Pylonen 1 och Tornet 1		0		55,290					(1,218	)		1972		2004	100 years
Näsbypark 73:5		0		0					0			1990		2004	100 years
Sfären 1-9, Solna		235,000		418,046					(133,638	)		1938		2004	100 years
Tvålflingan 5		0		186,983					(36,570	)		1973		2004	100 years
Autopiloten 5,9, Stockholm		21,996		47,849					(21,694	)	Other			2004	100 years
Stockhem 11		76,415		123,986					(68,581	)	Other			2004	100 years
Wahrenberg 9-10		132,700		283,831					(105,497	)	Other			2004	100 years
Other				(509,094	)				238,945
Elim on consolidation Dec 31, 2004				(628,152	)				628,152
Total SFFAB		5,553,983		8,089,080			256,066		(218,832	)


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
Archimedeslaan		69,701		103,288		1,086		104,373		(3,782	)		1996	03/06	100 years
Atoomweg		80,512		85,516		7		85,523		(6,963	)		1979	07/02	100 years
Brain Park 30		51,434		58,801		3,546		62,348		(1,746	)		1988	05/04	100 years
Brain Park 80		23,069		18,641		1,479		20,120		(5,507	)		1989	11/89	100 years
Brain Park 120		36,471		25,742		6,067		31,809		(7,868	)		1989	11/89	100 years
Breguetlaan		31,497		38,768		22		38,790		(980	)		1992	04/06	100 years
Cessnalaan		33,562		49,734		0		49,734		(1,564	)		1997	01/006	100 years
Eisenhowerlaan		22,022		31,505		208		31,714		(3,034	)		1979	01/02	100 years
Haspelslaan		53,567		76,068		492		76,560		(3,577	)		1986	07/01	100 years
Ottho Heldringstraat		79,897		46,784		1,237		48,021		(5,315	)		1990	01/90	100 years
Hogehilweg 6		50,476		62,128		773		62,901		(2,082	)		1986	07/06	100 years
Keizersgracht		35,398		38,306		5,314		43,620		(4,977	)		1750	10/88	100 years
Kiotoweg		51,387		55,461		676		56,137		(5,311	)		2002	08/02	100 years
Koninginnegracht 10		25,306		17,629		11,950		29,579		(2,231	)		1984	06/98	100 years
Koninginnegracht 12		35,334		28,902		11,375		40,277		(2,270	)		1984	06/98	100 years
Koninginnegracht 13		27,256		31,635		17		31,652		(2,233	)		1990	12/97	100 years
Koninginnegracht 14		36,215		51,682		0		51,682		(2,387	)		1994	09/01	100 years
Koninginnegracht 23		23,342		33,615		0		33,615		(3,198	)		1971	01/02	100 years
Lichtenauerlaan		46,047		52,711		1,216		53,928		(3,723	)		1997	03/04	100 years
Max Euwelaan		52,787		58,208		3,614		61,821		(3,983	)		1988	05/04	100 years
Markthalle		48,321		91,737		−2,649		89,088		(39,647	)		1987	12/87	100 years
Nacap		26,273		30,686		1,734		32,420		(3,732	)		1989	07/89	100 years
Nacap01		99,233		108,369		462		108,831		(4,247	)		1989	11/05	100 years
New York, Lijnden, 2 ihop		71,026		78,905		207		79,112		(3,032	)		2001	12/01	100 years
Nieuwezijds Kolk		62,943		71,641		44		71,685		(2,972	)		1996	04/05	100 years
Park Voorn		45,945		57,360		0		57,360		(7,076	)		1989	10/89	100 years
Park Voorn 9		17,707		26,239		244		26,483		(703	)		1989	02/06	100 years
Paviljoensgracht		63,031		70,913		994		71,907		(4,096	)		1981	12/99	100 years


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
San Francisco, Lijnden		8,205		23,652		−16,888		6,764		(578	)		2002		03/02	100 years
Scheveningseweg		40,701		41,490		4,835		46,325		(2,830	)		1988		04/04	100 years
Schipolweg		108,684		69,760		25		69,786		(6,817	)		1986		12/02	100 years
Stadhouderskade		71,593		76,876		12,055		88,931		(5,964	)		1928		10/96	100 years
Rooseveltweg		37,173		40,655		1,681		42,336		(3,142	)		1995		06/03	100 years
Rooseveltweg 11		49,394		60,796		9		60,805		(1,366	)		2002		08/06	100 years
Veraartlaan		23,796		25,205		2,037		27,242		(1,625	)		1978		08/99	100 years
Volmerlaan		99,668		43,308		14,928		58,236		(5,756	)		1978		02/90	100 years
Westblaak		0		70,893		30,609		101,502		(1,348	)		1976		12/06	100 years
Wilhelminalaan		52,513		61,663		60		61,723		(4,914	)		1979		05/97	100 years
Zeestraat		43,983		49,782		0		49,782		(2,532	)		1982		10/00	100 years
		0		0		0		0		0
Elim on consolidation
Dec 31, 2004				0				0		0
Total SRBV		1,835,467		2,065,055		99,468		2,164,523		(175,110	)


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		47,254		72,424		5,185		77,609		(3,809	)		1986	09/05	100 years
Rue Brasseur, Luxemburg		165,947		162,593		9,888		172,481		(15,943	)		1992	04/92	100 years
Sophia Antipolis, Nice		14,995		16,196		3,489		19,685		(2,055	)		1989	03/90	100 years
Schiessstrasse, Duesseldorf		62,576		73,755		9,217		82,972		(4,063	)		1990	06/89	100 years
WTC Sophia Antipolis		97,472		78,032		81,470		159,501		(7,155	)		1990	12/00	100 years
Font de’l orme		30,904		29,382		7,827		37,209		(504	)		1989	09/03	100 years
Les Deux Arcs		97,343		128,769		47		128,817		(38	)		2003	12/04	100 years
Marco Polo		184,291		248,983		0		248,983		(1	)		2003	12/06	100 years
Ecolucioles		99,233		87,223		0		87,223		0
Total SPBV		752,761		824,932		111,939		936,871		−29,759


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
Hotel Fredrikshavn			281,631				281,631			(185,159	)			50 years
Hotel Grenå			0				0			0				50 years
Other buildings, Denmark			82,821				82,821			(70,957	)			50 years
Port of Stranraer			152,459				152,459			(55,180	)			40 years
Port of Holyhead			1,076,426				1,076,426			(344,477	)			40 years
Port of Fishguard			220,541				220,541			(92,900	)			40 years
Other			0		1,968		1,968			(1,241	)			40 years
Hook of Holland			56,261				56,261			(40,185	)			20 years
Port of Helsingborg			57,579				57,579			(48,963	)			20 years
Port of Gothenburg			36,608				36,608			(20,725	)			20 years
Other			903				903			(964	)
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			(39,094	)			(39,094	)		39,094
Total Stena Line			1,484,216		1,968		1,486,184			(379,737	)


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		29,400		26,593		(2,708	)			50 years
Olskroken 35:5		12,500		0		0				50 years
Strand Norum 33:4		8,250		12,503		(967	)			50 years
Ryda 9:13		600		2,479		(235	)			50 years
Galeasen 1		4,000		6,010		(754	)			50 years
Umeå Tolvmansgården 4		5,250		7,417		(231	)			30 years
Stockholm Hjässan 18		18,900		26,785		(69	)			30 years
Nacka Sicklaön 349:5		12,600		18,497		0				30 years
Arendal Rud 2:6 (ofri grund, pantsatt arrendekontrakt)		0		8,459		(1,159	)			50 years
Valsätra 1:12 (ofri grund, pantsatt arrendekontrakt)		0		16,302		(942	)			30 years
Lidingö 3:390 (ofri grund)				1,455		(25	)			30 years
Mölnlycke Solsten 1:153				5,303		0				30 years
Investment in rented property		0		13,736		(19	)			10-20 years
Envac				683		(398	)			20 years
Elim				29		(19	)
Total Adactum		91,500		146,251		(7,526	)


		Page
PART I
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		22
Item 4A.	Unresolved Staff Comments		45
Item 5.	Operating and Financial Review and Prospects		45
Item 6.	Directors, Senior Management and Employees		67
Item 7.	Major Shareholders and Related Party Transactions		70
Item 8.	Financial Information		72
Item 9.	The Offer and Listing		73
Item 10.	Additional Information		73
Item 11.	Quantitative and Qualitative Disclosures about Market Risk		78
Item 12.	Description of Securities Other than Equity Securities		80
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies		81
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds		81
Item 15.	Controls and Procedures		81
Item 16.	[Reserved]		81
Item 16A.	Audit Committee Financial Expert		81
Item 16B.	Code of Ethics		81
Item 16C.	Principal Accountant Fees and Services		82
Item 16D.	Exemptions from the Listing Standards for Audit Committees		83
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers		83
PART III
Item 17.	Financial Statements		84
Item 18.	Financial Statements		84
Item 19.	Exhibits		84


YEAR ENDED DECEMBER 31,	AVERAGE⁽¹⁾		HIGH		LOW
2003		8.0351		8.7920		7.1950
2004		7.3320		7.7725		6.5939
2005		7.5200		8.2434		6.6855
2006		7.3098		7.9656		6.7674
2007		6.7575		7.1060		6.2356
October 2007		—		6.5156		6.3608
November 2007		—		6.4111		6.2356
December 2007		—		6.6089		6.3636
January 2008		—	6.5289		6.3080
February 2008		—	6.5116		6.1643
March 2008		—	6.1598		5.9360


	Year Ended December 31,
(SEK in millions)	2005		2006		2007
Travel		3,139		3,248		3,372
Onboard sales		1,828		1,795		1,849
Freight/other		4,078		4,370		4,647
Net gain sale of assets						146
Total revenues		9,045		9,413		10,014


	Year Ended December 31,
Volumes (in thousands)	2005		2006		2007
Number of passengers		11,517		11,432		11,374
Private Cars		2,229		2,194		2,204
Freight units		1,522		1,558		1,621


Type of vessel	Number of vessels		Average age (years)
HSS Vessels		3		11
Conventional Fast Ferry		1		11
Day Ferries		3		16
Night Ferries		2		24
RoRo Vessels		2		3
RoPax Vessels		24		19


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


	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2007


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


	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


Large accelerated filer			Accelerated filer			Non-accelerated filer


	•	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 and 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, including those relating to our Senior Notes, or be able to refinance maturing indebtedness.


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


	•	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


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


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


	•	the United States Oil Pollution Act of 1990 (‘‘OPA ‘90’’) 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 Comprehensive Environmental Response Compensation and Liability Act (‘‘CERCLA ‘90’’) which 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;


	•	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 of 1973 and Protocol 1978 (‘‘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 have to be built with double hulls;


	•	the International Maritime Organization International Convention for the Safety of Life at Sea (‘‘SOLAS’’) of 1974 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 (‘‘ICLL’’) 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’’), relating to the limits of liability of carriers, which has introduced a strict liability regime with limited defenses; and


	•	the U.S. Maritime Transportation Security Act of 2002 (‘‘MTSA’’) with respect to vessel security.


	•	effect service of process within the United States upon us or our directors and officers, or


	•	enforce judgments obtained in United States courts against us or our directors and officers based upon the civil liability provisions of the United States federal securities laws.


	•	a judgment of a United States court would not be enforceable in Sweden against us or our directors and officers, but would be accepted on an evidential basis in a Swedish legal action, and


	•	there is doubt whether an original action could be brought in Sweden against us or our directors and officers to enforce liabilities based solely upon the United States federal securities laws.


	Passengers						Private cars						Freight units
(In Thousands)	2005		2006		2007		2005		2006		2007		2005		2006		2007
Gothenburg-Fredrikshavn		1,597		1,569		1,565		342		330		331		161		166		184
Varberg-Grena		170		170		168		39		42		43		40		39		39
Helsingborg-Helsingör⁽¹⁾		4,009		3,933		4,059		711		693		705		137		142		152

Exhibit Number

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’’)).*

Indenture dated as of November 27, 2002 between the Registrant and JPMorgan Chase Bank, as trustee, relating to the Company’s 9.625% Senior Notes due 2012 (incorporated by reference to Exhibit 4.1 to the 2002 Registration Statement).*

Indenture dated as of December 2, 2003 between the Company and JPMorgan Chase Bank, as trustee, relating to the Company’s 7.5% 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’’)).*